Comments on 2023 Local Capacity Requirements Study Criteria, Methodology, and Assumptions

1. Provide a summary of your organization’s comments on the 2023 Local Capacity Requirements Study Criteria, Methodology, and Assumptions:

The California Energy Storage Alliance (CESA) appreciates the ISO’s efforts to conduct thorough studies that ensure the reliability of transmission- and/or generation-constrained Local Reliability Areas (LRAs). As California advances towards an increasingly decarbonized grid, the ISO’s Local Capacity Technical Studies (LCTS) should provide market participants a robust understanding of the capacity outlook in LRAs, and the type and magnitude of preferred resources that can be accommodated in those load pockets. In this context, CESA’s comments can be summarized as follows:

• The ISO should revise its energy margin assumption for storage resources since it does not apply to other technologies.
• The ISO should assess energy storage under several round-trip efficiency (RTE) assumptions.
• The ISO should consider studying an LCTS sensitivity that assesses sufficiency based on the unforced capacity (UCAP) methodology.

2. Provide your organization’s comments on the charging for storage used as local RA resources topic, as described in slides 36-40:

The ISO should revise its energy margin assumption for storage resources since it does not apply to other technologies

In the presentation shared by the ISO ahead of the October 27, 2021 stakeholder meeting, Staff describes its methodological approach to represent energy storage and its charging within the LCTS. One of the key assumptions utilized in this approach includes an hourly energy margin of 5% or 10 MW – the larger of the two – that is applied to both the charging and discharging need.[1] The ISO noted that this was incorporated to represent the lack of perfect foresight as well as the fact that storage is seldom dispatched continuously, instead being dispatched in 5 MW increments, for example.

CESA finds that the reasoning behind the ISO’s assumption does not apply exclusively to energy storage or resources that participate under the non-generator resource (NGR) pathway. As such, it is unclear why the ISO would only take these incremental steps to represent the bidding/dispatch behavior of these assets when the majority of local capacity requirements (LCRs) are met by conventional thermal generators. Thus, CESA requests that the ISO remove this assumption as it does not seem to be applied fairly across fuel types and participation pathways within the LCTS.

The ISO should assess energy storage under several round-trip efficiency (RTE) assumptions

At the stakeholder meeting, staff explained that it will assume a charge/discharge efficiency of 85% in its assessment of energy storage. The ISO argues that this assumption is reasonable as it is “based on the general battery efficiency.”[2] CESA understands that, in the last decade, the vast majority of the energy storage assets deployed within the CAISO’s footprint have been lithium-ion batteries. CESA thus understands the ISO’s decision to use 85% RTE as a starting point for its evaluation of storage assets. While the conclusions derived from these assumptions will provide some insight to market participants, evaluating storage capacity and energy limits under a wide array of RTEs would prove much more valuable, especially considering the growing interest in long duration energy storage (LDES).

In the Integrated Resource Planning (IRP) proceeding, the California Public Utilities Commission (CPUC) has directed jurisdictional load-serving entities (LSEs) to collectively procure at least 1 GW of LDES resources by 2026.[3] This requirement is expected to be met by a variety of technologies with different operational characteristics. To this end, the LCTS has the potential to provide substantial insight into how these solutions can be deployed in local areas, thus minimizing ratepayer costs by meeting both IRP and LCTS requirements. Thus, CESA requests the ISO the potential for energy storage energy and capacity by LRA under several RTE assumptions. Based on CESA’s collaboration with Strategen Consulting,[4] CESA recommends considering 50%, 65%, and 75% RTEs, in addition to 85% as described during the stakeholder meeting.

[1] CAISO, 2023 ISO LCR Study Criteria, Methodology, and Assumptions, at 39.

[2] Ibid, at 39.

[3] See CPUC, Decision (D.) 21-06-035. LDES is defined as a storage resource capable of discharging at its maximum power output for 8 hours or more.

[4] Strategen Consulting, Long Duration Energy Storage for California's Clean, Reliable Grid, December 2020, 28-33. Available at https://static1.squarespace.com/static/5b96538250a54f9cd7751faa/t/5fcf9815caa95a391e73d053/1607440419530/LDES_CA_12.08.2020.pdf

3. Additional comments on the on the 2023 Local Capacity Requirements Study Criteria, Methodology, and Assumptions and October 27 stakeholder call discussion:

The ISO should consider studying an LCTS sensitivity that assesses sufficiency based on the UCAP methodology

Within the Resource Adequacy (RA) Enhancements Initiative, the ISO has developed a substantive record for the modification of the capacity counting methodology to one that internalizes the likelihood of forced outages. This approach, UCAP, has been socialized both in said initiative and the CPUC’s RA proceeding, where it will be considered in the context of framework reforms for Fall 2023. To calculate UCAP, CAISO proposes assessing availability ex post, looking at the top 20% of hours with the tightest supply conditions.[1] Preliminary data shows that UCAP would represent a significant reduction in capacity contributions for natural gas generators, with weighted seasonal availability factors of about 87.5% during peak months.[2] Since the UCAP framework is actively being considered and could be adopted for the 2024 RA Year, CESA requests the ISO evaluates a sensitivity case in which it counts existing capacity and communicates LCRs in terms of UCAP, not NQC. This is timely as it will provide stakeholders with a clear panorama of the resource deficiency associated with solely relying on existing thermal generation.

[1] CAISO, Day 1 Presentation of the RA Enhancements Draft Final Proposal and Sixth Revised Straw Proposal, January 2021, at 40. Available at http://www.caiso.com/InitiativeDocuments/Day1Presentation-ResourceAdequacyEnhancements-DraftFinalPropsoal-SixthRevisedStrawProposal.pdf

[2] Ibid, at 84.

