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Released May 02, 2018 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--A century ago, in New York, anti-immigrant merchants looking to hire workers put this sign in their windows: "No Irish Need Apply." That's probably how power developers feel now about building gas-fired power projects in California.
It's not that electric utilities in California have suddenly turned against gas because of some hostility to the fuel. Rather, the state's renewable energy and climate change laws rules are forcing those decisions. And future legislation could accelerate the shift away from gas-fired power.
The state's current renewable portfolio standard (RPS) calls for 33% of electricity to come from renewable resources by 2020, rising to 50% by 2030. Some state lawmakers want to go even further even faster: Legislation is under consideration to compel utilities to get 52% of their electricity from renewable resources by 2027, 60% by 2030, and ultimately 100% of their electricity would have to come from carbon-free resources by 2045.
The other driver is the state's greenhouse gas (GHG) reduction goals, which call for a 40% reduction in emissions below the 1990 baseline by 2030.
The combined effect of an ever-rising RPS and the GHG reduction mandate effectively precludes building any type of generation in the Golden State except wind, solar, small hydro, biomass, geothermal, electricity storage and distributed energy resources (DERs) like rooftop solar and community solar. Those measures not only will preclude construction of new gas-fired generation, they also will cause some existing gas-fired generation to close, which alarms some of the state's electric utilities. For more on this, see March 6, 2018, article -- Beyond Nuclear and Gas: California Looks to Cut Greenhouse Gases with Renewables and Storage.
Last month, the Glendale City Council (Glendale, California), placed a "hold" on plans to repower the 80-year-old Grayson Power Plant, a 500-megawatt (MW) gas-fired generator. Instead, the lawmakers instructed the local utility, Glendale Water & Power (Glendale, California) to more fully investigate cleaner, non-emitting electric options.
In another April development, NRG Energy Incorporated (NYSE:NRG) (Princeton, New Jersey), which has been trying to build the 262-MW Puente Power Plant for Southern California Edison (SCE) (Rosemead, California), a unit of Edison International (NYSE:EIX) (Rosemead, California), asked regulators for more time to consider its license application. Regulators delayed consideration of a license for this project last November, and last month NRG asked regulators for an extension on the license application. NRG's client, SCE, was, under the direction of state utility regulators, casting about for non-emitting generation resources like wind, solar and battery storage, as well as transmission and distribution (T&D) upgrades that might obviate the need for new generation. SCE expects to announce the results of its request for offers (RFO) next March.
The Glendale and NRG moves follow a decision earlier this year by the California Public Utilities Commission (CPUC) (San Francisco, California) to deny Pacific Gas & Electric (PG&E) (San Francisco, California) the opportunity to use power from three existing gas-fired units to meet customer demand and system voltage requirements. Those units, totaling about 700 MW of generation capacity, are operated by Calpine Corporation (NYSE:CPN) (Houston, Texas).
Nearly one year ago, the Los Angeles Department of Water & Power (Los Angeles, California), put its $2.2 billion plan to upgrade three gas-fired power stations on hold while it looked for "cleaner energy resources." As yet, the utility has not released the findings of its search.
Approximately 29 gas-fired power generation projects were completed in California between 2010 and the first quarter of 2018. The value of these projects, according to Industrial Info Resources' Global Market Intelligence platform, is about $8.5 billion. In aggregate, these projects added about 7,336 MW to the state's electric supply.
But over that same time period, 18 gas-fired power generation projects were cancelled or placed on hold. The aggregate value of these projects is about $4.2 billion. If all were built, the state's electric generating capacity would have grown by about 5,212 MW.
Industrial Info currently is tracking 10 active gas-fired power generation projects still under development in California, valued at about $5.5 billion. If all these power generation projects were built, they would add about 4,735 MW of new generation to the state's electric grid. These projects include grassroot construction, unit additions and unit repowerings.
But the state is awash with electric generation capacity at a time when usage in aggregate is declining and a flood of renewable resources have come online or plan to come online in the near future. For that reason, Industrial Info expects a growing number of gas-fired power projects in the state will slip from the "active" column into the "cancelled" or "on hold" columns.
