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Is California engaging in wishful thinking or rigorous planning?

Uploaded: Nov 28, 2021
Two weeks ago, a comment on this blog asserted that California is sure to fail in its attempt to close the Diablo Canyon nuclear reactor without increasing emissions. The writer pointed out that the reactor is responsible for 9% of California’s power and about 17% of its zero-emissions power. (1) That is a lot of carbon-free power to be removing, especially as we are ramping up electrification of other sectors (e.g., transportation).

Yet state law requires that we succeed. When regulators agreed to close Diablo Canyon, Jerry Brown signed a law stating that the California Public Utilities Commission (CPUC) must “avoid any increase in emissions of greenhouse gases as a result of the retirement of the Diablo Canyon nuclear power plant.” Was Governor Moonbeam suffering from undue optimism? A nuclear advocate quoted in Time magazine would likely think so, characterizing net-zero ambitions that preclude nuclear energy as “a lot of wishful thinking, a lot of fingers crossed.”

So I read over the proceedings to see how the CPUC is taking action on this. To date California has been very effective at reducing emissions on the grid, so I wanted to understand how they are going about this difficult task.

California emissions by sector, 2000-2019. Source: CARB (2021)

California has reduced power sector emissions in part by evolving in-state generation to rely less on gas and more on low-carbon power sources, especially over the last six years. Our imports have also gotten much cleaner.

California’s in-state electricity generation, 2000-2019. Source: CARB (2021)

California has accomplished this by engaging in intensive planning across several state agencies. The legislators and California Air Resources Board (CARB) establish emissions goals for the electricity sector and provide guidance on how we can achieve them. The California Energy Commission (CEC) produces reports that, among other things, forecast electricity demand by looking at trends in electrification, climate, efficiency, and energy tech. The CPUC takes this information and works with power providers (e.g., our utilities) to formulate a “reference” plan that will meet the requirements with good reliability and low cost. The power providers use this as guidance for their individual plans, which the CPUC then collects and analyzes to see if the aggregate plan is suitable. The CPUC makes adjustments as needed, then produces a “preferred plan” that the power providers can work with to sign contracts. The California Independent System Operator (CAISO) participates throughout to determine what transmission is needed.

CPUC’s Integrated Resource Planning process for the 2019-2020 cycle. Source: CPUC (2019)

The question is, how did the Diablo Canyon shutdown wend its way through this process? Did it sneak by unnoticed? Was it accounted for but sloppily? Was the modeling overly optimistic? Or did it get a critical look? It’s safe to say that it was carefully analyzed, but not without some foot-dragging and some contention. Here is how it played out.

In 2018, after years of discussion, the Diablo Canyon nuclear plant was directed to shut down in 2025. PG&E said it was going to be expensive to retrofit the plant to comply with marine water regulations; it no longer needed the power (customers were switching over to Community Choice Agencies (CCAs) like our own Peninsula Clean Energy and Silicon Valley Clean Energy, as well as adding more energy efficiency and rooftop solar); and the plant’s steady (inflexible) operating profile meant that it would increasingly force cheaper renewables offline. Energy models indicated there were better alternatives. When the CPUC planning cycle began in 2018, the analysis was clear that the state would be able to meet its emissions goal of 46 million metric tons (MMT) by 2030 without Diablo Canyon, and that should be good enough for Jerry Brown. The report did suggest that some of the renewables replacing the nuclear energy should be bought prior to shutting the plant down in order to take advantage of federal tax credits, which would save taxpayers some money.

This generated robust commentary during the discussion of the report. Comments came from utilities, renewable energy providers, natural gas associations, friends and foes of nuclear energy, and more. There was some debate about whether the right approach was to buy early for tax credits or buy later and wait for prices to go down. (2) But one of the more impactful responses was a petition from several organizations (3), referred to as the Joint Parties, that pointed out the CPUC plan omits any specific ask of power providers to replace the power from Diablo Canyon. The petition suggested that we might be able to do better than 46 million metric tons if we kept the plant running, so the argument that “we’ll meet our goal” is not enough to uphold the law. Some organizations worried that buying renewables prior to shutdown would lead to an emissions bump at plant closure, which we want to avoid. The CCAs and some others disagreed, saying that the state’s modeling effort was fine and there was no need to explicitly identify clean energy purchases to balance Diablo Canyon’s output.

