I have always thought of California as a place that is known for its tech savviness, vibrant music scene, the iconic Golden Gate Bridge, and its open values. Incidentally, it’s also the place where many of my American friends reside. Unfortunately, in recent years, the state embraced an ideological extreme becoming the center of the green fanatical and anti-nuclear dogma.
Surprisingly, California appears to be awakening from its dogmatic energy slumber. In 2023, the Democratic government led by Gavin Newsom made two commendable decisions related to a sane energy policy.
The first significant move was the approval of the life extension of the Diablo Canyon Nuclear Power Station. Nuclear power stations, much like coal, require timely life extensions to avoid additional operations costs and early retirements. I suspect that eventually, California’s ratepayers might have to invest more than the OECD average of $555/kw for the life extensions of Diablo Canyon.
There has been some tiptoeing around the costs involved, because of as the seismic underdesign of the power station. Advocates for nuclear power in California should acknowledge that upgrading Diablo Canyon from a peak ground acceleration of 0.4g to 0.70g will inevitably incur expenses (estimated around $1 billion), but in my view the upgrades will be worthwhile to prevent a seismic disaster and to guarantee the affordable operations cost.
California should look towards France for help. In 2008 the French started their Noyau Dur Program that looked into the resilience of the entire nuclear fleet to post Fukushima Tsunami and Earthquake events. The project proposed certain safety upgrades, and it did incur costs, but it is likely to pay off. The lessons learned were incorporated into a new, much simpler EPR2 design, and the French reactors with life extensions are now ready to operate for another 20 years. France has now even exported its lessons learned to other reactors such as South Africa’s Koeberg, and Belgium’s Tihange and Doel 4 power plants.
The U.S. federal government would do well to implement a similar program across the entire nuclear fleet. Working on old designs have enormous benefits as it inevitably selects for engineers that can solve complex problems and think on their feet. But as is usual in America, there will be challenges when it comes to government spending on sensible infrastructure, as it is perceived by many to intervene with “freedom”.
The second move by Newsom that is even more surprising: California finally realized that homeowners were offsetting the full cost of electricity services, consequently bankrupting the utilities. As I anticipated, a few homeowners now find themselves with stranded assets. With the announced job losses, the local PV industry is set to be impacted, but it was predictable, because from an economics perspective, it makes as much sense to compete against the public utility as it does to grow your own food in your garden and compete against the green grocer.
Utility interconnection request data shows that solar sales have fallen between 66% and 83% year-over-year following NEM 3.0.
What’s more, there have been massive layoffs industry wide. CALSSA said over 17,000 solar jobs have been lost in 2023, representing 22% of all solar jobs in the industry.
Image: CALSSA
Based on interviews of residential solar installers across the state, CALSSA found that 59% of installers expect more layoffs ahead, and 63% expect to have cash flow issues over the next three quarters. About 70% expressed concern about their business outlook, while 43%, or about 300 businesses, said it will be difficult to remain in business.
Is this a sign of sanity returning to the sunshine state?
I suspect so, but they aren’t there yet, because a third step towards sanity would be for California to lift the moratorium on nuclear construction. The sunshine state can easily add and afford at least 10 000 MW as baseload capacity, so that the new nuclear plants to replace the reliance on natural gas imports from neighbouring states. Natural gas prices at the moment are low, but LNG is highly elastic and therefore in the case of another oil shock, the Californian ratepayers will be feeling it even harder in their pocket.
Energy News Beat