Feeling the heat: analyzing California ISO's near-record peak day

What did we learn from it and should it change the way we think about renewable energy goals?

On September 1, 2017, an extreme late-summer heat wave hit California and much of the west coast. What did we learn from it and should it change the way we think about renewable energy goals?

California Greenhouse Gas ("GHG") emissions have fallen at a rapid pace since 2007, with 2015 emissions about 10% below peak levels. Along with structural macroeconomic changes since the great recession, the power sector (roughly 20% of total GHG emissions) has been a major driver of reductions thanks to rapid growth in wind and solar generation on top of significant energy efficiency gains.

In fact, power sector emissions are almost 30% lower than peak 2008 levels. This achievement in only seven years represents about 45% of the total reduction required to meet California's 2030 climate goals, with 15 years to go. However, outside of power, California's other sectors have not done as well at reducing GHG emissions. It is therefore likely that the power sector will need to continue contributing more than its relative share of reductions going forward.

With continuing cost reductions for solar, wind, and now energy storage technologies, California has progressively increased its renewable energy mandates over time. State leaders were even considering 100% renewables by 2045, but that legislation (Senate Bill 100) is on hold, for now. Such an aggressive goal would present renewable-integration challenges not faced by the state so far. As such, reviewing what happened during past peak demand days when the power grid was stressed can help us understand future challenges.

Here, we take a detailed look at the recent record heat wave in California and the near-record peak power demand that resulted. We also look at the role renewables and conventional generation assets played, and what that can ultimately tell us about meeting future renewables goals.


On September 1 2017, an extreme late-summer heat wave hit California and much of the west coast. The heat wave included normally temperate coastal cities in addition to inland areas. For example, San Francisco set an all-time high temperature record of 106 degrees, beating the old record by 3 degrees. The table below shows some of the high temperatures from different cities in California and neighboring states. In spite of this, the California ISO ("CAISO") peak demand for the day still did not exceed the record peak of 50,270 MW set on July 24, 2006.

Daily high temperatures are select locations (°F)

Source: National Weather Service

Part 1: A Detailed look at the CAISO system on September 1, 2017

We'll start by examining the September 1, 2017 demand and supply dynamics in detail, and look at the performance of traditional generators and renewable technologies.

Renewables and energy efficiency impacts on peak demand

There are several reasons that the CAISO peak demand record has stood for over 11 years. Energy efficiency is the primary driver, with the transformation in lighting from incandescent bulbs to CFLs/LEDs being the largest efficiency gain. Not only is lighting demand 80% – 90% lower per bulb, but the new bulbs give off almost 80% less heat, which then no longer needs to be cooled by air conditioning on a hot summer day. Other end-use efficiency improvements and California building efficiency standards have lowered demand as well. However, even with these energy efficiency gains, CAISO would have set a new peak on September 1, 2017 were it not for the Distributed/Behind-the-Meter Solar ("DG"/"BTM" aka rooftop solar). The DG solar added to the state since 2006 has effectively reduced wholesale grid demand.

The figure below shows the CAISO actual 24-hour loads and utility-scale generation by fuel type for September 1, 2017. The highest average hourly demand (System Peak) of 49,898 MW occurred during Hour 17 (4 – 5 p.m.). This is only 372 MW short of the all-time record. Although not reported directly by the CAISO, the CAISO grid now includes over 5,000 MW of installed DG solar capacity. Wood Mackenzie estimated how much DG solar was generating each hour on September 1, 2017 (also shown in the figure below). Without it, the demand in Hour 16 (3 – 4 p.m.) would have been about 3,700 MW higher, setting a new CAISO all-time peak of more than 53,000 MW.

CAISO 9/1/2017 actual hourly generation and demand

Source: CAISO, Wood Mackenzie

Changing reliability metrics: from system peak to net peak

The above figure also highlights the important distinction between reported hourly system demand and net demand, a concept covered in past analyses published by Wood Mackenzie. Because wind and solar resources are intermittent and non-dispatchable (other than when they are curtailed), their generation reduces the net demand that must be served by other generating resources. In addition, since their output varies, the highest net demand hour ("net peak") often is not during the same hour as the system peak. This was true on September 1, 2017, when CAISO's 49,898 MW System Peak demand occurred in Hour 17. During that hour, solar and wind together were producing 7,526 MW, leaving a net demand of 42,372 MW. Three hours later, during Hour 20 (7 – 8 p.m.), the CAISO system demand was 46,977 MW (2,921 MW lower than Hour 17), but combined solar and wind had fallen to 276 MW, resulting in a net peak of 46,701 MW. This is 4,329 MW higher than the net demand in Hour 17, and demonstrates that system planners now must analyze system reliability during the highest net peak hours in addition to system peak hours. The challenge is to calculate an accurate reliability factor (Net Qualifying Capacity or "NQC") for each different generator technology.