In April 2019, the CPUC filed a follow-on decision laying out the plan that power providers would need to follow for the coming years. In it they directly addressed the Diablo Canyon controversy and largely held their ground. They disagreed that there should be no increase in emissions “at the very moment that the Diablo Canyon units go offline”. They explained: “Expecting an exact one-for-one replacement of energy from Diablo Canyon that is timed perfectly to coincide with the Diablo Canyon closure would be a costly and illogical way to ensure that the emissions trajectory of the electric sector is on track to meet the State’s goals.” However, the CPUC did express some concerns about reliability and whether the CCAs and other power providers would replace the 24x7 power from Diablo Canyon with more variable renewables that would not provide energy at critical peak hours. They stated: “... if anything we are concerned that the replacement power procured mostly by CCAs will not represent as reliable a resource as Diablo Canyon has proven to be over the decades.” They go on to say: “We will require each LSE (Load Serving Entity, aka power provider) serving load in PG&E’s territory to address how it will replace the characteristics of the Diablo Canyon output with either flexible baseload and/or firm low-emissions energy. We will not, however, allocate a specific replacement capacity or energy to each LSE.”

Around this time, the CPUC was getting concerned about procurement (i.e., power purchases). In the past, the agency had worked mainly with three big investor-owned utilities (PG&E, Southern California Edison, and San Diego Gas and Electric) to purchase needed power supplies. The CPUC was able to direct power purchases and had good visibility into the transactions.. But with the growing popularity of local power providers, the CPUC now had to work with many smaller utilities, each with their own philosophies and goals as well as different levels of transparency. These smaller agencies also tended to have less ability to make large investments.

The CPUC was now faced with building a reliable and efficient system across many newer and smaller operators while managing a quickly changing energy landscape. Concerned about the pending loss of 2,300 MW for Diablo Canyon and 4,200 MW for retiring gas plants during this transition, the agency added some additional process to track and facilitate procurement. They also developed a “backstop” mechanism whereby the big investor-owned utilities would contract for power in the event some providers were unable to achieve their plan. Between looking at these near-term stressors and dealing with the outages of summer 2020, it wasn’t until February 2021 that the CPUC issued a report addressing procurement and the reliability of the power supply in the 2024-2026 (“mid-term”) time horizon.

The CPUC had many causes for concern at this point. They wrote: “The potential for reliability challenges is driven by several factors, including the planned retirement of the Diablo Canyon Nuclear Plant, planned retirement of older natural gas plants including those using once-through cooling, suggested modifications to the planning reserve margin, changes in resource availability throughout the west, updated effective capacity accounting, and an updated demand forecast.” The summer outages and increasing prospects for extreme and widespread heat had the analysts seeking a larger planning reserve margin. Hydroelectric resources strained by the drought, combined with more emissions standards in western states, could restrict clean imports. Demand is forecast to increase with successful electrification efforts. And the amount of power available at peak times is diminishing as the peak moves away from times when solar and even wind are plentiful. (4)

Around this same time, the Union of Concerned Scientists issued a report criticizing the CPUC’s approach of “As long as we hit our emissions target, we know that Diablo Canyon’s retirement had no impact”. They showed that the emissions target that CPUC had chosen, namely 46 MMT in 2030, was not compatible with a “no impact” result. If Diablo Canyon were not shut down, emissions would be only 43 MMT based on the planning guidance to date. They urged a lower emissions target and/or dedicated resources added to replace Diablo Canyon’s power.

CPUC’s February 2021 report moved in this direction. It proposed a 7,500 MW special procurement, and critically that 7,500 MW was required to be “net qualifying capacity”, namely power that would be available at peak times. Solar farms could contribute only minimally towards it, and wind farms would also be heavily discounted. The table below shows recent guidance for these discounts, which get more aggressive over time as a particular type of power becomes more prevalent on the grid.

