Bloomberg News

Solar Seen Bailing California Out of Summer Hydro Shortage

May 09, 2014

May 9 (Bloomberg) --California, facing a record drought that’s dried up hydropower supplies and spurred wildfires, has enough electricity to supply peak demand this summer thanks to a jump in solar and gas-fired generation, according to the state’s grid manager.

Demand in the state, which uses more power than any other except Texas, is expected to reach 47,351 megawatts when rising temperatures boost air-conditioner use, the California Independent System Operator Corp. said in an assessment today. The system will have 56,550 megawatts at its disposal when demand peaks, with 3,243 new megawatts of mostly solar and gas-fired power coming online by June 1, the ISO said.

The new generation will help alleviate strain on California’s grid as it deals with the shutdown of Edison International (EIX:US)’s San Onofre nuclear plant and water shortages that are expected to shrink hydropower supplies and may halt output at other plants. While the state has enough resources, it still faces a rise in power prices and reliability challenges, the ISO said.

“There is a lot of solar coming on, and it’s going to coincide with peak lead, so the bottom line is the situation doesn’t look as bad as it previously did,” Chris Jylkka, West regional director for Louisville, Kentucky-based Genscape Inc., which monitors output at U.S. power plants, said in a phone interview. “There’s still some up-side risk with the potential for forest fires, and that’ll force people to commit more in the day-ahead markets.”

Power Prices

On-peak power at the NP15 hub in Northern California for the peak July-through-September season fell 50 cents to $57 a megawatt-hour at 2:26 p.m. New York time, according to data compiled by Bloomberg. The same contract at the SP15 hub in Southern California dropped 65 cents to $57.85, a month-low.

Southern Orange and San Diego counties, areas previously supplied by the San Onofre complex, “will be a focus of summer grid operations” because of potential heat waves, unplanned power plant outages and wildfires threatening transmission lines, the ISO said in an e-mailed statement.

Edison shut the 2,200-megawatt San Onofre power plant in Southern California in January 2012 after a radioactive leak and unusual wear on steam generator tubes were discovered.

The risk of power shortages and transmission constraints may actually come later this year as heating demand lingers and less solar power is available for dispatch, Jylkka, based in Boston, said.

Late Summer

“Everyone thinks summer is July and August, but SP15 has a history of peaking late in the year, so you can get pretty hot days in October,” he said.

Rain and snow-water levels in the Northern Sierras were 44 percent below normal as of May 1, and statewide reservoir storage was 64 percent of average yesterday, data compiled by the state Department of Water Resources show.

These drought conditions will cut hydropower resources by 1,370 megawatts under a normal scenario and 1,669 in an “extreme” situation, the ISO said. Three other “thermal units,” a term typically used to describe gas-fired plants, that produce a total of 1,150 megawatts are also at risk of shutting because of water supply curtailments, the report shows.

“The ISO will work with state and local agencies to monitor these facilities through the summer,” the grid operator said, without identifying the plants. “Water supplies to thermal generation will likely be of a greater concern in 2015 if the current drought continues.”

To contact the reporter on this story: Lynn Doan in San Francisco at ldoan6@bloomberg.net

To contact the editors responsible for this story: Dan Stets at dstets@bloomberg.net Bill Banker, Charlotte Porter


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