Efficiency, energy storage, renewables planned due to Diablo Canyon retirement

Pacific Gas and Electric (PG&E) will take various measures in the next several years to compensate for the 9% of California’s power production that will be lost when the two reactors at the Diablo Canyon nuclear plant are retired by 2025.

The PG&E Corp. (NYSE:PCG) utility subsidiary announced June 21 that it has agreed with Friends of the Earth (FOE), the Natural Resources Defense Council (NRDC) and other parties that it plans to operate Diablo Canyon to the end of its current Nuclear Regulatory Commission (NRC) operating licenses, which expire on Nov. 2, 2024 (Unit 1), and Aug. 26, 2025 (Unit 2).

PG&E has agreed to abandon its 20-year license renewal application that it filed with the NRC in 2009.

Under the joint proposal, PG&E will plan to obtain 2,000 gross Gigawatt-hours (GWH) of energy efficiency savings to be implemented over the 2018 to 2014 time period.

The utility will issue a request for offers (RFO) for energy efficiency projects and programs by June 1, 2018. This first phase will procure energy efficiency projects only.

No later than June 1, 2020, PG&E will issue an all-source RFO for 2,000 GWH per year of greenhouse gas-free energy resources or energy efficiency.

PG&E will commit to providing 55% of its total retail sales from eligible renewable energy beginning in 2031 and 2045.

To compensate for the loss of more than 2,000 MW of carbon-free baseload energy, PG&E will look at additional large pumped storage and utility-owned storage projects.

“Given the reliability and resource integration challenges described above, the Parties support a change in existing policies to allow allocation of resource costs for integration and storage” through the California ISO (CAISO) transmission access charge or (TAC). Alternatively, PG&E said it would seek a “cost allocation mechanism” governed by the California Public Utilities Commission (CPUC).

PG&E notes that it has already incurred about $50m related to federal and state license costs in connection with its license renewal effort, which it will now abandon with the NRC.

PG&E will request cost recovery of the license renewal costs. Most of its joint proposal parties will support the cost recovery application.

PG&E submitted a revised Diablo Canyon decommissioning study on March 1 in a CPUC proceeding. A site-specific decommissioning study will now be submitted to CPUC.

PG&E and the other parties are asking that CPUC issue a ruling on the joint proposal application by Dec. 31, 2017.

The Natural Resources Defense Council, one of the signatories on this deal, in a June 21 statement said this agreement opens the door to clean energy. “Energy efficiency and clean renewable energy from the wind and sun can replace aging nuclear plants – and this proves it. The key is taking the time to plan. Nuclear power versus fossil fuels is a false choice based on yesterday’s options,” said NRDC President Rhea Suh. “The Diablo Canyon solution is the way of the future. Even as nuclear plants near retirement, we can cut our carbon footprint with energy efficiency and renewable power.”

Although there have been other recently announced plans to shutter nuclear plants, this is the first with a replacement commitment of no carbon emissions, the NRDC noted. 

NRDC said it was invited originally by Friends of the Earth and PG&E to participate in negotiating a proposal for the orderly closure of Diablo Canyon because of NRDC’s years of participation in California electricity proceedings and expertise on energy efficiency, renewable energy resources, and the safe decommissioning of nuclear plants. Energy Program Co-Director Ralph Cavanagh was NRDC’s lead negotiator.

“Giant baseload nuclear power plants like Diablo Canyon cannot easily be taken offline or ramped up and down as system needs change, which obstructs the integration of renewable resources with variable output into the electricity grid. This worsening problem is forcing the California grid operator to shut down low-cost renewable generation that could otherwise be used productively,” Cavanagh said. 

Diablo Canyon accounts for about 9% of California’s in-state power generation, 6% of the state’s total electricity mix, and about 20% of the electricity in the service territory of PG&E.

This announcement precedes a decision by the California State Lands Commission on whether to extend the permit allowing the plant continued access to ocean cooling water. The parties to the Joint Proposal will support the extension at a June 28 commission meeting, which would allow the plant continued access to ocean cooling water from the current permit’s 2018 expiration date through the end of the two-unit plant’s current operating licenses in 2024 and 2025, respectively. Ocean water intakes would drop significantly once the plant begins its decommissioning process.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.