Musical Chairs: Resource Adequacy Slice of Day Regime

Ziad Alaywan Kevin Coffee

An unintended consequence of the transition to an energy supply portfolio dominated by solar has been an oversupply of energy in hours when solar energy is the highest and an undersupply when solar energy is the lowest.   CAISO has termed this phenomenon the “Duck Curve”). The result is that CAISO’s Resource Adequacy Program (RAP) could no longer focus on a single peak hour for its planning.

Fast forward to January 2025 as the CPUC implemented its program called the “Slice of Day” framework (SOD). The effort arose as a response to the 2020 Backout.  The new SOD framework requires a review of supply sufficiency for not just a single hour but for all 24 hours of a monthly peak day.

A more complete explanation of SOD can be found here: https://zglobal.biz/resource-adequacy-slice-of-day/

The SOD framework divides the day into different time periods, or "slices." Load Serving Entities (LSEs) must now ensure they have enough resources available during each of these slices, rather than just focusing on peak demand. This approach aims to address the variability of renewable energy, particularly solar and wind generation that fluctuate throughout the day.

The SOD framework has several benefits because the program will enhance grid stability and better align with renewables integration. On the other hand, SOD has three important shortcomings that I explain below:

1.      Increased planning complexity for LSEs and Generator Owners:

The SOD framework significantly complicates resource planning and procurement. LSEs and generator owners must now account for resource availability across 24 hourly slices, rather than focusing solely on peak periods. This requires more sophisticated (and expensive) forecasting and planning tools.

2.      Higher Costs for Consumers:

The increased complexity and the need to secure flexible resources can lead to higher costs which are passed on to consumers.  Resources that can operate during critical slices are likely to be in high demand, potentially driving up RA market prices.

Resource Adequacy contracts are private bilateral agreements where big players can make deals soonest… for a price.  Describing the impact of RA on consumers, the CALCCA best described the higher cost:

“RA program compliance has become a game of musical chairs.  Several chairs are occupied by the IOUs and more have been grabbed by large out-of-state entities, leaving smaller California LSEs without a chair when the music stops.  Until more new resources come online, the race to find a chair in the game will have detrimental consequences for all consumers.”

“The RA shortfall has driven up prices paid by consumers. RA prices for  resources averaged $3.63 per kilowatt-month in 2019.  Summer 2023 saw individual transactions at prices over $60 per kilowatt-month – the highest for CCAs being $82.94/kW-month.  Often, resources are unavailable at any price and sellers are the only market participants who benefit from this pressure.”

This pattern has continued throughout 2024 and is expected to persist in the years to come. Furthermore, in the traditional RA supply stack, solar resources contribute up to 11 percent of their nameplate capacity toward RA.  Yet based on the calculated exceedance values solar contributes zero to RA supply at 8pm.  A shift to SOD thus eliminates 1,790 MW of RA supply from September 2025 supply stack in the net peak hours resulting in higher cost to consumers.

3.      Challenges to Regulators:

Regulators including the CPUC need to re-evaluate the unnecessary and bogus requirements

·         energy import restrictions under CPUC’s RA program

·         reduced availability of imports to the CPUC-jurisdictional RA market

·         other rules that artificially restrict supply.  

The CALCCA report cited above indicates that in September 2025 and 2026 an estimated supply deficit of 2,642 MW and 1,887 MW, respectively, may occur in extreme weather cases.  

The challenge in meeting RA requirements is exacerbated by rising loads, increasing planning reserve margin requirements, and removing once-through cooling plants from the RA market of resources. Scary scenario!