These incremental Effective Load Carrying Capacity (ELCC) values reflect the ability of a resource to prevent power shortages. (4) Source: Astrapé Consulting and E3 for the CPUC (2021)

The chart below shows how the state forecast the grid’s “net qualifying capacity” over the coming years. It’s a little hard to read, but there are a few things to notice:
- The massive amounts of solar and wind on the grid contribute plenty of energy but generally little at peak times, so the corresponding bars on this chart are narrow. (They are the light orange and light blue bars, respectively.) Gas (grey) makes the dominant contribution, while nuclear (yellow) and hydro (dark blue) make a relatively large contribution among carbon-free sources.
- In 2021 (the first column) the state plans for a 1.1 GW reduction in hydroelectric power due to constrained supplies.
- In 2023 the state plans for a 3.7 GW reduction in thermal energy (gas plants retiring due to their use of once-through cooling).
- In 2024-2025 the state plans for a 2.3 GW reduction from the Diablo Canyon retirement.
- In 2025 another gas plant goes offline, taking 500 MW.
- And in 2025-2026, with the increased penetration of rooftop solar, solar becomes even less effective at addressing peak capacity crunches.

Analysis of available net qualifying capacity by year. Source: CPUC, slide 27 (2021)

Although the state has some additional peak capacity coming online, mainly in the form of batteries, the analysis still shows a large, approximately 7,500 MW gap between what the planned resources can handle and the projected peak (the dotted line). The shortfall is shown in a salmon-colored bar at the top.

Reviewers were “quite divided about the reasonableness” of this analysis. Some, including most of the utilities and power providers, felt it was well balanced. Others felt it was too conservative and therefore too costly, and advocated for reducing planning margins and asking for less capacity. Still others, including CAISO (which did its own analysis) and several environmental organizations, felt the proposal was too risky. They argued that the state should plan for a “high need” rather than a “mid need” scenario, citing a need for higher reserve margins due to extreme weather, greater reductions in the availability of clean imports, the potential for stricter emissions targets and more gas plant retirements, and the severe consequences of falling short.

Ultimately, in June, the state agreed with those who argued that we should plan for a “high need” scenario, saying: “As the rotating outages required in August 2020 have demonstrated, we are not in a business-as-usual situation on the electric grid in California. The electricity market is changing rapidly in many respects, including the large number of new LSEs (power providers), the recent major shifts in the resource mix, a great deal of weather- and climate-change-driven uncertainty, as well as the increasing acceleration of electrification of building and transportation end uses.” They also cited the likelihood of the agency’s adopting a more aggressive emissions goal for the power sector (38 MMT by 2030 instead of 46 MMT), which is better aligned with this scenario.

The final decision issued in June 2021 requires power providers to procure a record-setting 11,500 MW of net qualifying capacity power (power available at peak times), all non-fossil, all zero-emission or renewable. The CPUC calls this “an unprecedented, but necessary, quantity of clean energy procurement that will ensure reliability in the mid-decade, help California achieve its climate goals, spur the development of the clean firm resources needed for deep decarbonization, and create thousands of green energy jobs in California.” They also specifically address the Diablo Canyon retirement. They require “2,500 MW of zero-emitting generation, generation paired with storage, or demand response resources” to replace the power from that plant. They further clarify that “These resources are expected to be largely incremental renewables paired with storage (physically and/or contractually) that can deliver continuous power, at a minimum, during five hours (5 p.m. through 10 p.m.)”

Given the considerable analysis and discussion, I think it’s fair to say that the issue of Diablo Canyon’s retirement got ample attention during the planning process, and has been well incorporated into the state’s plans. What remains to consider is the ability of our power providers to procure the needed resources in a timely fashion, and their ability to do so at reasonable cost. That will be the topic of my next blog post, so stay tuned!

Notes and References
1. See the California Energy Commission’s 2020 Total System Electric Generation report.

