Weekly Energy Market Updates by Region - Archive

As reported by Thomas Brill and Steven Russo of Utility Dive last week, New York has one-upped California in passing ambitious legislation that calls for the total elimination of carbon emissions within its borders. Whereas The 100 Percent Clean Energy Act of 2018 codifies the Golden State’s goal of a retail electricity market comprising 100% renewable and zero-carbon sources by the end of 2045, the Climate Leadership and Community Protection Act, signed by Governor Andrew Cuomo on July 18, aims for carbon-free electricity in the Empire State by 2040.

Given the current state of California’s energy mix, for example, to say that such a lofty goal will be difficult to attain is an understatement. The graph below from CAISO depicts the very typi-cal hourly contributions of various energy sources just yesterday, August 28. Although renewa-bles contributed the most power during daylight hours, natural gas and imports still took over the heavy lifting once the sun went down. Dictated largely by nature, this trend may very well spread to New York and other states with similar initiatives.

Ironically, so much solar and wind power is coming onto California’s grid during the daytime that, at times, CAISO must actually curtail the output of those renewable resources. CAISO has stated, "The ISO is seeking solutions to avoid or reduce the amount of curtailment of renewa-ble power to maximize the use of clean energy sources." California (similar to New York) has ambitious battery storage goals but until battery storage flattens the duck curve associated with solar in California, the hourly price shape curve will continue to be dynamic as the market progresses.

With these new mandates must come new technology to keep grids both reliable and afforda-ble. Fortunately, because the touchstone of this green-energy movement is the absence of carbon, both California and New York have deliberately included not only the word zero (as in “zero-carbon”) but also the word renewable in their revised energy policies. Both concepts are important to this issue and are definitely not the same thing. Lee Beck and Jennifer Gordon elucidated the difference in Utility Dive back in March. Renewable energy sources, such as solar and wind, naturally replenish themselves; zero-carbon sources include not only renewa-bles but also nuclear energy and carbon capture and sequestration technologies (which help prevent carbon dioxide from entering the atmosphere during the process of generating elec-tricity via the burning of fossil fuels).

A Wood Mackenzie report estimates "the cost of full de-carbonization of the US power grid at US$4.5 trillion, given the current state of technology," which works out to $35,000 per house-hold. Because those costs will ultimately trickle down to ratepayers, the hope is that new tech-nology such as battery storage enhancements can help realize the clean, reliable, and afforda-ble electricity markets envisioned by these and other states.