1. Provide a summary of your organization’s comments on the 2023 Local Capacity Requirements Study Criteria, Methodology, and Assumptions:

For each area and subarea, SCE requests the CAISO clearly specify local transmission serving capabilities and hourly local capacity requirements in terms of numerical values.  Furthermore, the portfolio dispatch of available resources assumed within the studies to meet hourly local capacity requirements should be made available to better understand how resources are expected to collectively follow the load curve and meet local reliability needs.  Additional details can be found in the response to Question 3.

2. Provide your organization’s comments on the charging for storage used as local RA resources topic, as described in slides 36-40:

Hourly Energy Storage Margin Assumption

On slide 39, it states that for energy storage resources an hourly energy margin of 5% or 10 MW, the larger of the two, is applied to both charging and discharging need.  SCE seeks clarification in how this assumption is applied by providing the following example below.  

For storage charging hours, the study will assume storage can only charge up to 95% (a 5% margin) of the available charging capacity if available charging capacity exceeds 10 MW.   Available charging capacity is the absolute value of the negative local capacity (LC) need shown in the table below.  If available charging capacity is less than 10 MW, charging in that hour is not assumed.   For discharging hours, storage must output the larger of either 10 MW or 105% of the local capacity need.  While the below example excludes any local RA non-storage resources, available generation when dispatched can increase the total local load serving capability, reduce the amount of storage discharge required, and increase energy available for storage charging.  Therefore, it is expected that the 5% or 10 MW hourly energy storage margins would be applied after transmission and generation load serving capabilities are calculated.  Please confirm if this example accurately captures the study assumption.

[1] “Local Capacity Need” = “Load” minus “Txn Capability” with negative values representing available capacity to charge storage and positive values representing the need for storage to discharge to meet the need.

SCE encourages the assessment of energy charging capacity to also incorporate distribution system constraints, which may be more restrictive than transmission constraints.

Defining Energy Storage Planning Methodology and Assumptions

SCE supports including slides 36-41 and any additional information describing CAISO's energy storage assessment methodology and planning assumptions either in the 2023 LCR Study Manual or a separate whitepaper as mentioned during the stakeholder meeting.

3. Additional comments on the on the 2023 Local Capacity Requirements Study Criteria, Methodology, and Assumptions and October 27 stakeholder call discussion:

Specifying Local Transmission and Resource Load Serving Capabilities

SCE believes clear specification of both transmission and resource capabilities is necessary to define needs and procure resources with the proper attributes, especially in resource-constrained areas and subareas.  As stated on slide 38, local load serving capability consists of (1) transmission load serving capability and (2) local generation load serving capability.  SCE recommends that CAISO explicitly include the following in the LCR reports:

1. 1. The transmission load serving capability limit(s) under the worst contingency condition without the support of local generation (in MW).  While this is available to some extent in prior reports, the capability limit is currently shown as a curve rather than an actual MW value.  Without specifying a numerical value, the actual limits are subject to interpretation.
   2. The assumed hourly dispatch of the local generation and storage required to serve the load.  In other words, the hourly dispatch of existing and upcoming resources assumed in the studies to meet the area under the curve. 
       

Specifying Hourly Local Capacity Requirements

In transitioning the local supply fleet to more use-limited resources, hourly capacity requirements should be specified in CAISO’s studies to clearly guide the procurement of local resource portfolios with appropriate attributes.  From a procurement perspective, it has been challenging to interpret the load shapes included in the LCR reports to determine hourly local capacity requirements.  To avoid potential misinterpretation, SCE recommends specifying the hourly capacity requirements at least for the “duration of LC need” as illustrated below from slide 37 for each area and subarea.  

Making Study Materials Available

For all study years, SCE requests that Appendix A: Physical Resource List Used for the LCR Studies (in Excel format) be made publicly available.  Furthermore, SCE supports CAISO publishing the hourly area and subarea load shapes (in Excel format) when appropriate, including calculated transmission capability and generation dispatch study assumptions.  These materials will facilitate any subsequent analysis necessary to review and confirm procured resource portfolios meet identified reliability requirements.

1. Provide a summary of your organization’s comments on the 2023 Local Capacity Requirements Study Criteria, Methodology, and Assumptions:

Vistra Corp. respectfully submits these comments in response to the CAISO’s 2023 Local Capacity Requirements Draft Study Manual posted on October 20, 2021 and discussed at a public stakeholder call on October 27, 2020. We appreciate the CAISO detailing its methodology for the 2022 Local Capacity Requirement (“LCR”) studies. Please see below for specific areas of the draft study manual and presentation that Vistra requests the CAISO provide clarity or confirmation.

[1] 2023 Local Capacity Area Technical Study, Draft, CAISO, October 20, 2021, Page 7, http://www.caiso.com/InitiativeDocuments/2023LocalCapacityRequirementsDraftStudyManual.pdf

[2] 2023 ISO LCR Study Criteria, Methodology, and Assumptions, CAISO, October 27, 2021, Slide 35, http://www.caiso.com/InitiativeDocuments/Presentation-2023LocalCapacityTechnicalStudyCriteriaMethodologyandAssumptions.pdf

[3] Id at Slide 39.

[4] Id at Slide 39.

[5] Id at Slide 39.

[6] Id at Slide 40.

2. Provide your organization’s comments on the charging for storage used as local RA resources topic, as described in slides 36-40:

See above.

3. Additional comments on the on the 2023 Local Capacity Requirements Study Criteria, Methodology, and Assumptions and October 27 stakeholder call discussion:

None currently.