Significant Transmission Additions and Upgrades Identified in the California Grid Operator’s 20-Year Transmission Outlook

February 18, 2022

Energy Law

On January 31, 2022, the California Independent System Operator (CAISO) issued its first ever 20-year draft transmission outlook, which identifies $30.5 billion in long-term infrastructure upgrades and build-outs needed to meet the State’s goal of ensuring all electric retail sales are from carbon-free resources by 2045. The outlook, developed in collaboration with the California Public Utilities Commission (CPUC) and the California Energy Commission (CEC), evaluates diverse generating resources, examines land-use patterns and transmission alternatives, and provides a roadmap to help enable and accelerate the integration of new renewable energy and energy storage resources onto the grid. The 20-year outlook complements the CAISO’s annual Transmission Plan, which authorizes specific transmission infrastructure projects based on a 10-year planning horizon.

California’s transition to the future of its energy supply and infrastructure will be challenging. In addition to Senate Bill 100’s (2018) carbon-free mandate for 2045, the continuing electrification of transportation and other industries, increasing customer demand for clean energy, and upcoming retirement of the Diablo Canyon Nuclear Power Plant and 15,000 megawatts (MW) of natural gas-fired generation call for a significant increase in new zero-carbon resources. The CAISO’s 2020–2021 Transmission Plan called for approximately 1,000 MW of new generating and storage capacity per year over the next 10 years. The draft 2021–2022 Transmission Plan, also released on January 31, 2022, forecasts generation and storage increases of 2,700 MW per year, and current drafts of the 2022–2023 plan call for over 4,000 MW per year of new generation and storage over the coming decade. The 20-year transmission outlook assumes an even greater growth in generation and storage capacity, an average of over 6,000 MW annually, over the next 20 years. The existing transmission system must be upgraded to accommodate the increasing generating capacity. The transmission build-out will include high-voltage lines that cover significant distances to access out-of-state resources, as well as major generation pockets, including offshore wind and geothermal resources located inside the state.

To identify the transmission improvements needed to accomplish the State’s 2045 goals, the CAISO used a “starting point” resource development scenario that calls for 120.8 gigawatts (GW) of zero-carbon projects to come online by 2040: 37 GW of battery energy storage; 4 GW of long-duration (e.g., pumped hydroelectric) storage; over 53 GW of utility scale solar; over 2 GW of geothermal resources; and over 24 GW of wind generation split between out-of-state and in-state resources, with the bulk of the in-state resources consisting of offshore wind.

The CAISO’s outlook estimates a cost of $8.11 billion for developing transmission to integrate offshore wind, a renewable energy resource currently in the early stages of development in California. The starting point scenario identified 10,000 MW of offshore wind in 2040, with 6,000 MW in the Diablo Canyon and Morro Bay areas in the central coast and 4,000 MW in the Del Norte, Humboldt, and Cape Mendocino areas in the north coast of California. The CAISO noted that, while the central coast offshore wind can be interconnected to the existing 500 kilovolt (kV) system in the Diablo Canyon and Morro Bay areas, the transmission system in the north coast area is predominantly 115 kV and 60 kV and will require significant 500 kV and high-voltage direct current (HVDC) facilities to interconnect to the existing 500 kV system. To connect this level of offshore wind generation, the CAISO identified the need for two 500 kV alternating current (AC) lines connecting to the Fern Road 500 kV substation and a HVDC line to the Collinsville 500/230 kV substation, as well as additional transmission to interconnect the 500 kV AC and HVDC systems to each other and to the offshore wind farms in the two wind development areas. The outlook assumed that the first 2,000 MW would be in the Humboldt area, and that these additions would be required to connect new resources in either the Del Norte or Cape Mendocino areas, depending on which area gets developed.

The draft outlook offers a high-level analysis to identify the types of resources that might be required for future renewables while maintaining the reliability of the grid. The draft outlook is subject to change based on stakeholder input and will be finalized in March 2022.