In reaction to the energy crisis of 2000-01, the California Public Utilities Commission over the past decade approved billions of dollars in utility spending for projects and strategies to produce both megawatts and negawatts. The California Energy Commission, federal and local governments, and public power agencies have been equally busy. The approval of new facilities and programs has reached such a fevered pitch, that lately I’ve been intrigued by whether the state may face overcapacity in its power system. California’s thrown every possible strategy at the wall to see what sticks. There are new gas-fired power plants, big utility-scale renewable energy projects, big transmission lines, and even plans for expensive pumped storage facilities. Then there’s the negawatt strategy--from net-zero energy building standards to aggressive demand-response programs centered on smart meters. Top these off with increasing access for distributed generation--from fuel cells to rooftop solar--and the resurrection of cogeneration. Consumer advocates see overkill, pointing to slackened demand growth due to the economic downturn, plus improvements in energy efficiency. These factors led the California Energy Commission in 2009 to forecast that peak demand in the state--including both investor and publicly owned utilities--would grow from about 62,000 MW in 2009 to about 71,000 MW in 2020, or perhaps even to 73,000 MW under an optimistic economic outlook. Earlier this year, CEC downgraded its immediate short-term demand forecast further over the next two years while it re-examines the longer-term outlook. Meanwhile, utilities and some regulators counter that the state needs to take the long view and plan for the time its economy sails out of the doldrums. They also point to the likely closure of up to 15,000 MW of old coastal power plants by 2020 under state regulations adopted last year to phase-out once-through cooling systems that harm marine life. Then there is the withdrawal of state utilities from coal power plants under a state law. Between Southern California Edison and Los Angeles Department of Water & Power alone, 1,197 MW of coal power already is on the chopping block, with more cuts likely by other utilities. To see whether we are lagging, overshooting, or on the mark to meet future power demand, I decided to check the numbers. For my purposes, I’ll assume the rosy economic scenario we’d all like to see, plus that all the coastal (once-through water-cooled) plants close, and the shift away from coal goes as announced so far. This would leave the state with the need for at least 27,200 of new megawatts and negawatts by 2020. Add in what’s required under the state’s 15-17 percent reserve margin requirement and we’ll need to see the equivalent of 38,200 MW of new resources by 2020 to keep the grid reliable. So far, here’s where we stand based on my rough tally of what appear to be viable projects: Fossil-fueled & solar thermal: The California Energy Commission approved construction of 9,344 MW of new natural gas and solar thermal power plants that still are on track, plus another 4,955 MW that are on hold. Together they total 14,299 MW. Wind power: The wind energy industry is installing 443 MW of new wind turbines in California, according to the American Wind Energy Association. More are planned. Photovoltaic: The California Solar Initiative aims at an additional 1,376 MW of rooftop solar panels installed by 2016. In addition, publicly-owned utilities have programs that should add hundreds of additional megawatts. On top of this, the state’s investor-owned utilities are adding 1,100 MW from solar panels in large installations that feed into the distribution system. These are split between utility-owned systems and panels installed by other companies that sell the power to utilities under contracts. In addition, at least 1,000 MW of utility-scale PV projects are in various stages of development. That totals 3,476 MW of expected PV power, with more planned. Geothermal: 85 MW of geothermal projects are slated to open in California in the next few years with another 369 MW nearing construction, so make that 454 MW of added geothermal power. Hundreds more MW of capacity are in various stages of planning and development. Combined heat & power (cogen): The California Air Resources Board is calling for 4,000 MW of new combined heat and power capacity in the state under its greenhouse gas reduction plan. A settlement the CPUC recently approved clears the way for this new capacity, most agree (Current, Dec. 17, 2010) Transmission: While transmission alone cannot make power, it can tap new power sources in other states or distant areas. Right now utilities are either building or seeking to build enough added transmission lines to bring thousands of new megawatts to market from both out of state and renewable resources areas within the state. For instance, Southern California Edison’s Devers-Palo Verde 2 line could import 1,200 MW of new power. LADWP is upgrading its Southern Transmission System line to bring in another 600 MW. Lines planned by other utilities could boost imports too. Trickier are instate lines that could both boost imports and open new areas to massive renewable energy development, such as SDG&E’s 1,000 MW Sunrise line into Imperial Valley and Edison’s Tehachapi line aimed at tapping up to 4,500 MW of renewable energy from north of Los Angeles. For a conservative estimate of how these lines will add to capacity, let’s call it 3,000 MW over the next ten years. Add it all up and these projects are likely to result in at least 25,672 MW of new capacity for the state, more than two-thirds of what we’re likely to need by 2020. In addition, the CEC is considering licenses for another 4,643 MW of new thermal power plants and expects to soon receive license applications for another 1,300 MW of capacity. Wind, geothermal, and photovoltaic development, which CEC does not license, is expected to continue to grow, as well as use of biogas and distributed generation technologies like fuel cells. Now, how about negawatts? Here are the numbers so far: Utility energy efficiency: By just 2012, the CPUC has directed the state’s investor-owned utilities to invest in energy efficiency measures on customer premises aimed at reducing peak demand by 1,500 MW. More reductions are expected beyond then through additional energy efficiency programs that include new building standards. Public utilities are spending on energy efficiency too. Demand-response: Under the current CPUC-authorized demand response programs, utilities can spend up to $125/kW for negawatts, capped at around $112 million a year. That money can trim peak demand by some 900 MW, even more. Munis also are spending in this area. So negawatts under state-authorized programs total 2,400 MW, even more when you add what munis are pursuing. LADWP alone is aiming to achieve 780 negawatts, so let’s round off total negawatts between investor-owned and all publicly-owned utilities at around 3,500 for good measure. This brings total new resources likely to materialize to 29,172 megawatts and negawatts, or about 76 percent of projected need by 2020. Clearly, some of this will fade away, although the 29,172 MW number omits many announced projects, or even plants in permitting. It’s also questionable whether all of the coastal power plants will close down when push comes to shove. Owners may retrofit and modify some units to keep them running. At the moment, the bottom line is that there is no overcapacity, but, hey, it’s barely 2011. Consider that all of what’s included in my tally has been planned and largely approved in just the past few years. If the current pace continues, overcapacity not only is highly probable, but promises to be costly. That’s why the takeaway message for regulators is: yes you’ve done a good job the past few years making sure the grid is modernized and adequately resourced after years of underinvestment. But: you need to be more careful about which projects you approve in the next several years. If you’re not, overcapacity is likely. That not only would hurt consumers, but could result in a bubble of investment that hurts companies, employees, and investors when it bursts.