California Declares State of Emergency, Raising Flags about its Transition Away from Gas

What’s the issue?

California has proposed that all new light-duty vehicles be zero-emission vehicles starting in 2035, which will add significant incremental load to the power grid. At the same time, California is ramping up the percentage of renewable and zero-carbon energy resources. By 2030, California is planning to have at least 60 percent of California’s electricity coming from renewables, with 100 percent of electric retail sales to come from renewable and zero-carbon resources by 2045.

Why does it matter?

California is currently under a State of Emergency due to projected energy supply shortfalls with only 33 percent of generation coming from intermittent renewable resources. Ironically, the current supply shortfall and State of Emergency caused California to add new natural gas-fired generation under temporarily suspended air quality rules. In addition, last summer, California experienced rolling blackouts due primarily to the increase in intermittent renewables. Adding new load to the grid by electrifying the transportation sector and others while increasing the percentage of renewable power generation will likely exaggerate these problems.

What’s our view?

California’s clean energy goals, including those for the transportation and power sectors, are highly ambitious. To accomplish its goals, California must build up to 6 GW of new renewable and storage resources annually. However, over the last decade, the state has built on average 1 GW per year. Therefore, as the state moves to phase out reliable, readily available natural gas-fired generation and replace it with intermittent renewable resources, it will likely come with significant consequences, including supply shortages, outages and an unreliable grid.


California has long led the nation in setting ambitious clean energy goals. Two sectors where California has particularly ambitious goals are transportation and power generation. As we highlighted in The End of the Internal Combustion Engine Age?, on September 23, 2020, Governor Newsom signed an executive order setting aspirational targets for zero emission vehicles (ZEV), including by 2035, 100 percent ZEV sales for new passenger vehicles and, by 2045, 100 percent ZEV operations for medium- and heavy-duty vehicles. During a similar timeframe, the state plans to decarbonize the electric grid. Senate Bill (SB) 100, “The 100 Percent Clean Energy Act of 2018,” establishes a target for renewable and zero-carbon resources to supply 100 percent of retail sales by 2045. The bill also increases the state’s Renewables Portfolio Standard (RPS) to 60 percent of retail sales by December 31, 2030. These goals have noble intent as California is suffering from high heat, record drought conditions, and high wildfire risk caused by climate change. But the current State of Emergency due to energy supply shortages and the recent announcement by the California Department of Water Resources to set up five temporary gas-fired power generators to avoid blackouts raise flags about their viability.

On July 30, 2021, Governor Newson proclaimed a State of Emergency, ordering solar, wind, and other green power projects to speed up completion and temporarily removed some air quality rules, paving the way for more fossil fuels to be placed into service to alleviate supply shortages projected for this summer and next. In addition, the State of Emergency set up payments for large energy users to reduce demand during periods of short supply. This is not the first time California has had challenges balancing the grid; just last summer, the California Independent System Operator (CAISO) was forced to institute rotating electricity outages in the midst of an extreme heatwave due to the failure of the planning process to keep pace with the transition to a reliable, clean and affordable resource mix.

Before digging into the incremental electric load required to support California’s ZEV policies, let’s first look at the resources used today to supply demand on a summer day. The top chart below is demand data provided by CAISO for August 12, 2021. Peak demand occurs in the late afternoon and early evening hours. While overall demand rises and falls as the temperature outside changes day to day, the general shape of the load curve is relatively consistent during the summer months. The bottom chart below breaks down the supply resources used to meet demand.






As seen in the supply chart above, renewable resources are most abundant from 9 a.m. to 5 p.m., when solar resources generate the most power. On any given day in August 2021, between 11,000 megawatts (MW) and 13,000 MW of solar capacity were supplying power midday, out of a total installed capacity of 14,276 MW as of August 1, 2021. When solar generation declines rapidly in the late afternoon and early evening hours, natural gas-fired generation is ramped up to meet demand. During August 2021, between 5,000 MW and 14,000 MW of natural gas capacity was used to supply power during non-peak hours, and between 15,000 MW and 25,500 MW of natural gas capacity was used to meet daily net peak demand, which is the peak of demand net of solar and wind generation resources. According to the California Energy Commission, as of December 31, 2020, there were 39,409 MW of installed natural gas-fired electric generation capacity in California, which accounts for 49 percent of total installed generation capacity in the state.