2. As you can imagine, the renewable energy providers preferred buying early, while the CCAs on the hook to buy energy preferred to wait.

3. The Joint Parties were: Friends of the Earth, Natural Resources Defense Council, California Unions for Reliable Energy, and Pacific Gas and Electric Company.

4. You can find a good explanation of this phenomenon here, from Senior Energy Analyst Mark Specht of the Union of Concerned Scientists.

Current Climate Data (October 2021)
Global impacts, US impacts, CO2 metric, Climate dashboard (updated annually)

Quote of the week, from a San Francisco Chronicle editorial in the context of our severe and on-going drought: “But conservation won’t be enough. We still need to diversify our water portfolio. Thankfully, there are rivers upon rivers of untapped, drought-resistant fresh water waiting to be captured — our treated sewage outflows.”

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What is it worth to you?


Posted by John Sack, a resident of Barron Park,
on Nov 28, 2021 at 6:46 am

John Sack is a registered user.


Given the growth of electric cars (especially in CA and especially in the Bay Area) it seems like an untapped energy storage resource in the future is the electric cars sitting in driveways, plugged in to houses. Two cars might be (when fully charged) 150kw.

AFAIK, there isn't any way for my car to discharge its energy to the house (much less to the grid), but obviously that is done with solar panels now.

Is there any standard now or on the drawing boards to allow cars to be used as storage batteries for a home, or the grid?

Posted by Sherry Listgarten, a blogger,
on Nov 28, 2021 at 7:18 am

Sherry Listgarten is a registered user.

Vehicle-to-grid (V2G) integration exists in some form but the state is getting more serious about it. See here and here. I'll try to do a post on it soon.

In general I don't think you want to discharge your car battery on a daily basis to your house (too much wear and tear on the battery) but it could work great for occasional peak crunches as well as for outages.

Efforts like V2G, and demand response (where users move their energy use off-peak), are great low-cost ways of addressing peaks. You can see in the chart above that the state anticipates demand response (in pink) to address as much peak capacity as solar and wind combined over the next five years. Demand response was instrumental in keeping the lights on during the summer heat, and the CPUC is trying to do much more with it. I love demand response. Give everyone a smart thermostat and a smart charger!

Posted by Eeyore (formerly StarSpring), a resident of Adobe-Meadow,
on Nov 28, 2021 at 12:21 pm

Eeyore (formerly StarSpring) is a registered user.

It would seem that the obvious thing would be to exempt Diablo Canyon from the "marine water regulations"

We are facing a planetary crisis. Once we get that under control we will have the time and resources to address the (not all negative!) changes DC has made in it's local environment. Right?

Posted by Janice Selznick, a resident of another community,
on Nov 28, 2021 at 1:25 pm

Janice Selznick is a registered user.

Your term of “Wishful Thinking" is an apt description of California's approach to creating a reliable-and-affordable energy grid.

Posted by Allen Akin, a resident of Professorville,
on Nov 28, 2021 at 6:01 pm

Allen Akin is a registered user.

The answer to the headline question is, of course, "yes".

But seriously, this is a truly excellent summary, and very helpful to everyone trying to understand the issues. Thank you!

Posted by Sherry Listgarten, a blogger,
on Nov 28, 2021 at 7:37 pm

Sherry Listgarten is a registered user.

@Eeyore, you might be interested in this fact sheet. FWIW, my preference would be not to backslide on important marine protections but instead to fix pricing. If we would properly price the externalities of thermal (gas) plants, and properly value power delivered at peak times, then Diablo might well be easily competitive. Maybe this will still happen. I think the transition from today's pricing to more accurate pricing is difficult, creating affordability problems and equity issues that would need to be addressed.

@Allen, I'm glad you found it helpful. I find that chart of peak capacity resources really illuminating. It looks completely different from the power supply you normally think of in California. This is why efforts by companies like Google and power providers like Peninsula Clean Energy to work towards matching their clean supply to demand on an hourly basis year-round are so important.

Posted by Raul Mendoza, a resident of another community,
on Nov 29, 2021 at 8:57 am

Raul Mendoza is a registered user.

