How PG&E got creative in overcoming capacity limits

Building permitting delays are a constant complaint among developers, particularly in housing-strapped parts of California. And once those buildings are finished, they often face another snag: getting hooked up to the grid. 

Long queues for power have cost San Francisco almost $35 million, partly because of a transformer shortage. Last year, California state senator Scott Wiener introduced a bill that would have forced utilities to connect new residential and commercial developments to the grid promptly after they’re permitted — or pay fines. The bill failed.

Meanwhile, many are frustrated by long interconnection waits, particularly in some rural parts of the state. In Northern California’s Humboldt County, transmission capacity limits and load growth have created severe bottlenecks for developers. In 2022, Pacific Gas & Electric (PG&E) said it could take a decade to build enough capacity to meet demand for new housing and commercial facilities, pointing to an uptick in energy demands from the cannabis industry as one stressor on the region’s grid.

But PG&E eventually landed on a creative solution to capacity limits in Humboldt County, which it traced to a constrained 49-mile distribution line in the southern part of the county. 

“We needed to find some innovative solutions to meet customer needs on the timeline that they need. The old way would have been a $90 million upgrade,” explained Heather Rock, senior director of strategy at PG&E, on the With Great Power podcast. But in this case, the utility’s innovation team “took a hard look and thought about things in a different, and I'd say in a breakthrough, way,” she said.

Rather than reconductoring the line, PG&E will install three Tesla Megapacks, modified for what it calls a “semi-temporary mobile deployment,” in a facility near the end of the 49-mile circuit that it normally uses for backup generation. 

“If we just install these batteries, then we're going to manage the voltage issue, and a $90 million project quickly became a $10 million project,” said Rock. “So an amazing example of using technology and new ways of thinking to come up with projects that will…get capacity needs served for our customers, but also at a lower cost.”

The batteries will serve as both a release valve and a reserve of energy for the line. PG&E is developing specialized engineering processes based on the project, which will allow it to standardize the solution for transmission elsewhere in its service area.

PG&E anticipates construction and testing will be completed by the end of 2024, enabling new loads to begin connecting in 2025. That’s six years faster than a reconductoring project would take — and it should come in at one-tenth of the cost.

Storage is becoming a critical piece of grid operations. In California’s Monterey County, PG&E collaborated with Vistra to install Megapacks at an old natural gas power plant called Moss Landing, creating what is considered the world's largest lithium-ion battery energy storage system, at 3,000 MWh. And last year, in the wildfire-prone foothills of the Sierra Nevada mountains, PG&E paired a mobile Megapack with existing solar arrays in the town of Foresthill to create a microgrid. 

PG&E’s plans in Humboldt show how batteries and grid-enhancing technologies can lower costs and shorten timelines to address acute energy needs in a specific service area, something the Department of Energy called for more of in its latest liftoff report.

Heather Rock says the utility is putting more effort into replicating this creative approach. 

“We've actually set up a team with folks who worked on this project to say, okay…how do we do this so that every engineering decision and every planning decision asks a different set of questions about how we're going to meet our energy needs?” she said.

For the full conversation with Heather Rock on PG&E’s approach to modernizing the grid, listen to her interview on season 3 of With Great Power.

With Great Power is a show about the people building the future grid, today. It's a co-production of GridX and Latitude Studios. Subscribe on Apple, Spotify, or anywhere you get your shows.

Transcript

Brad Langley: Seven years ago, Heather Rock pulled into her parking space at Chevron's offices in California in a newly leased electric vehicle. At the time, Chevron's earnings were rebounding after a global drop in oil prices and it was facing the first of many lawsuits from US municipalities for climate damages. Heather was there working in the climate space. Looking back, she says, rolling up to Chevron in her new EV foreshadowed a future career change, but at the time, it just felt a little weird.

Heather Rock: I remember it felt a little uncomfortable in the parking lot, but it's the car I wanted. It was the technology I wanted. My manager, I was working on climate issues at the time, said Heather, "If you were at Coke, you would be drinking Pepsi."

Brad Langley: "If you were at Coke, you would be drinking Pepsi." It was a joke, but it left a big impression on Heather.

Heather Rock: It wasn't this moment of I was trying to be contrarian. It was just where I saw the world going. I think it was that comment and just seeing with the Paris Agreement, seeing with all the technology advances, I really wanted to be where things were changing and I wanted to be part of the change. As much as I really valued and learned so much at Chevron, I just wasn't excited to drill more oil and gas out of the ground. I really wanted to serve that carbon-neutral future. For me, that was the point where I knew I had to make a career switch.

Brad Langley: When she decided to leave Chevron in 2018, Heather started looking at other large energy companies where she could make an impact, and when she saw an opportunity at Pacific Gas & Electric, she jumped at it.

