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NewsData's "People in Power" is an exciting new biweekly podcast that explores issues in the energy industry, featuring expert guests from a wide range of backgrounds. Hosted by veteran energy journalists Jason Fordney and Abigail Sawyer of California Energy Markets and including appearances by writers from sister publication Clearing Up, People in Power will explore trends such as development of a Western wholesale electricity trading market, the transition to a more electrified world of new infrastructure and transportation, renewables integration and reliability, wildfire response and mitigation, and many other topics. "People in Power" draws from an unprecedented pool of expertise and insight in a way never seen before! It's available on all major podcast platforms as well as at www.newsdata.com.
Intro:
Welcome to NewsData's Energy West, a podcast about the energy
industry today and where it's going tomorrow.
Dan Catchpole:
Hello, I'm Dan Catchpole, reporter with NewsData's Clearing Up.
And with me is my co-host and editor of California Energy
Markets, Jason Fordney.
We're here with some of our top stories.
Jason, how are you doing, and what do you have for us?
Jason Fordney:
Well, great, Dan, for this special late afternoon taping.
It's cool down here in California.
We got some rain here in NorCal, so starting to feel the change
of the seasons.
And a big topic for us, CAISO regionalization, that would be
regionalization of the California Independent System Operator.
I'll talk about a little bit about my story about CAISO
launching its latest study process for that driven by some state
legislation. Then I was going to talk about CAISO's Department
of Market Monitoring discussing second quarter
report and what's happening with energy prices, mainly how gas
prices are driving electricity prices up.
And then we'll talk a little bit about offshore wind and the
Interior Department's new auction plan
for sites off the central and northern coasts.
Dan Catchpole:
All right. From the Northwest, I'll round that out with federal
funding for battery materials supply chain
. And Bonneville Power Administration saying that demand response
is now an affordable,
financially competitive resource, along with energy efficiency
and some other standard, least cost options.
Jason Fordney:
All right.
Dan Catchpole:
So, Jason, regionalization.
Jason Fordney:
Yes, we've talked about this a lot recently, including our
upcoming long-form podcast on this topic, or Western Regional
Transmission Organization, I should say.
But CAISO last week launched its new study process to study
regionalization.
This was driven by Assembly Concurrent Resolution 188 from
Assemblyman Chris Holden that directed CAISO to
study the creation of a Western regional transmission
organization.
And Mr.
Holden talked about ways to enhance reliability with the influx
of new renewables and retirement of
coal-fired resources around the West.
And this has been done before.
It was done through 2015 legislation and CAISO put out a report
in July
2016. They'll be updating that report now with the help of the
National Renewable Energy Laboratory.
And yeah, this looks to be a pretty involved process done with a
lot of other participants.
Arizona Corporation Commission, Colorado Public Utilities
Commission, Colorado, Oregon legislatures, their balancing
authorities in the West.
So they'll be looking at.
..
Dan Catchpole:
Long list.
Jason Fordney:
Oh, yes. And they'll be looking at.
Yeah, just the benefits.
I think they found, you know, pretty substantial benefits in
previous studies, and as CAISO just
continues to be a topic.
Of course, there was legislation in 2018 that didn't pass on
regionalization for reasons that we've discussed before.
Dan Catchpole:
Yeah. So this wouldn't, they're not studying actually moving
forward with regionalization.
They're just looking at the value proposition of
regionalization.
Jason Fordney:
Yeah. And really looking at a bunch of other studies that have
been done, there's about 30 publicly available
reports, and they're looking to trim some of those, maybe add
some of those.
But the 25th, the 2016 report from CAISO found customers benefit
by 1.5 billion.
It would reduce greenhouse gas emissions and create 20,000 jobs.
I think that's the kind of details and information that they're
looking for on this one.
Dan Catchpole:
Assemblyman Holden out there carrying the banner of
regionalization once again.
He was the one who pushed that 2018 legislation that failed.
Jason Fordney:
Yes.
Dan Catchpole:
The stalwart advocate and the winds are changing.
So, those same winds might pick up the banner that he is
carrying.
