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19 May 2022

California proposes 5 GW “Reliability Reserve”

California’s Governor Gavin Newsom’s revised budget draft for 2022 to 2023 includes added spending of $1.75 billion for clean cars and charging infrastructure, $1.5 billion for electric school buses, $1 billion for domestic solar-plus-storage, and most noteworthily, $5.2 billion for a 5 GW “strategic electricity reliability reserve”.

The new draft states at the start of its energy section “Climate change is causing unprecedented stress on California’s energy system—driving high demand and constraining supply. Extreme weather events from climate change—including heat waves, wildfires, and the impact of drought on hydropower capacity, combined with other factors such as supply-chain disruptions—are jeopardizing California’s ability to build out the electric infrastructure in the time frame and at the scale needed.”

The most severe supply chain disruption is surely the AD/CVD investigation which Newsom has mentioned specifically. Perhaps it is because the US has had most of its supply of solar panels cut off for an unspecified duration, that the Reliability Reserve is to consist not only of existing dispatchable capacity scheduled to retire, but potentially even new gas and diesel generators. At least it will include battery energy storage.

Keely Bosler, California Department of Finance director, expects four gas plants totaling 3.7 GW to be involved – they were already scheduled for decommissioned in 2020, and have had their licenses extended to 2023 so far. In similar vein most of California’s nuclear plants have been decommissioned, leaving 2.2 GW operational with a license until 2025, but Newsom said only a few weeks ago that he was looking into the federal funds which the Biden Administration has made available to prolong usage of uneconomic nuclear plants.

The move is similar to the case of the 120 MW of natural gas capacity which was temporarily secured in 2021 via the Department of Water Resources at Newsom’s command.

The original January budget included $2 billion of support for clean energy technologies – joined by $8 billion in the new draft for “energy system resilience, reliability, affordability and energy transition”.

It is strange to see a pro-energy transition politician leaving open the possibility of new diesel generators being deployed – the first choice would surely to be accelerate distributed solar-plus-storage to reduce reliance on an old and exposed grid. Between wind, solar, batteries, and long-duration storage technologies, California shouldn’t have to resort to diesel generators. The impression given is that after multiple other supply chain disruptions – polysilicon, international shipping, Shanghai lockdowns – the AD/CVD investigation has been the nail in the coffin, causing planners to lose confidence in short-term solar development.

Lithium-ion battery has its own supply chain issues and battery storage is of limited help with any multi-day grid crisis like the “heat dome” of summer 2021 which afflicted both California and the neighboring states from which California typically imports 7 GW at any given moment once the sun goes down.

Then there is long-duration energy storage – which California is working towards at scale, having granted $735 million to pre-commercial long-duration storage projects in last year’s budget. Hydrostor has proposed 10 GWh of compressed-air storage for California, and the state is also home to CSP start-up Heliogen, though we definitely won’t see any new CSP on the grid before 2025. The state’s own efforts are backed up by the potential for large-scale energy storage systems in neighboring and nearby states, such as Utah’s Advanced Clean Energy Storage project (ACES), which received $504 million from the Department of Energy last month.

But these projects will take a few years for the first few to be commissioned, while California is facing a high risk of power shortages each year – in 2019 and 2020 there were power cuts, in 2021 a Flex Alert but no power cut, and it remains a threat this coming August.

The last segment of the budget summary addresses “Lithium Valley Development” – including $5 million to further planning for “geothermal and lithium extraction facilities in the Salton Sea region to support in-region lithium and battery production,” $45 million over three years for projects involved in the lithium supply chain, and $80 million for related education. The Salton Sea is a salty lake in the south of the state which has lithium released into it by geothermal activity – enough for an annual harvest of 600,000 tons of the substance, according to California Energy Commission estimates. Berkshire Hathaway Energy and General Motors are among those working towards geothermal extraction.

The overall budget draft from Newsom runs to $300.7 billion, thanks to a record $95.7 billion surplus which exceeded even the Governor’s January estimate of $76 billion.