Wind contribution to reliability

The same large high-pressure system across the west that caused the September 1, 2017 heat wave also resulted in very low wind generation. Consequently, the 5,970 MW of installed CAISO wind resources produced just 366 MW (6.1% of installed wind capacity) during the system peak demand Hour 17, and 236 MW (4.0%) during the net peak Hour 20. Over the entire day, CAISO wind averaged a 9.4% capacity factor. For reference, CAISO currently assigns wind resources a 2017 NQC of 18% for August and 11% for September.

Wind generation also struggled in the Pacific Northwest. In the Bonneville Power Administration ("BPA") balancing authority north of CAISO, approximately 4,782 MW of wind capacity only produced 5 MW (0.1%) during Hour 17 and 35 MW (0.7%) during Hour 20. Across the wider Northwest Power Pool ("NWPP") area (Oregon, Washington, Montana, Idaho, Nevada, British Columbia, Alberta, parts of Wyoming) there is almost 11,500 MW of wind capacity. NWPP wind generation was 1,532 MW (13%) during Hour 17 and 1,405 MW (12%) during Hour 20. This suggests that California will not always be able to count on significant imports of renewable energy from other states to offset low in-state renewable generation.

Solar contribution to reliability

CAISO has about 9,983 MW of in-state utility-scale solar, and it performed as one would expect (about 34.5% capacity factor for the day) on September 1, 2017. Because it was late in the summer (with the sun lower in the horizon), maximum solar generation reached 9,192 MW during Hour 14 (1 – 2 p.m.). However, this fell to 7,160 MW (71.7%) for the system peak demand Hour 17, and solar was producing 40 MW (0.4%) during net peak Hour 20. This compares to 80% NQC that CAISO assigns to solar in August and 75% NQC in September. The NQC value CAISO uses seems reasonable based upon system peak hour performance, but appears to be much too high when considering the net peak hours.

Daily net peak now occurs on or after the final hour of solar output

Returning to the net demand concept, one key takeaway from the September 1, 2017 data is that the net peak in Hour 20 was only about 3,200 MW lower than the system peak in Hour 17. We can thank solar generation for most of that reduction. However, with CAISO's combined wind and solar nameplate capacity totaling roughly 16,000 MW, every megawatt of wind and solar capacity only reduced the net peak by about 0.2 megawatts (20%) on average. More importantly, because the CAISO solar capacity factor in Hour 20 was only 0.4%, the incremental net peak reduction from any new solar capacity is only 0.4% of nameplate capacity. Thus, Hour 20 will remain CAISO's Net Peak hour for the foreseeable future.

The changing role of imports and traditional generation sources

Not surprisingly, the September 1, 2017, net peak Hour 20 also had the highest generation value of the day for both imports (11,146 MW) and gas-fired generation (26,180 MW). Since CAISO has about 33,000 MW of gas-fired generating capacity, this means that almost 7,000 MW of that capacity did not generate energy during the net peak demand hour of 2017. Although some of that unused capacity may have been providing operating reserves, CAISO obviously has excess generating capacity for the time being. However, we expect that almost 7,000 MW of gas-fired capacity will retire in CAISO between now and 2021, wiping out whatever surplus currently exists. For adequate reliability margins, CAISO will need new generating capacity or demand response by 2021 even if there is no load growth. This is in addition to any wind and/or solar capacity added between now and 2021, since neither of those technologies will meaningfully reduce net peak Hour 20 on a replay of September 1, 2017, no matter how much is constructed.

New state-mandated energy storage capacity and approved gas-fired generators will help meet some of the 2021 CAISO capacity requirement. California regulators are also revisiting some of the previously approved gas-fired generators to see if an alternative combination of new renewables, energy storage, and demand response are better options. Beyond 2021, CAISO will require additional new capacity. The Diablo Canyon nuclear plant's 2,268 MW of capacity is scheduled to retire by 2026. In addition, many out-of-state baseload coal resources slated to retire over the next 10 years backstop a non-trivial percentage of CAISO imports, either directly or indirectly. Once those retire, neighboring systems will have less surplus energy and capacity to sell into CAISO.

Part 2: Can September 1, 2017, provide clues about a 100% renewables future?

Even as the need for new capacity is growing, California will be continuing its transformation to a lower carbon renewable future. Extreme days like September 1, 2017 suggest there could be some challenges. Although "average" yearly renewable production has grown considerably over the past five years, September 1, 2017 only saw in-state renewables (wind, solar, hydro, geothermal, biomass, etc.) serving 37% of the demand across the day.


CAISO demand and supply dynamics, focusing on the hourly performance of traditional generators and renewable technologies

Feeling the heat: Analyzing the California ISO's near-record peak day and implications for renewable energy goals

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