Heather Rock: It was sort of a no-brainer to me. Here's this opportunity and here's a way to be on the cutting edge of things that were happening in terms of climate change. What I like about working in really big companies like Chevron and PG&E and others is that because of the size and the scope and the scale, if you can make change internally, you can really steer a ship in a different way.

Brad Langley: Heather admits her timing wasn't the best. PG&E was already facing billions of dollars in liability for the 2017 wildfire season and was about to declare bankruptcy. Then in 2018, the flaws in California's electric grid made even more national headlines.

News clip 1: Today, CAL Fire announced PG&E is responsible for the state's deadliest and most destructive wildfire.

News clip 2: The cause of the campfire was a utility owned and operated equipment that came in contact with a receptive fuel bed or vegetation that caused the campfire.

Heather Rock: Now, once I got there, things were challenging. I joined in end of 2018, and then things like the campfire happened. We've had numerous CEOs, but I'm so grateful that I stuck through it because we have a much clearer path towards where we're going.

Brad Langley: Since then, Heather has had a few different roles, all of them focused on imagining and building a better grid.

Heather Rock: We like to ask the question, what would have to be true to achieve this outcome? What would have to be true to completely decarbonize or have a net-zero energy system by 2040? That's why I've stuck around, it's because I feel like this is where we can make real progress on advancing the energy transition.

Brad Langley: This is With Great Power, a show about the people building the future grid today. I'm Brad Langley. Some people say utilities are slow to change and they don't innovate it fast enough, and while it might not always seem like the most cutting edge industry, there are lots of really smart people working really hard to make the grid cleaner, more reliable and customer centric. This week, I'm speaking with Heather Rock, A senior director of strategy at PG&E about the ways she and her team are building climate resilience into California's grid. We also discuss the utility's efforts to find innovative ways to address load growth while also meeting its de-carbonization goals.

Heather joined PG&E in 2018 as Director of Climate Resilience, a role focused on near term adaptation and making the grid more rugged. I asked her whether tackling these longer term existential issues drew her toward her current role in planning the strategy.

Heather Rock: I love these big fundamental questions. That's what I think about before I go to sleep and what I wake up thinking about. How are we going to position this major utility? We serve 16 million Californians here. We're in the most progressive state when it comes to thinking about and setting ambitious goals, and I think we have a real opportunity to, I'd say not just be a leader, but really create followership. If we can solve some of these big picture questions and set a path that others can follow, that will be the biggest achievement that we can do.

Brad Langley: Before diving into those questions, I wanted to learn more about what it was like to join PG&E at such a time of crisis.

Heather Rock: Oh gosh. I mean, I'll admit, I had a couple of moments where I was like, "Oh my God, what did I do?" I am sure if you didn't, you would have to have your head in the sand at the time.

I actually had a conversation with one of the executives that I had worked with in a prior role and asked him about it, and his advice to me was to stick it out, that if you can find some order in the chaos and you can just come up with good ideas on how to get things done, it will be helpful and it will get me places and just generally be the right thing to do. I stuck it out and I saw opportunity.

PG&E was dealing with one of the first major climate risk hazards of wildfire, and it really opened up the conversation on how do we think about all the risks at the time. It wasn't just wildfire, it's also heat waves, it's also sea level rise, and so it opened up a place of possibility by the fact that everyone was so focused on the fact that the conditions under which PG&E was operating its infrastructure had just changed.

Brad Langley: With wildfires and extreme heat and sea level rises, how do you balance the need to protect infrastructure while you're dealing with those other situations?

Heather Rock: I would think of it in two different ways. The first from the resilience angle is how do you operate, maintain and invest in your infrastructure so that you are building infrastructure and putting assets in the ground, steel in the ground, every day that is not just designed for today's environment and environmental conditions, but it will be designed for the whole life of the asset.

The other side is really the root of the problem, which is climate change itself and emissions itself. You need both sides. You need the adaptation and you need the mitigation. Right now, the mitigation side is what my team is really heavily focused on. PG&E has an incredible vantage point as one of the few dual fuel utilities in the country, and so we are actively thinking about how are we going to meet our 2040 net-zero goal with a gas system? How are we going to continue to have a resilient and reliable and affordable system that's also also clean?

Brad Langley: A couple years ago, PG&E needed to address capacity constraints and voltage issues in Humboldt County, which is up in northern California for our listeners, for businesses in that area looking to connect new loads of the grid. This led to concerns about long wait times for service. What was the nature of those issues?