Ms. Listgarten:

Given the abundance of current emanating from both the Pacific Ocean and the San Francisco Bay, would this particular technology be feasible? It is currently being implemented in the North Atlantic...

Web Link

Posted by William Hitchens, a resident of Mountain View,
on Nov 29, 2021 at 2:25 pm

William Hitchens is a registered user.

The road to Hell is built with good intentions --- highly idealistic, politicized and badly uninformed in this case.

What I gathered from the article is that the State wants to phase out a significant fraction of its highly reliable 24/7 sources of power (thermal, nuclear, and hydro)and replace them with much more variable & unreliable solar and wind sources of power.

Looking at this as a physicist, this makes absolutely no sense in the REAL WORLD that some, but not enough, of us live in. This disastrous scheme would work if there were reliable, affordable, and available ways to store huge amounts of power for when solar and wind sources are not producing enough energy to meet demand. But reliable, affordable storage of huge amounts of "green" power is not available at this time (batteries are far too expensive), nor will it be available any time soon.

So, the increasing "green" energy sources still must be backed up by thermal, nuclear, and hydro sources until large scale energy storage eventually is online, or else we will face ever increasing energy shortages --- unless we contract to buy the backup energy from producers out of state. It makes sense to shut down older, inefficient gas power plants, but it is insane not to replace them with sufficient numbers of new, part time backup gas power plants to meet REALISTIC supply shortfalls when solar and wind can't meet demand.

Posted by maguro_01, a resident of Mountain View,
on Nov 30, 2021 at 3:29 pm

maguro_01 is a registered user.

California may have around the 5th largest economy in the world and all that, but if it is dependent for electric power on the states to the east of us California has no bargaining power and a compromised future. That is germane here. It is very possible that California will soon be facing a very hostile Washington. That, combined with the state capitols to the east of us, could easily find us taxed by extremely high, actually crushing rates for imported power and handicapped in many other ways.

It is really necessary for us to be aware of our surroundings and our time. The necessary goals in emissions we should reach can be thwarted by a hostile environment eternal to California. In the worst case that could mean all branches of Washington and state governments including the courts. That might persist for a generation or more. Many of our activists focus so narrowly on their objectives, often devoting their lives to them, that they can be blindsided by events. How can we lose when we're so sincere isn't a real question.

There are new directions for nuclear power in architectures and building more and smaller ones in factories for assembly onsite by contractors skilled in that task. Clearly, the present process for large sites is impossibly expensive, prolonged, and error prone every step of the way. Also the plants are not that efficient users of their heat output. Perhaps combining power generation with desalination or sewage purification would be useful. It's hard to site even an improved fission plant in seismically active California and the waste problem remains. Perhaps a study of where it is possible to site such a plant might be made since we have to build a smart grid anyway. Perhaps there are none, perhaps there are.

Also the present Process means 10-15+ years between a decision and any construction. Time is moving faster than that.

Posted by Joseph E. Davis, a resident of Woodside: Emerald Hills,
on Nov 30, 2021 at 4:29 pm

Joseph E. Davis is a registered user.

California is a place where pious platitudes and utopian dreams are prioritized above facing reality. Unfortunately, reality has a way of crashing in.

I chuckled to read that "state law requires that we succeed." Well then, nothing to worry about!

Posted by Ronen, a resident of Menlo Park: Suburban Park/Lorelei Manor/Flood Park Triangle,
on Dec 2, 2021 at 11:30 pm

Ronen is a registered user.

This analysis and argument sorely misses the point.

Diablo Canyon produces reliable, CO2 free electricity in large quantities. Perhaps we can take it offline and produce enough renewable energy to avoid increasing emissions. But if that's the case, it only means we could drive even lower emissions by keeping Diablo Canyon running while still producing that additional renewable power, and retire more of the thermal fleet.

That's even without looking at time of use issues. At night, when solar is unavailable and when onshore wind production is weak, our renewable production is limited to hydro (not great given our drought), battery (awesome, but not available at scale yet), and geothermal (minimally deployed). What I'm guessing will happen is that our night time production of electricity will be heavily reliant on fossil gas replacing emission free nuclear.