"It looks as if the 'dash to gas' is about over for California," commented Britt Burt, Industrial Info's vice president of the Global Power Industry. "That's one of the consequences of the state's focused effort to grow its renewable generation while lowering electric demand and decentralizing its generation options. The Power industry will continue to keep a close eye on California to see how the state's electric future unfolds."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
It's not that electric utilities in California have suddenly turned against gas because of some hostility to the fuel. Rather, the state's renewable energy and climate change laws rules are forcing those decisions. And future legislation could accelerate the shift away from gas-fired power.
The state's current renewable portfolio standard (RPS) calls for 33% of electricity to come from renewable resources by 2020, rising to 50% by 2030. Some state lawmakers want to go even further even faster: Legislation is under consideration to compel utilities to get 52% of their electricity from renewable resources by 2027, 60% by 2030, and ultimately 100% of their electricity would have to come from carbon-free resources by 2045.
The other driver is the state's greenhouse gas (GHG) reduction goals, which call for a 40% reduction in emissions below the 1990 baseline by 2030.
The combined effect of an ever-rising RPS and the GHG reduction mandate effectively precludes building any type of generation in the Golden State except wind, solar, small hydro, biomass, geothermal, electricity storage and distributed energy resources (DERs) like rooftop solar and community solar. Those measures not only will preclude construction of new gas-fired generation, they also will cause some existing gas-fired generation to close, which alarms some of the state's electric utilities. For more on this, see March 6, 2018, article -- Beyond Nuclear and Gas: California Looks to Cut Greenhouse Gases with Renewables and Storage.
Last month, the Glendale City Council (Glendale, California), placed a "hold" on plans to repower the 80-year-old Grayson Power Plant, a 500-megawatt (MW) gas-fired generator. Instead, the lawmakers instructed the local utility, Glendale Water & Power (Glendale, California) to more fully investigate cleaner, non-emitting electric options.
In another April development, NRG Energy Incorporated (NYSE:NRG) (Princeton, New Jersey), which has been trying to build the 262-MW Puente Power Plant for Southern California Edison (SCE) (Rosemead, California), a unit of Edison International (NYSE:EIX) (Rosemead, California), asked regulators for more time to consider its license application. Regulators delayed consideration of a license for this project last November, and last month NRG asked regulators for an extension on the license application. NRG's client, SCE, was, under the direction of state utility regulators, casting about for non-emitting generation resources like wind, solar and battery storage, as well as transmission and distribution (T&D) upgrades that might obviate the need for new generation. SCE expects to announce the results of its request for offers (RFO) next March.
The Glendale and NRG moves follow a decision earlier this year by the California Public Utilities Commission (CPUC) (San Francisco, California) to deny Pacific Gas & Electric (PG&E) (San Francisco, California) the opportunity to use power from three existing gas-fired units to meet customer demand and system voltage requirements. Those units, totaling about 700 MW of generation capacity, are operated by Calpine Corporation (NYSE:CPN) (Houston, Texas).
Nearly one year ago, the Los Angeles Department of Water & Power (Los Angeles, California), put its $2.2 billion plan to upgrade three gas-fired power stations on hold while it looked for "cleaner energy resources." As yet, the utility has not released the findings of its search.
Approximately 29 gas-fired power generation projects were completed in California between 2010 and the first quarter of 2018. The value of these projects, according to Industrial Info Resources' Global Market Intelligence platform, is about $8.5 billion. In aggregate, these projects added about 7,336 MW to the state's electric supply.
But over that same time period, 18 gas-fired power generation projects were cancelled or placed on hold. The aggregate value of these projects is about $4.2 billion. If all were built, the state's electric generating capacity would have grown by about 5,212 MW.
Industrial Info currently is tracking 10 active gas-fired power generation projects still under development in California, valued at about $5.5 billion. If all these power generation projects were built, they would add about 4,735 MW of new generation to the state's electric grid. These projects include grassroot construction, unit additions and unit repowerings.
But the state is awash with electric generation capacity at a time when usage in aggregate is declining and a flood of renewable resources have come online or plan to come online in the near future. For that reason, Industrial Info expects a growing number of gas-fired power projects in the state will slip from the "active" column into the "cancelled" or "on hold" columns.
"It looks as if the 'dash to gas' is about over for California," commented Britt Burt, Industrial Info's vice president of the Global Power Industry. "That's one of the consequences of the state's focused effort to grow its renewable generation while lowering electric demand and decentralizing its generation options. The Power industry will continue to keep a close eye on California to see how the state's electric future unfolds."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