Heather Rock: If you look back a little bit, even back to the, let's say 2000, we had relatively flat load growth for let's say 20 years or so. Now we have EVs, I think in California were 27% of all new car sales in 2023, there's a huge amount of excitement about the future of AI and data centers, and then to meet our de-carbonization goals, we're going to need to have a pretty substantial amount of building electrification. There's a big question of how do we meet our customer needs today while also building the infrastructure of the future? That came to a head in early 2023 with Humboldt. We had a couple community concerns about being able to hook up critical infrastructure like a hospital, and we needed to find some innovative solutions to meet customer needs on the timeline that they need.

One of the ideas was to address a voltage issue on a transmission line by installing Tesla Megapacks, which normally doing it the old way would've been a $90 million upgrade, but instead, they took a hard look and thought about things in a different, I'd say in a breakthrough way, and then they identified, well, if we just install these batteries, then we're going to manage the voltage issue and a 90 million project quickly became a 10 million project. An amazing example of using technology and new ways of thinking to come up with projects that will get the capacity needs served to our customers, but also at a lower cost, which is a win for everyone.

Brad Langley: I assume with that lower cost came maybe accelerated timeline as well. Did this unique approach make it... Allow you to make these changes faster to get those problems addressed?

Heather Rock: The teams are working through piloting. Excited about the technology, have to make sure it aligns with our operations and their engineering specs. I know that they're in the process of really testing this, but yes, we are very excited that this is going to move up the timeline of connecting the infrastructure that Humboldt needs.

Brad Langley: A lot of times with unique or innovative approaches, you're going to run into some technical barriers. Were there any major ones that you all have had to overcome?

Heather Rock: I would say not just technical barriers. Sometimes it's just people's mindsets. We have incredible folks and a lot of engineers, and they've done things and they've operated the system in a certain way for a long time. The grid we're foremost concerned about reliability and maintaining a safe system, when you start inputting new technologies, there has to be a process of working with the folks who are operating the grid to make sure they understand it so that they feel comfortable with the technologies.

Brad Langley: One last question on this battery technology. Is this a strategy you're using in other parts of your service area to address capacity constraints or for other applications?

Heather Rock: What we realized we needed to do is we need to do this again and again and scale it. We've actually set up a team with folks who worked on this project to say, okay, how do we turn not just that this combination of technology and planning for this project into motion, but how do we do this so that every engineering decision and every planning decision asks a different set of questions about how we're going to meet our energy needs. Because the Tesla Megapacks were a great solution in this case. What we want is our engineers and our planners to now think what is the realm of possibility here for rethinking how we plan and engineer and design the system.

Brad Langley: Looking ahead and looking at a bigger scale, PG&E is expecting to grow its load by 70% over the next 20 years, which is a significant amount of load growth. I mean, it's a game changer to borrow a cliched term. I'm curious, what role will technologies play in meeting that demand, whether it's storage, DERs, vehicle to grid or other approaches?

Heather Rock: We are going to need a mix of technologies. Most of them already exist today. The issue is just scaling and cost. We're going to need distributed energy resources, we're going to need large-scale utility solar, but I think we have a pretty good idea of the past to get to where we need to be. The issue is just how do we scale it and how do we do it, equally importantly, in a way that's affordable for our customers in a way that brings them along? Because there is going to be a lot of change in store and we want to make this something that we bring our customers along, and it's a joyful, seamless experience for them.

Brad Langley: Now, the California ISO is an innovative market, especially when it comes to clean energy regulation. Can you talk about California ISO's, how its strategy impacts PG&E? Maybe describe your interactions with folks there.

Heather Rock: California ISO's in an interesting position because they are looking at all the projections for energy load from electrification of buildings, transportation rate, and they're putting out extremely ambitious goals out for the sheer number of, frankly, gigawatts that we're going to have to build over the next 10 years. It's breathtaking just how much we're going to have to build in terms of transmission. I think what is challenging is, especially when we're thinking about affordability and we're thinking about integrating new technologies like distributed energy resources, is how do you test and enable these new technologies and things like DPPs in a way that preserve the fundamental need to have a reliable system while also bringing on innovative things that we haven't really deployed at scale before. I think there is going to be a give and take and a testing, but we are going to be changing the grid. The challenge is how do we get from today's standard planning process to a more innovative one?

Brad Langley: It seems like utilities like PG&E and SoCal Edison to the south and others and California in general really lead the way in a lot of this. Is there something unique about California, the utilities there that make, I'll say us, because I live in this state as well, such leaders in the transition?

Heather Rock: I mean, I'm a California girl, so I'm going to give you a biased answer. I don't know. I will say to some of my counterparts' credits that we have great discussions with other utilities across the country too. We've talked to National Grid, we talked to ConEdison, we talked to Duke. We're all looking at these big problems, and especially for some of the dual fuel utilities, really thinking about what can we learn from each other in the energy transition. We are so privileged to have Silicon Valley right in the heart of California. I applaud our state for setting really ambitious goals. I also know that we have to do this in a way that brings customers along because one of the things I worry about is that right now when we think about the energy transition, so much of that is financed through customer utility bills. I don't think that's sustainable. I think we need to have a broader conversation about how do we pay for the energy transition. I think we'll get there, but I think we have a lot of work to do.

