CAISO Draft Plan Signals Shift to Proactive Transmission Planning

April 14, 2023

Energy Law

In its Draft 2022–2023 Transmission Plan, the California Independent System Operator (CAISO) introduces a shift to more “strategic and proactive” transmission planning, with a goal of aligning the sites of future new generation and storage resources with the locations of planned new transmission projects. Past Transmission Plans included a consideration of the transmission needs of existing and approved generation resources. The CAISO’s new approach is designed to attract future generation development in areas with expanded transmission capability.

The Draft Plan, issued on April 3, is the result of a two-year planning process that identifies the transmission additions and upgrades needed to maintain reliability and achieve California’s clean-energy policy goals over the next ten years. The Draft Plan authorizes 24 reliability-driven projects and 22 policy-driven projects, with a total estimated cost of $9.3 billion.

The Draft Plan also reflects closer coordination by the state’s primary energy planning agencies in an effort to “tighten the linkages between resource and transmission planning activities, interconnection processes and resource procurement.” In the process followed in recent planning cycles, the California Energy Commission (CEC) forecasts electricity demand for the 10-year forecast period. The California Public Utilities Commission (CPUC) develops a portfolio of the generating and storage resources required to meet the forecasted demand. The CAISO then identifies the transmission projects needed to accommodate the new resources.

The Draft Plan takes an additional step for this planning cycle. In response to forecasts of significantly higher levels of electricity demand, the need for California to add over 40,000 megawatts (MW) of new supply resources in the next 10 years, and problems resulting from an unprecedented number of requests to interconnect projects to the electric transmission grid, the Draft Plan identifies 14 specific geographic zones where it makes economic and operational sense to add transmission upgrades and facilities. The locations and capabilities of these targeted transmission zones will be communicated to generating and storage project developers, and the CPUC will encourage utilities and other load-serving entities to procure power from new resources located in those zones. The CAISO will also give priority to interconnection requests for generating and storage resources located in these zones.

By better matching new resource development with planned transmission upgrades, the CAISO hopes to avoid the delays and other problems that resulted from the swarm of interconnection requests it received in April 2021, during the open window for Cluster 14 of the CAISO’s generator interconnection process. Of the 373 interconnection requests received for Cluster 14, 205 projects are proceeding to more detailed Phase 2 studies; both numbers are far higher than for previous clusters. Cluster 15, which opened on April 3, could result in a similar number of requests. The sheer number of requests to be analyzed and studied has slowed down the interconnection process and jeopardized projects’ ability to meet contractual deadlines and commitments. By defining targeted transmission zones, encouraging developers to site new generating and storage resources in those zones, and giving interconnection priority to projects in those zones, the CAISO hopes to ensure that the resources most needed to meet reliability and policy goals will come online without excessive delays or unexpected costs.

The transmission projects that the Draft Plan proposes will also improve the ability of new generating and storage resources to obtain “deliverability” status. Deliverability is required to establish a project’s Resource Adequacy capacity, which reflects the project’s potential contribution during times when the electric grid is under stress. Sales of Resource Adequacy capacity provide revenues that are a key component of many projects’ business plans. In recent years, frustrated developers have faced unexpectedly high costs of the network upgrades required to establish deliverability and lengthy delays in construction of the necessary upgrades. In the Draft Plan, the CAISO pledges to provide more public information about where resources can connect to the grid with minimal or no network upgrades.

The Draft Plan also identifies four 500-kV regional transmission lines and related facilities that will be the subjects of competitive solicitations the CAISO will conduct to select the project sponsor. These major projects, all located in Southern California, will ease congestion and reduce deliverability constraints in the area.

The Draft Transmission Plan is scheduled to go before the CAISO Board of Governors in May.