On Feb. 10, the California Energy Commission adopted its biennial report on energy issues facing the state, which covers areas that include renewable energy development and efforts to make up for the retirement earlier this decade of the San Onofre nuclear plant.
The 2015 Integrated Energy Policy Report (IEPR) assesses major energy trends and issues and provides policy recommendations. It covers a broad range of topics including the continuing need to improve the energy efficiency of buildings and appliances, decarbonizing the electricity sector and reducing greenhouse gas emissions 40% below 1990 levels by 2030.
The report provides a 10-year forecast of electricity consumption and peak demand. It finds projected electricity consumption to be slightly lower than past projections because of declining consumption and higher projections for self-generation, mostly from solar photovoltaic systems. The report also projects higher natural gas demand, but less natural gas to be used for electricity generation, since several gas-fired plants affected by the state’s once-through cooling rules will need to be retired over the next few years.
Said the report: “California is well on its way to reducing its greenhouse gas emissions to 1990 levels by 2020 as required by the California’s Global Warming Solutions Act of 2006 (Assembly Bill 32, Núñez, Chapter 488, Statutes of 2006). For example, data from the California Air Resources Board shows that in 2013 greenhouse gas emissions from California’s electricity sector was already 20 percent below the 1990 levels. The Governor’s 2030 target strengthens the state’s position to meet its long-term goal of reducing greenhouse gas emissions 80 percent below 1990 levels by 2050. Meeting the 2050 goal will require a deep transformation of California’s energy system – it will require the innovation for which California is so well known.”
An important tool in meeting climate and air quality goals is decarbonizing the electricity sector as part of an integrated approach to reducing emissions from energy use. The state uses renewable energy to serve about 25% of its electricity consumption and is on a solid trajectory to meet the state’s Renewables Portfolio Standard of 33% by 2020. As part of his climate policy, Gov. Jerry Brown set a goal of increasing California’s electricity derived from renewable sources from one-third to 50% by 2030. SB 350 put this goal into law.
“While implementing the 50 percent renewable requirement, care must be taken to maintain the reliability of the electricity system and keep costs competitive,” the report said. “Given the intermittent nature of renewables that are coming on-line, integrating their energy into the grid is a key challenge moving toward the 50 percent renewable goal. One key solution is a regional marketplace that balances supply and demand. Other solutions include targeted energy efficiency, demand response, time-of-use rates that encourage shifts in when consumers use energy, a more diversified portfolio of renewable resources, and energy storage. Finally, research and development will help bring new technologies and other innovations needed to meet the 2030 and 2050 greenhouse gas reduction goals.”
The 2015 IEPR forecast results show slightly lower growth for electricity consumption compared to the forecast from the 2014 IEPR Update. Annual growth rates from 2014–2025 for baseline forecast consumption average 1.27%, 0.97%, and 0.54% in the high, mid, and low cases, respectively, compared to 1.21% in the 2014 IEPR Update mid case. Lower baseline consumption, combined with higher projections for self-generation, particularly photovoltaic systems, reduce growth in peak demand and retail sales. Annual growth rates for peak demand average 0.97%, 0.46%, and -0.28% in the high, mid, and low scenarios, respectively, compared to 1.08% in the 2014 IEPR Update mid case.
Natural gas grows for other uses, but not for power generation
While natural gas may provide a lower carbon fuel source when compared to other fossil fuels used for electricity generation or transportation, recent studies indicate that methane leakage can reduce the climate benefits of switching to natural gas. The ongoing gas well leak at Southern California Gas’ storage facility at Aliso Canyon is an example of a large but unexpected methane leak that is having a very large impact on California’s total carbon footprint while also disrupting the daily lives of residents in an entire neighborhood. Other examples of leaks in the natural gas supply chain are far less obvious yet are of increasing concern, said the report.
Converting biomass to renewable natural gas for use in the transportation sector, electricity generation, and end-use consumption reduces the climate impacts of this fuel, but resource availability may be limited and costs may be high. Assembly Bill 1257 directs the Energy Commission to explore the strategies and options for using natural gas, including biogas, to identify strategies to maximize its benefits.
Similar to electricity, the Energy Commission develops a forecast of natural gas prices, production, and demand as detailed in the 2015 Natural Gas Outlook. By 2024, the final forecast for end-use natural gas demand is about 9.3% higher than the 2013 IEPR forecast. Staff attributes the higher growth rates to an increase in natural gas demand in the residential, commercial, and transportation sectors. Demand for natural gas used in electricity generation, however, is expected to decline over the forecast period. This is driven by increases in the share of electricity generated from renewable resources that reduce the need for power from fossil-fueled sources.
Report looks at San Onofre, Diablo Canyon nuclear issues
In June 2013, Southern California Edison announced the permanent retirement of San Onofre Units 2 and 3. Southern California Edison plans to complete the decommissioning of San Onofre within 20 years and, consistent with a 2013 IEPR recommendation, to transfer its spent fuel from cooling pools into dry casks by 2019. In preparation for the decommissioning of multiple sites in the near term, the Nuclear Regulatory Commission recently launched a new rulemaking to identify potential improvements to decommissioning regulations. The Energy Commission intends to actively engage in that rulemaking with the objective of ensuring that state and local concerns about the decommissioning of nuclear plants are more effectively addressed by the Nuclear Regulatory Commission.