Brad Langley: Yeah, and I'm glad you brought that up because obviously electricity rates and high bills are a big area of concern for PG&E customers right now, and not just PG&E, but across the country. As you think about in your role with respect to roadmapping, any early insights on how PG&E can support an equitable, affordable, and reliable energy transition for everybody?

Heather Rock: One of the things that we concluded when we did our own pathway to 2040 is that we feel that electrification of, I'd say almost everything, is really the lowest societal cost way to net-zero. Look at just at the efficiency of appliances. EV uses, I think 25% of the energy of an equivalent internal combustion engine. Same for heat pumps. As we look into that energy future and you think about that customer share of wallet, that customer that is fully electrified driving an EV is actually going to be in a much better place in that scenario than the customer that doesn't transition. What we need to do is to recognize that not all customers have that upfront capital investment, that cash to make those capital investments to purchase a new EV or to purchase electric appliances. That is where we need to have the discussion more broadly about equity issues in order to have an organized transition that really helps those communities along.

Brad Langley: We talked a little about customer awareness on the path to electrification. There's obviously various rebates and tax credits available through state and federal programs, so there's a lot of opportunities for rate payers to electrify, but determining the best paths forward, whether motivated by climate or by cost, it can be a complicated process. Any details on how utilities can be effective in supporting customers on their home electrification journey?

Heather Rock: We need to make it as seamless and joyful and efficient as possible. I'll be the first to admit, we have a lot of work to do. We have a lot of work going on to improve our information that we provide our customers, and we have some really cool R&D ideas going on right now.

One of them is to think about, well, how could we reimagine, for example, a socket of the future where you don't need that panel upgrade for your home, where you don't need to trench and spend a lot of money to be able to fully electrify your home? How much energy really needs to go through your panel? Because sometimes people make the assumption... You're probably not going to charge your EV, run your heat pump, run every appliance in your home at the same time. Obviously, we tend to design for that, which is often what triggers a lot of the upgrades. We are thinking a lot about how do you incentivize through time of use rates or technology, how people use and when they use electricity. I think this is where, for example, our CEO talks a lot about the future of EVs as battery storage. We have thousands of megawatts just out on the road every day. How do we channel it so that this is another energy source for the grid, and we incentivize charging at the right time. We could de-charge at the right time and use our grid in a more efficient way.

Brad Langley: I'd love to dig in on that word joyful. You've mentioned it a couple of times. When you think about making it a joyful experience, what does that look like? Because I think energy brings joy, but people don't necessarily equate those two things together all the time because there's expectation the lights come on, the gas stove fires up, what have you. When you think of bringing joy to this experience, talk to me about what you mean by that.

Heather Rock: Well, we have a stand here at PG&E and and it is enjoyable to work with and for PG&E. This applies to all of our coworkers, it applies to our partners that we work with, and it applies to our customers and communities. We want this experience of engaging with us, of working with us on the energy transition or just connecting your home to be an experience that brings you joy. We don't want to be the source of your frustration.

Brad Langley: PG&E is obviously doing a lot of innovative work to hit these aggressive clean energy goals. Are there any other approaches that you're taking to come up with these ideas in support of delivering on our clean energy future?

Heather Rock: Yes. Just last year, our R&D team took our company's strategy and then they broke down all the different issues in the strategy into about 70 problem statements, which they then published in an R&D report mid last year. We had a pitch fest. We had about 600 organizations apply to be part of the pitch fest. We invited 60 to come, and it was almost like a Shark tank type experiences to vet these ideas. We now have 20 of these R&D ideas now working to solve various challenges within our strategy to really leverage up and coming technologies to address some of the biggest strategic issues we're facing today.

Brad Langley: Very good. We call this show, With Great Power, which is a nod to the power industry. It's also a famous Spider-Man quote, "With great power comes great responsibility." What superpower do you bring to the energy transition?

Heather Rock: I guess I bring a love of connecting dots and seeing how all the different puzzle pieces are fitting together. Maybe great curiosity. I love learning about all the new things that are happening, and largely because it enables me to see more clearly the path to get to the future that we're all creating. I guess that's my superpower.

Brad Langley: Love it. Well, Heather, thank you so much for taking your time and coming on the show. I really enjoyed talking with you.

Heather Rock: Likewise. Thanks, Brad. Pleasure speaking with you today.

Brad Langley: Heather Rock is Senior Director of Strategy at Pacific Gas & Electric.

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