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California's power market balancing act

Why the state won't let go of nine gas plants set to retire this year

1 minute read

The California State Water Resources Control Board is set to meet on September 1, where they will vote on the extension of once-through-cooling (OTC) compliance deadlines for nine OTC gas plants set to retire at the end of this year – effectively delaying their retirement. The vote represents another rendition of the balancing act California is performing when it comes to achieving its renewable portfolio standards and climate goals while also maintaining grid reliability.

With well-cited concerns by entities including the California Energy Commission, California Public Utilities Commission, and CAISO, along with recent evidence showing the sensitivity of California’s supply stack, the board is expected to approve the extension for over 3.6 GW of thermal capacity in Los Angeles County.

So, what is the challenge at the heart of this balancing act and how does extending these units aide that effort?

The problem

In an analysis of California’s electric supply as well as statewide and local area grid reliability, the Statewide Advisory Committee on Cooling Water Intake Structures (SACCWIS) stated: “starting in the summer of 2021, additional power is likely needed for peak usage on hot days through 2023.”

The committee, which advises the State Water Board on OTC policy, cited four major contributing factors driving this concern: "shifts in peak demand to later in the day and later in the year when solar and wind resources are not as reliably available to meet peak demand; changes in the method for calculating the qualifying capacity of wind and solar resources resulting in lower qualifying capacity for these resources than previously determined; a significant increase in projected reliance on imported electricity over historical levels; and earlier-than-expected closures of some non-OTC power generating facilities" ...