I'm ok with taking nuclear energy offline, but not a minute before every last one of our polluting, fossil fuel power plants goes the way of the dodo. I wish the CPUC and our politicians listened to reason on this.

Posted by Sherry Listgarten, a blogger,
on Dec 3, 2021 at 11:32 am

Sherry Listgarten is a registered user.

All, thanks for the terrific comments.

@William: FWIW, my sense is that the state knows well how much it relies on gas right now, more than many of us do. We are trying to move away from fossil fuels, as we must, but the state is realistic and often allows increasing efficiency at existing gas plants, which increases capacity; it also recently delayed retirement of some older gas plants in order to ensure reliability. My 2c: I think the state is doing an okay job of balancing the goals of reliability and reduced emissions so far. The trick comes imo when you add the third leg of affordability.

@maguro: Time is indeed moving fast. I agree that we have gotten away with more imports, especially clean imports, than we will in the future. From what I can tell, CA is planning for that, but there are some debates about how much and how quickly imports are likely to drop. In addition, with more transmission, we have more imports available to us, and how quickly we can build that is another open question. Imports will imo be critical for an affordable zero-emission power sector, but it’s hard during the transition.

@Joseph: Ha, I agree, that is odd phrasing. My bad, I recognized it when I wrote it but couldn’t think of more appropriate phrasing. Anyway, the upcoming blog post is more about reality (less about planning, more about procurement) so maybe you will like it better.

@Ronen: FWIW, one of the things to keep in mind about nuclear power (at least to date) is that it is inflexible. That means that it has to run all the time, it can’t ramp up and down to complement renewables. So what ends up happening is that Diablo can push cheaper renewables offline rather than run alongside them. In the previous blog post on this topic, I quoted a report that said that if Diablo Canyon were flexible, it would run as little as 12% of the time by 2045 because of the penetration of cheaper renewables. It’s also expensive to retrofit. IMO they would not be shutting it down if they thought it were economical to keep running, though there have been analyses showing both yes and no for that. Part of the problem may also be that PG&E no longer has the customer base to need this plant and the smaller power providers don’t want to (and can’t) pick it up. All of this said, the alternatives may not be great -- see the upcoming blog post. It would not be a shock imo if the state ends up delaying the retirement of this plant for a few years until it’s faster and more affordable to bring emissions-free net peak capacity online.

Anyway, these are great comments, thanks as always for reading and sharing your thoughts.

Posted by Dan Waylonis, a resident of Jackson Park,
on Dec 4, 2021 at 6:39 pm

Dan Waylonis is a registered user.

Thanks for the informative article. One thing not mentioned was a newer nuclear fission reactor design announced this fall from SpaceX. It's a micro reactor with many safety factors and advantages over the old water cooled reactors. Check out this article for some details: Web Link

Posted by Peter Converse, a resident of University South,
on Jan 12, 2022 at 7:33 pm

Peter Converse is a registered user.

Great analysis, and while I disagree with your conclusion as to Diablo Canyon, I conclude that the 2024 and 2025 shutdowns will happen as scheduled. The reason for my disagreement is that it implicitly assumes (as does CAISO) that renewables procurement from neighboring states and Mexico can be expanded dramatically. I think that that's unlikely, and that net power imports by California may even shrink in the coming decades. California now imports 30% of its power use, net, and virtually all those imports are either fossil fuel or nukes. All of the states those imports are drawn from are generally growing more rapidly than California, have their own huge grid decarbonization needs, and are likely to embrace broader electrification as well. If California can expand its net power imports from the current 83 million MWh/year to 200 million MWh, presumably no problem. But if, instead, those 83 million MWh/year don't increase, or even shrink, it's very different. If NIMBY arises in the other Western states, just as an example, then California has a big problemo. Those 16 million MWh from Diablo Canyon might come in darn handy sometime soon. But I still thought the analysis was very reasonable and thoughtful. Thanks!

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