California will need more storage and higher reserve margins to prevent a recurrence of the rolling blackouts that hit the state in August, Edison International CEO Pedro Pizarro said last week, but he insisted there is no turning back on the increasing use of renewables.
It was climate change, he said, that caused the oppressive heat that stressed the grid to its breaking point. “We saw not only heat, but a heat dome over the entire Western United States that was really unprecedented,” Pizarro said during a panel discussion with other utility CEOs that closed the Edison Electric Institute’s Virtual Leadership Summit on Thursday. He said heat domes normally last four or five days, but this one lasted two weeks.
“It’s not the renewables that did this,” he said. “It’s been unfortunate to see some of the press saying … California’s push for addressing climate change and using renewables was the culprit here.
“We saw more coincident peaks across California, and we saw more of the other Western states needing their own resources that decreased imports into [California],” Pizarro said. “We saw gas and renewables operate as you would expect. There’s variability with wind … but within the natural volatility of that. It’s the same with solar. It’s not the renewables that did this.”
Pizarro acknowledged that renewable-dependent systems will require different parameters and “much more storage.” He also called for revisions to planning reserve margins. “With a more volatile system — a system that has more intermittent resources — we need a little more safety margin,” he said.
Recalling a study he commissioned when he became Edison’s CEO in 2016, Pizarro said he wanted to determine how the state could meet its climate-change objectives in a way that made sense for the economy.
“That led to the conclusion that it’s a clean-energy-led pathway that has clean energy, has renewables, but it importantly needs to have a lot more storage built into the system to provide that shock absorber so that we can use that clean energy to electrify a lot of society,” he said. “This should not be viewed as a step away from the clean-energy transition so many of us are committed to.”
DTE Energy Executive Chairman Gerry Anderson, Exelon CEO Christopher Crane, Ameren CEO Warner Baxter and Xcel Energy CEO Ben Fowke, EEI’s incoming chairman, also reiterated their support for decarbonization during the panel discussion.
Fowke said renewables can’t solve climate change alone.
“Our industry and my company, we’ve done a lot to reduce carbon, and renewable energy played a big role in that,” Fowke said. “But at some point … the big grid becomes saturated. You can only have so much renewables.”
Xcel has set carbon-reduction goals of 80% by 2030 and 100% by 2050. Other companies represented on the panel have set similar goals.
“That last 20% of carbon [removal] is going to require technologies to be commercially and economically viable that aren’t today,” Fowke said. “We need to start investing today and nurturing those technologies so they can be ready for tomorrow. It’s really important that we are out there continuing to lead and reduce carbon, while at the same time thinking about those long-term goals that will require different technologies.”
“So much of our strategy is now defined by that clean-energy transition,” Anderson said. “As an industry, we’ve learned that what looked so challenging a decade ago now looks like an opportunity to transition much of the economy to electricity, to grow fundamentally in the process and do something that we’ll all really be proud of.”
The CEOs raised the issue of investing in smarter energy infrastructure. EEI says its member companies sink an average of more than $110 billion each year into the grid.
Baxter stressed the importance of regulatory frameworks that support those investments.
“Customers have been loud and clear that they want cleaner, more reliable, more resilient [energy],” he said. “I think we’ve made good progress. Some of the frameworks are better than others. This is where we as an industry. These are the types of things that we know can really make some step changes. We can’t let up.”
Crane said the stakes will increase with vehicle electrification.
“The old CAIDI [Customer Average Interruption Duration Index] and SAIFI [System Average Interruption Frequency Index] top-quartile numbers are not going to cut it when you electrify a whole bus system and the power goes down for eight hours and the buses can’t charge before they’re supposed to roll in the morning,” he said. “We’ve got new standards coming our way, and we have to be ready to invest in it and be able to get some recovery.”
When Crane closed the session with the standard “what-keeps-you-up-at-night” question, Fowke had a ready answer: public policy.
“I like to say that with a stroke of the pen, our fortunes can be changed for the better or the worst,” Fowke said. “Natural gas and nuclear may not be popular technologies with all of the environmental communities, but I worry perfection may get in the way of the greater good. Our industry is making a lot of progress, but if we make our product unaffordable, or worse, unreliable, I think the clean-energy transition is going to come to a slowdown or a halt.”
Fowke also lamented the nation’s increasing polarization.
“We don’t listen to each other very well anymore,” he said. “That’s the challenge. The opportunity is we are in the communities. I think through this COVID-19 crisis, we’ve seen our customer satisfaction scores improve. People like … what we’re doing in their backyards. So, I think as an industry, we can really rally and maybe bridge some of this polarization and really show that big business can also come up with big solutions.”
Anderson said his company is watching the upcoming elections closely for their potential impact on the clean-energy transition. “If we get a flip of the presidency and a flip of the Senate, this will be a key near-term priority for both Congress and the president I think.”