Incremental Electricity Load

In order to meet the targets in Governor Newsom’s executive order, the California Air Resources Board estimates that 8 million light-duty ZEVs and 180,000 medium- and heavy-duty ZEVs will be needed in 2030. As reported in the July 2021 Electric Vehicle Charging Infrastructure Assessment, California Energy Commission models project that electricity consumption in 2030 from light-duty vehicle charging alone will reach around 5,500 MW around midnight and 4,600 MW around 10 a.m. on a typical weekday, increasing electricity demand by up to 25 and 20 percent at those times, respectively.




Model results indicate that nonresidential charging demand will generally align with daytime solar generation; however, more than 60 percent of total charging energy will still be demanded when sunshine is not abundantly available.

While private light-duty vehicles typically see extended periods of downtime that allow for flexible charging patterns, medium- and heavy-duty vehicles tend to adhere to rigid operating schedules, making infrastructure planning for these vehicles unique with less downtime and higher-power charging presenting challenges. While there is significant variation in energy demand timing among these vehicle types, the charging network needed in order to meet the state's projected goal of 180,000 medium- and heavy-duty ZEVs in 2030 corresponds with a load in excess of 2,000 MW around 5 p.m. on a typical weekday, when daily electricity demand is near its highest.


California Renewable Energy Targets

At the same time that California plans to ramp up ZEV charging load, the state will be ramping up the percentage of renewable and zero-carbon energy resources to supply customers under SB 100. SB 100 established a target for renewable and zero-carbon resources to supply 100 percent of retail sales by 2045.

In addition to the 2045 goals, SB 100 updates the state’s RPS to ensure that by 2030 at least 60 percent of California’s electricity is renewable. The RPS, established by law in 2002, has been a primary driver for increasing clean electricity generation. The law and subsequent amendments require the state’s electric utilities to make renewables an ever-greater percentage of their power base. According to the California Energy Commission, the state exceeded the 2020 target of 33 percent renewables in 2019 and 2020. Eligible renewable energy resources under the RPS include: solar, wind, geothermal, biomass, biomethane, small hydroelectric, and fuel cells using renewable fuel or qualifying hydrogen gas. Existing large hydroelectric and existing nuclear resources are also eligible resources under SB 100 to meet 2045 targets.

In order to better illustrate power supply in California today, the chart below breaks out 2020 California in-state power generation by fuel type.




During 2020, just over 33 percent of electricity generated in California was from renewable fuels, while 48 percent was produced using natural gas, 9 percent from nuclear, and 10 percent from large hydroelectric facilities. On average, net imports average just over 25 percent of total power supply in California.

Forty-eight percent of in-state electricity produced in California comes from natural gas, a reliable, readily available energy resource, while only 33 percent is produced from intermittent renewables. The current State of Emergency due to supply shortages and the rolling blackouts last summer raises the question: how does California get from here to a stable grid and a reliable energy supply under SB 100, when natural gas generation will be phased out and can only serve non-retail load or system losses by 2045?

According to the March 2021 SB 100 Joint Agency Report on Achieving 100 percent Clean Electricity, to reach the 2045 target while electrifying other sectors to meet the state’s economy-wide climate goals, California will need to roughly triple its current electricity grid capacity. In addition, California will need to sustain its expansion of clean electricity generation capacity at a record-breaking rate for the next 25 years. On average, the state may need to build up to 6 GW of new renewable and storage resources annually. By comparison, over the last decade, the state has built, on average, 1 GW of utility solar and 300 MW of wind per year.

To say that sustaining capacity expansions at a record-breaking pace for 25 years is ambitious is an understatement, one likely to come with consequences. In this instance, the most likely consequences are supply shortfalls and power outages similar to what California is seeing today and experienced last summer. Ironically, the current supply shortfall and State of Emergency is leading California to add new gas-fired generation under temporarily suspended air quality rules. According to the Joint Agency Report, there is growing interest and investment in natural gas generation with carbon capture and sequestration to provide more flexibility and reliability in the state’s electricity grid. However, technological and economic barriers to full decarbonization of fossil fuels remain high.

If you would like to discuss this issue in depth, please contact us.

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