California Sunset - Radical Shifts in the Golden State's Power and Gas Markets

California energy markets look quite a bit different today than they did five years ago when the state enacted a renewable portfolio standard (RPS) law that requires every utility and other electricity retailer to serve 33% of their load with renewable energy by 2020. Since then, California has seen huge changes in its energy balances – it shut down the nuclear generating plants at San Onofre, regulators expedited the build-out of new transmission lines to get more wind and solar power into the market, the state implemented a carbon cap-and-trade program, the legislature increased the RPS target to 50%, and SoCal Gas’s Aliso Canyon natural gas storage facility sprung a leak.  Today, we look at the changes in California’s energy markets since 2011, and what they mean for future developments in a state far out front in the adoption of renewables and environmental regulation.

An Energy Market in Flux

It was 2011 when California’s state legislature approved –– and Governor Jerry Brown signed into law –– Senate Bill 2, which launched the state into what amounts to a restructuring of its energy markets.  A year later (2012), problems with newly replaced steam generators at the two-unit San Onofre Nuclear Generating Station (SONGS) resulted in their permanent shutdown, taking 2,250 MW of generation capacity out of the power-hungry Los Angeles basin (see Play Me a Songs Mr. Generator Man).

The combination of RPS implementation and the loss of San Onofre prompted state regulators to speed up the build-out of new transmission lines to allow more wind and solar power to move from supply regions to key demand areas.  Both wind and solar saw capacity grow in 2012, with wind up 800 MW and solar rising 600 MW.  That intermittent renewable power supply was far from enough to make up for the San Onofre shutdowns, but fortunately there was help from the Pacific Northwest, which was able to provide hydroelectric power into California thanks to a few strong “water years.” 

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