So other winds that are changing up here in central Washington,
the batteries materials supply chain is getting a whole bunch of
money from the federal government thanks to the Inflation
Reduction Act.
And two companies, Scylla and Group 14 Technologies, are going
to be some of the first recipients among, actually some of the
very few recipients west of the Mississippi.
But these two companies, they're located in central Washington.
They're setting up facilities in central Washington, and they
each stand to get $100 million in federal funding to develop new
large scale production facilities in central Washington and
Moses Lake.
And it's part of a tranche of $2.8 billion, which is the first
of 7 billion provided through the
infrastructure law.
I misspoke there. I apologize.
It's the bipartisan infrastructure law, not the Inflation
Reduction Reduction Act.
The whole funding package here is to build out the battery
materials supply chain as has been expressed by the federal
government. This is a part of a federal strategy and to build
that out and build a robust supply chain here in the US and
not be captive to foreign suppliers of battery materials and
battery
production, i.e.
China.
Jason Fordney:
Sure. I'm looking at a rendering here.
Lots of solar panels, and it looks like they're developing,
they'll produce a silicone-based powder designed to replace
graphite in batteries.
Dan Catchpole:
Yeah, it's going to make.
They're hoping it'll make batteries 20% more energy dense
without actually doing any other changes to it just by using
their materials.
So potentially some really big payoffs if their technology
delivers, like how they hope.
Jason Fordney:
And would replace graphite.
I assume the Graphite Producers Association was against that one
.
Anyhow...
Dan Catchpole:
Didn't get their press release.
Jason Fordney:
Okay. Back in California, the Department of Market Monitoring is
out with its second quarter '22 report
discussing how energy prices continue the trend from last year.
In the second quarter, natural gas prices doubled in some
regions, power prices skyrocketed.
Day ahead electricity prices rose by about 70%, 72%, compared
with the second quarter of 2021.
That's according to DMM.
Last year, wholesale power costs in the ISO rose by 33% compared
with the previous year.
The higher frequency of price spikes this quarter was due to
higher fuel costs, increased congestion, which is a big topic and
increased frequency of high demand intervals.
CAISO, of course, had above average temperatures in May and June
as well as later in the year.
And as we know, electricity prices in western states usually
follow gas prices because gas-fired units are the marginal source
of generation in CAISO and other regional markets.
I only know this because DMM told me.
So, yeah, especially in Southern California where SoCal Citygate
gas prices often affect overall
system prices because there's a large number of gas plants down
there in the south which can set system prices, and if there's no
congestion. So the price at SoCal Citygate was at 90,
96%, averaging $7.59.
That's reporting from our freelancer Rory Sweeney, who has come
on board recently and doing some good stuff for us.
But you can find that report on the CAISO website.
Dan Catchpole:
Yeah, it's an interesting chart that's here accompanying the
story, showing a real upward, I mean, it's spiky, but the clear
upward trend since 2022, which coincides with the rising natural
gas or coincides with the rising
price of natural gas.
I'd be curious to see what this would look like if you adjust it
for natural gas price?
Jason Fordney:
Yeah, I think.
Dan Catchpole:
Kind of like with inflation.
Jason Fordney:
Right? I think DMM does that, but I don't have that right in
front of me.
Dan Catchpole:
I'll have to go check that out.
Jason Fordney:
So, tune in next week, folks.
I will look that up.
They do discuss that from time to time.
I, of course, didn't write this story, but I can check the
report, see what I can find out.
Dan Catchpole:
Well, speaking of different resources, demand response is getting
a new look from BPA, Bonneville
Power Administration, in their 2022 Resource Adequacy
Assessment.
Most of the assessment pretty much looks like any other one in
all the years that they've done them.
But one significant difference.
Demand response joins energy efficiency and market purchases in
the least cost portfolio of resources that Bonneville could lean
on during periods of high demand and low water conditions.
This is a big step forward for demand response, which heretofore
has kind of been like a like a distant cousin showing up at
a family get together.
We're like, who's that guy over there?
I don't see him very often, and he's kind of small, like.
Jason Fordney:
A little weird.
Dan Catchpole:
What's his name name? Yeah, it's something that people talk
about, but you see very little of, especially in the
Northwest, because we have cheap hydro here.
