California is one step away from keeping dirty fossil fueled backup generation out of demand response - for good

The dangers of inhaling dirty fumes from the combustion of diesel and other fossil fuels are well known. The bulk of this pollution comes from mobile sources like large trucks and ships moving heavy freight. NRDC has led the decades-long crusade to clean up our ports, trucks and fuels in California and other locales across the country.

But what you may not know is that tens of thousands of stationary engines - an estimated 15,000 or so in California alone powered by dirty diesel "no. 2 fuel oil" -- lurk within facilities as common as hospitals, laboratories, data centers and even casinos. The primary intention of these stationary engines is to provide backup power to their on-site host during rare times of imminent or complete electricity grid power failure. These fossil-fueled backup generators, or "BUGs" for short, are located right where we live and work. And most BUGs are typically very old - two to four decades old or more because they're not used very often.

Currently before the State of California Public Utilities Commission is a proposal to adopt a policy prohibiting the use of BUGs in demand response programs. This is a positive step toward ensuring that California's robust set of climate solution strategies remain truly clean and free of fossil fuels. Let's unpack this important milestone.

Why we should care about BUGs location and usage

Beyond using BUGs for their intended purpose as backup power during grid power failures, BUG owners periodically test their BUG's to make sure they will work reliably. The timing and amount of usage to complete periodic testing and other non-specified BUG usage regimes underlie the current problem. During the time the grid is reliably working we don't know when or for what purposes BUG owners are turning them on. And most problematic of all are the periods when electricity grid prices go way up as a result of limited capacity and energy supply to meet periods of "peak" electricity demand, which are often not the same type of grid conditions that signal imminent or actual grid failure. Most often these peak demand days in California (as well as the majority of the contiguous U.S.) occur during the summer and early fall when outdoor temperatures soar and air conditioning demand spikes. Over the years electric utilities have responded by fashioning peak demand response programs that compensate customers to lower their demand for electricity from the grid. In a few jurisdictions there is a subtle but important distinction between "peak" and "emergency" demand response, but in most cases this distinction is not made. It is thus through the peak demand response programs designed to reduce peak electricity demand whereby BUG owners find themselves in a strategically lucrative spot. BUG owners can get paid by their local utility to turn on their BUG(s) to lower their demand for grid electricity even though the grid is not at a point of imminent or actual grid failure. As consumers and human beings in these communities we are dealt a formidable one-two punch to both our wallets and lungs. We're paying extra cash to certain utility customers with BUGs to turn them on and thus worsen our air quality.

A 2013 study that compared criteria pollutant emissions scenarios of BUGs versus peaker plants during times of peak load in the California Bay Area showed that even a miniscule number of BUGs used to meet DR load reductions could result in DR being far dirtier than the peaking resources it is meant to avoid. A typical Bay Area emergency BUG emits as much as

  • 4 times as much CO2
  • 8 times as much PM
  • 12 times as much CO
  • 94 times as much NOX, and
  • 286 times as much SOX

... as a typical natural gas peaker plant in California.

Several weeks ago California Public Utilities Commissioner Catherine Sandoval pointed to these risks that undetected BUGs pose to our public health:

"I would urge this Commission to prevent more fossil-fueled BUGs from participating in demand response and believe that this adoption to clarify that BUGs cannot participate is very important. Just to elaborate for a second on that, part of what we are concerned about is that we don't want to create perverse incentives for people to turn on their generators in order to participate in demand response.

And there's a question in certain urban areas, such as the South Coast Air Quality Management District about whether or not people would be allowed to do so because often the districts within their air quality rules would fine them for running fossil-fueled generators of this type. We certainly do not want to encourage others who have generators for various reasons such as farmers who use generators for their pumps to enroll in DR programs and run their BUGs more and create more pollution. I believe that one of the things that contributes to poor quality of air especially in the Fresno area and the San Joaquin air basin is the number of fossil-fueled generators that we have there including BUGs. We don't want to encourage them to participate in demand response...."

Demand response is advancing as a climate solution strategy; we must keep it clean

The recently signed California SB 350 law aims to boost the state's renewables portfolio standard to get at least 50% of the state's electricity supply from renewable resources by 2030. That will mean California will be getting a lot more of its electricity from solar and wind resources; energy resources with electricity production regimes that flow with natural variations in our climate and daily weather patterns. To help accommodate these new emissions-free resources, California's electricity grid planners, operators and utilities are strategically seeking ways to make the grid and customer energy demand more flexible so that we can use all of this new emissions free energy as productively as possible. Strategies such as better grid coordination and regional electricity markets combined with lowering the need for new energy generation through energy efficiency and enhancing grid flexibility through demand response are all part of the broader solution package that we need to deploy to rapidly decarbonize the grid.

Demand response has been around for many decades and has played an important as a grid emergency resource in California and throughout the U.S. In California a notable success of emergency demand response included the San Diego firestorm in 2007 whereby the local utility, SDG&E and the state's electricity transmission operator, CAISO, called on significant levels of demand response (i.e. customers voluntarily lowered their grid electricity demand) to keep the grid up and running as major segments of electricity grid infrastructure got charred. Customers with BUGs most certainly used them to keep critical functions and equipment up and running while avoiding electricity use from the utility grid. That necessity to rely on customer BUGs to avoid a broader cascading grid failure is appropriate and reasonable.

The grid is rapidly "smartening" with new applications of internet-based communication and real-time energy information devices. These smart grid devices are capable of delivering a whole new echelon of demand response capabilities. We call these new and diverse forms of demand response, "advanced demand response." Advanced demand response is capable of providing grid flexibility in direct symmetrical response to solar and wind production variability and regular fluctuations in electricity demand. Advanced demand response will likely be used much more often - like on a daily basis from millions of potential customers responding through automated "dimmer" controls on things like air conditioners, fans, engines and electric vehicle charging.

If BUGs continue to lurk in our communities undetected, we risk the possibility of seeing their usage go way up - to the detriment of our health - as demand response advances into new markets and roles beyond traditional grid emergency and peak demand scenarios. The California Public Utilities Commission recognizes this risk and we encourage them to take the next step to ensure that BUGs are appropriately monitored and enforced to keep them out of demand response.

About the Authors

Pierre Bull

Policy Analyst, Energy & Transportation program

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