The Diablo Canyon nuclear plant operates under its original licenses, which are set to expire in 2024 and 2025, respectively. While Pacific Gas and Electric filed a federal application to renew its operating license in 2009, it is uncertain whether Diablo Canyon will continue to operate beyond the current licenses, the report said. One factor impacting the future of Diablo Canyon is the compliance costs and time (up to $14 billion and 14 years) associated with the State Water Resources Control Board’s once-through-cooling policy, which establishes uniform standards to reduce the harmful effects associated with cooling water intake structures on marine life.
Another factor influencing Diablo Canyon’s license renewal application is the seismic study recommended by the 2013 IEPR. Pacific Gas and Electric completed its study in September 2014 and concluded that the plant is designed to withstand a major earthquake on any of the faults surrounding Diablo Canyon, reducing the level of uncertainty for some seismic hazards. However, external stakeholders and reviewers, including the Independent Peer Review Panel, have been highly critical of the study results, since some seismic hazards continue to remain poorly understood, the report noted.
The 2013 IEPR also recommended an evaluation of the potential long-term impacts and projected costs of spent fuel storage in densely packed pools versus dry cask storage, and the potential degradation of fuels and package integrity during long-term storage and offsite transportation. The NRC subsequently provided new guidance to nuclear plant operators on loading patterns for spent fuel in pools, advising a “dispersed” loading pattern that provides a “more favorable response” in the event of a loss of cooling water. Pacific Gas and Electric, in its recent California Public Utilities Commission filings, laid out a plan for spent fuel loading at Diablo Canyon that achieves the lower limit constraint in compliance with the NRC regulations, but does not achieve the more preferable dispersed loading pattern.
The federal government has yet to comply with its obligation to remove spent nuclear fuel from state facilities, leaving California to face a prolonged period of maintaining spent nuclear fuel at decommissioned plant sites, the report added. Proposed federal legislation founded on a consent-based process would authorize the U.S. Department of Energy to move forward with developing an interim storage facility and provide financial benefits to communities that agree to host such facilities.
OTC rule plus San Onofre retirement to leave big generation gap
With the impending retirement of several fossil-fueled facilities and the closure of the San Onofre station in Southern California, ensuring the region’s electricity system reliability has been a major focus since 2011. The State Water Resources Control Board’s 2010 policy to phase out the use of once-through cooling affects 10 power plants in the Los Angeles and San Diego basins. Those power plants total just over 11,000 MW. Taken into consideration along with the 2,200 MW lost with the 2013 closure of San Onofre, it is important to ensure that the region does not suffer grid reliability issues, said the report.
Shortly after the announced closure of San Onofre, Gov. Brown asked for a multi-agency plan to address the replacement of the power and energy that had been provided by the plant. As reported in the 2013 IEPR, this effort resulted in the Preliminary Reliability Plan for the Los Angeles Basin and San Diego. The plan called for a rough replacement target of 50% preferred resources and 50% conventional generation. An inter-agency team has continued to meet regularly to advance the plan. The 2014 IEPR Update covered the progress made since the formation of the team, and this year’s report covers the additional work completed to date on local capacity issues, resource procurement, contingency planning, and mitigation options, as well as the work that will be needed going forward.
In 2014, electricity supplies from existing coal- and petroleum coke-fired plants represented less than 5% of total energy requirements to serve California demand, and nearly all of it (93%) was from power plants located outside California, like the Intermountain coal plant in Utah. By 2026, virtually all electricity generated by known coal- and petroleum coke-fired generation serving California loads is expected to end.
In the SDG&E service territory, there are in the works gas-fired projects totaling 918 MW including: Pio Pico, Carlsbad Energy Center (comprised of five 100 MW peakers), and the collection of small peaking plants known as Cabrillo II that went into service in 2013. Full construction of the Pio Pico project began in February 2015, and as of December 2015 the project was 34% complete and on schedule for its target in-service date. The California Public Utilities Commission’s approval of the SDG&E/NRG Energy power purchase agreement (PPA) for the Carlsbad project now has two challenges filed in December 2015 with the California Court of Appeals. NRG has begun demolition of the old oil storage tanks within the Encina site to allow construction of Carlsbad, but a firm schedule of milestones to meet a 2017 in-service date cannot be provided until the appeals process is complete.
There are also three gas-fired projects in the SCE area totaling 1,382 MW that the CPUC approved in November 2015: Alamitos, Huntington Beach, and Stanton.
The gas-fired projects in the works are:
- Pio Pico (305 MW), SDG&E, 6/1/2017 targeted in-service date;
- Carlsbad Energy Center (500 MW), SDG&E, 11/1/2017 targeted in-service date;
- AES Alamitos (640 MW), SCE, 6/1/2020 targeted in-service date;
- AES Huntington Beach (644 MW), SCE, 5/1/2020 targeted in-service date; and
- Stanton Energy Reliability Center (98 MW), SCE, 7/1/2020 targeted in-service date.