And it just demand response is not as, there's not as much need
for it economically.
It just doesn't, it's not as financially viable.
There's not the business case for it.
It's really what I'm trying to get at.
So this is another indication of how much things are changing
and how much the economics of the industry are changing.
A small change in a big report, but a significant one for a
bellwether of where things are going
perhaps or not.
I'm just going to hand you that.
Jason Fordney:
It looks like 213 megawatts if needed during summer peak in 2026,
climbing to 488 megawatts by
2033. Not huge numbers, but good that BPA is looking at that, I
suppose.
Dan Catchpole:
I mean, those numbers, though, are not far off from what BPA's,
actually, those
are bigger than what BPA's energy efficiency goals are.
Jason Fordney:
I see that. Yeah.
Good report. Was that your story?
Dan Catchpole:
That was not. That was my editor, Steve Ernst.
Jason Fordney:
Excellent. Well, we were talking about winds earlier and getting
some attention.
Last week was Interior Department's plan to auction wind leases
on December 6th off California's central and northern coasts.
These would be the first federal offshore wind leases in West
Coast waters.
The sale was announced October 18th.
We'll cover five areas totaling 373,000 acres in the Morro Bay
and Humboldt Wind energy
areas. This could support up to 4.5 gigawatts of wind capacity
and more than 15,879
gigawatt hours of energy per year.
That's according to the Bureau of Ocean Energy Management.
Three of the leased areas are off the Central Coast and two off
the north coast.
It be a single auction at which acreage in all the lease areas
will be offered there.
They range from about 20 to 26 miles offshore.
So some movement, as we've seen with the Biden administration
ramping up that that offshore wind, at least in
theory, as we know it's a coast fraught with rocky, rocky waters
and
storms. And I mean that in both sense, metaphorical and
physical.
You know, you're going to have some pushback on projects like
this.
But here we have BOEM moving forward as.
Dan Catchpole:
BOEM, the increasingly important Bureau of Ocean Energy
Management.
Jason Fordney:
Yeah. When you're doing West Coast turbines, they've got to be
floating turbines because of the way the geology here, the
undersea geology.
So manufacturing capacity for the mooring cables required for
projects of this size does not currently exist domestically,
according to BOEM.
But you have some movement forward and perhaps we'll see some
turbines off the West Coast here at some point.
Dan Catchpole:
At some point.
Jason Fordney:
At some point.
Dan Catchpole:
I mean, things are moving along, I think, perhaps faster than
some people expected on the East Coast.
Jason Fordney:
Yeah, I would say so.
Dan Catchpole:
You know, that said.
They are, to your point about mooring cables, they're building on
the continental shelf.
So much shallower water versus what you would have to develop in
out here.
Jason Fordney:
Yeah, that's quite an engineering challenge.
And these are not small pieces of equipment.
It's going to be a lot of development and a lot of public
outreach, obviously,
BOEM moving forward.
Dan Catchpole:
Well, last thing from the Northwest, and it's Northwest adjacent.
The Wyoming Public Service Commission is holding a public
hearing today and tomorrow on October
24th and 25th, depending on when you listen to this dear
listener.
On Pacific Corp's proposal to retrofit three of its coal-fired
plants with carbon
capture utilization and storage technology, CCUS technology.
So they're going to be getting underway with that.
And it's early on, so I don't want to take too much time on
this, but this would be one of the bigger carbon
capture projects if it proceeds.
So certainly a lot of people will be, including us, we'll be
watching the public hearing and we will have more news on that
when and if news happens.
So otherwise, that's all for me.
Dan Catchpole, thank you for listening.
Please rate and review this podcast wherever you listen.
Energy West is edited and produced by our colleagues at Pioneer
Utility Resources and Lucky Sound Studio.
You can find me on Twitter.
I'm @DCatchpole and Clearing Up is @CUNewsData.
Jason Fordney:
I'm also on Twitter @FordneyEnergy.
You can read more of our content at NewsData.com.
Thanks for listening. We'll see you back here next week.
Outro:
You've been listening to NewsData's Energy West, a podcast about
the energy industry today and where it's going
tomorrow.