Extreme Events Force CA Leaders to Face “Necessary Evils” to Protect Grid

Growing concerns about California’s power system necessitates the recent extraordinary steps by legislators to safeguard reliability, a key member of the California Energy Commission told Current during a recent interview.

Since California’s 2020 blackouts, state regulators have authorized new energy supply, but Gov. Newsom's signing of AB 205/SB 122 June 30 will help meet additional projected urgencies, CEC Vice Chair Siva Gunda said. The measure allocates $5.2 billion for a Strategic Reliability Reserve Fund, which includes $550 million for a Distributed Electricity Backup Assets Account, and extends operations of environmentally threatening generating facilities.

By 2025, California may add 20 GW to 30 GW of nameplate capacity but unexpected factors beyond regulators’ control have slowed the rate of building, Gunda said. The possible “near term shortfall” from higher demand “could take three to five years to close,” he added.

Even if California catches up to previously planned additional resource targets , there are shortfall risks from regional heatwaves driving demand up or wildfires disrupting transmission access to out-of-state energy supplies. Those kinds of events threaten “California’s ability to build out the electrical infrastructure,” making “extraordinary near-term measures and substantive changes to mid-term energy policy,” necessary, AB 205 concluded.

In 2019, the CPUC authorized 3.3 GW of “backfill procurement” for coastal natural gas plants long scheduled for closure because of harms to ocean waters, said Gunda. And, in 2021, it authorized 11.5 GW of new supply by 2025 for the 2.2 GW Diablo Canyon nuclear facility retirement, other economic retirements, and load growth. Now, however, both the natural gas plants and Diablo operations could be extended.

Since 2020, California has faced accelerating reliability pressures from recurring peak demand crises, more severe climate projections and volatility, renewables supply chain constraints, interconnection delays, permitting issues, and a federal solar tariff import disruption, Gunda said.

“Over the last two years, over 4 GWs new generation was added, which was almost 8 GW of nameplate clean energy resources, and the CPUC also expanded demand side management programs and further procurements in extreme weather and emergency reliability proceedings, Gunda added.

Because of the significant risk-from lagging procurement, the budget bills authorize spending for at least 5 GW of clean energy in 2022 and up to 10 GW more for 2025. The urgency to protect the state’s power system reliability goes beyond the state because “if the lights go off in California, momentum for the climate effort in the rest of the country could be at risk,” Gunda said.

Stakeholders readily acknowledged the urgency. “The numbers show we are at risk, and reliability is a key part of governance that requires regulators and the Governor to take extraordinary actions,” said Center for Energy Efficiency and Renewable Technologies Executive Director V. John White. That may include accepting “necessary evils” like keeping generation scheduled for shuttering online.

Gunda, who joined the CEC in 2021, “has done important planning work, but “this is a collective longer-term state government failure,” White said. State leaders have known the natural gas plants and Diablo Canyon were scheduled for closure, and this “perfect storm” of economic and climate factors shows the hazards of “just-in-time procurement and transmission building.”

Acknowledge and mitigate now

California power sector stakeholders are reacting to both AB 205/SB 122’s potential costs and its extensions of natural gas and nuclear facility operations.

New analyses show more resources are needed for reliability over the next five years, said Union of Concerned Scientists Western States Energy Manager and Senior Analyst Mark Specht. But California “needs to break this year-by-year planning cycle that turns short-term reliability issues into emergencies and always finds spending necessary to keep old natural gas plants online.”

California “is suffering the consequences of neglect and delays in procurement of everything other than natural gas and nuclear,” CEERT’s White added.

Stakeholders “have a right to be annoyed with the continuous expansions and with this decision,” Gunda agreed. But most observers did not foresee this combination of climate and economic factors threatening reliability.

It is important to apologize “for the burdens frontline communities may bear,” Gunda said. It is also “important to acknowledge the risks of where we are , understand how we got here, the tradeoffs we now face, and move forward.”

The core of the problem is that there is simply not enough historical data to accurately say what the climate and extreme weather risks are, Gunda added. The solution is to stop planning in ways that silo potential utility-scale and distribution system solutions and “start planning for the long term not on what historically happened, but with more scenarios ,” he said.

Pay now, win later

Over the next one year to three years, and possibly through 2025, more resource options are needed to catch up with forecasted needs, Gunda said.

The transition to a reliable decarbonized power system “comes with some very significant costs and the question is whether society is willing to pay for it,” cautioned Los Angeles County General Manager for Energy and Environment Minh Le , who led the Department of Energy program that cut solar costs dramatically after 2010.

But the costs can be contained because the shortfalls do not mean only building new power plants,” Gunda told Current . The state has roughly 2 GWs of contingency measures, and as much as 4 GWs “will be met by keeping the proposed retirements online beyond 2025 and using demand side measures like emergency load reductions for extra high peaks, he said.

And once new procurement fills the remaining “gap” to protect against extreme risks, the state can return to procuring and building an estimated 1.5 GWs to 2 GWs annually to meet its 2030 goals, Gunda said.

But California can break the cycle now that keeps making natural gas plants and Diablo Canyon seem necessary by setting aside money to build more renewables and demand side resources for reliability, UCS’s Specht said.

White agreed. Regulators “can bring online significant third-party demand response and load flexibility and resolve the transmission and interconnection bottlenecks to more clean energy if they are willing to pay for it,” he said.

Those kinds of investments will more than pay off as transportation and building electrification grow, Gunda added. High EV loads don't begin to accelerate until late in this decade and can be addressed with managed EV charging as development of new capacity catches up with load growth, he said.

The expected 5.5 million light duty EVs in 2030 would likely have “an estimated charging need of about 75 GWh per day, but the total battery capacity will be multiple times that,” Gunda said. Those vehicles can be “ an enormous asset ” to system reliability.

Beyond 2030, “more long-duration energy storage, offshore wind, geothermal, and other resources that will also allow retiring most of the rest of the natural gas fleet.”