The California ISO saw higher wholesale power prices in 2013 but the costs were still competitive given the escalation in natural gas prices during the year, the ISO said in a report issued April 28.
Lots of new natural gas-fueled generation offset the more than 2,000 MW lost through the retirement of the Edison International (NYSE:EIX) San Onofre, according to the report from the Cal ISO’s Department of Market Monitoring (DMM) 2013 annual report.
While total wholesale electric costs increased by 31% in 2013, after controlling for the 30% in natural gas prices last year, costs rose by 5%, primarily because of implementing the state’s greenhouse gas emissions cap-and-trade program, Cal ISO said in a news release about the report.
The report will be presented to the ISO’s board of governors during the board’s May 28-29 meeting.
Another factor nudging prices higher in 2013 was a decrease in in-state hydro-electric generation, which was down about 40% in the fourth quarter from 2012. Over the course of 2013, prices were highly competitive, averaging very close to what market monitors estimated would result under highly competitive conditions.
About 2,000 MW of peak generating capacity from mostly solar renewable generation was added in 2013. Wind and solar energy interconnected to the ISO grid provided about 8% of system energy, compared to about 5% in 2012.
• Energy from new wind and solar resources is expected to increase at a much higher rate in the next few years as projects to the state’s renewables portfolio standard are built and come on line. This increases the need for flexible and fast ramping resources, such as new combine cycle natural gas, demand response and, in time, energy storage, the report said. The ISO and the California Public Utilities Commission (CPUC) are working together on rules to encourage more flexible resources.
• Over 3,500 MW of new gas-fired generation was added in 2013, mostly as part of the California Public Utilities Commission’s long-term energy procurement process. However, this increase was mostly offset by 2,900 MW of thermal generation retirements in 2013, including both units at the San Onofre Nuclear Generating Station (SONGS).
• The generation gap caused by having less hydro-electric and nuclear generation was filled, in large part, by natural gas. Natural gas generators supplied about 40% of ISO energy in 2013, up from 39% in 2012 and 28% in 2011.
• Imports made up about 28% of electricity used in the ISO area, a slight decrease in percentage terms from 30% in 2012. The state’s energy from imports decreased 7%.
• Nuclear generation was 5% below the reduced levels reached in 2012. This was a result of the extended outages, followed by the permanent retirement of, the San Onofre Nuclear Generating Station units 2 and 3. Overall, nuclear generation provided less than 8% of supply in 2013.
• Geothermal provided approximately 27% of renewable energy in 2013, or about 4% of overall system energy.
• At the end of 2013, prices increased as demand for natural gas increased in response to severe winter conditions both regionally and nationally.
• Because Northern and Southern California are served by different gas producing regions and transportation systems, natural gas prices within California periodically diverge, with prices in Northern California tending to be higher than in Southern California.
Meanwhile annual, average and peak electric load all decreased in 2013. Annual total energy reached 231,800 gigawatt-hours, a 1.3% decrease over 2012. Annual peak load dropped by 3.7% compared to 2012 and was the lowest peak observed in the last 5 years.