This student paper was produced for the Energy Policy Practicum (Rosner/Topel, 2021)

Utility-scale renewable adoption and the associated intermittency of those generation assets have increased dependence on reserves to meet NERC/FERC reliability standards. This paper aims to evaluate the net impact of replacing existing and planned spinning reserves with firm, non-intermittent distributed energy resources (“DERs”) in the form of internal combustion engines and lithium-ion battery energy storage systems (“BESS”).

This paper focuses on evaluating the quantity of key emissions and pollutants from relying upon firm capacity DERs versus the current status quo. Specifically, we will compare these DERs against the current non-baseload assets of California’s largest system operator: CAISO.

Our choice to focus on CAISO revolves around CAISO’s reliance on intermittent solar assets as a large portion of their baseload generation. Additionally, California is currently the only U.S. state that does not allow reciprocating areas to operate within its capacity market.

Gross emissions statistics for CO2 and NOx show that the DERs discussed in this paper have a higher emissions per MWhe of energy produced than the current non-baseload resources used by CAISO. However, our analysis brings in three additional factors that are not included in the gross emissions figures: reductions in transmission and distribution losses, elimination of ramping time, and a decrease in the spinning reserve capacity. After taking these factors into consideration under reasonable assumptions, we estimate that net CO2 and NOx emissions of these DERs are in fact lower than that of the current non-baseload capacity assets serving the CAISO market during peak load periods.

This paper also recommends policy actions related to these considerations, including:

  • The ability for balancing authority to rely upon DERs within the contingency reserve while potentially transitioning requirements from spinning to non-spinning.
  • Funding research to evaluate the ability of DERs to improve grid reliability while simultaneously decreasing grid emissions.
  • Implementing tax credit support for firm capacity DERs.
  •  Revamping California’s current approach to DER participation in certain markets, including an analysis of firm capacity DERs vs. emergency only generation in Public Safety Power Shutoffs (“PSPS”).
Areas of Focus: Energy Markets
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Energy Markets
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Electric Power
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Electric Power
As the electric power system faces new pressures and opportunities, EPIC research is working to identify the mix of policies needed to accelerate the global transition to clean, reliable, affordable...
Renewable Energy
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Renewable Energy
Lower technology costs and supportive public policies are driving an increase in renewable energy in markets around the world. EPIC research is assessing the costs, benefits, and efficiency of policies...