Welp, California is looking at continued rolling blackouts if the heat wave continues (and it probably will for another week, based on the weather guessers).
Why, you might ask…
The greenies have gotten the state to go full econazi and ‘transition’ to green energy. Except… They can’t control the wind, or sunshine… And the few natural gas plants they still have are old and tend to break, which is what happened last week. A 470MW gas plant shut down unexpectedly and the wind died.
Oopsie…
After a week of unwelcome drama from a power grid repeatedly bumping up to the edge of of its capacity, Californians weary of living with the specter of rolling power outages–on top of five months with COVID–are wondering what’s gone wrong with the grid and when it can be fixed.
Full article, HERE.
But this statement just floors me… Nuclear is clean energy and they absolutely REFUSE to acknowledge that, or even mention it…
Meantime, advocates of the decades long transition to renewable energy do not doubt the wisdom of California’s commitment to that goal–and the unacceptably destructive environmental impact of doubling down on burning fossil fuels– but do see need for further tuning.
This is the same bunch that lives/works in Sacramento, which has its own power company, SMUD. 80% of SMUD’s power is 56% NG and 24% hydroelectric. They used to have Rancho Seco Nuclear Power station, but it was closed in 1989, after years of mismanagement (projected life for a nuke plant is 50 years).
California has also closed San Onofre and is planning to close Diablo Canyon at Avila Beach in 2024. Diablo Canyon currently produces 8.6% of total California generation and 23% of carbon-free generation. In the early 2000s when California went through the first round of blackouts, I remember the hippies in their Volvos protesting at Diablo Canyon when they brought the second plant on line to ameliorate the rolling blackouts.
The real problem is that dependence on solar (only good 12ish hours a day), and wind (fickle at best), is that unless you have a LOT of battery backup, or contracts for emergency power from the west coast grid, you’re going to be SOL when the weather doesn’t cooperate.
THAT is the situation they are in now. Not enough backup, and, according to a friend in the business, no emergency contracts, so they are paying ‘spot’ prices for power. Palo Verde in Arizona on 30 July sold 30,000MWH of power for $80.00/MWH for example. Other days, the price was under $30.00/MWH…
What long term contracts (LTC) do, is flatten the cost spikes over the long term availability. Here is one explanation-
To put some structure around how LTC prices relate to underlying market dynamics it is useful to deconstruct price drivers into five key categories set out below.
- Exposure: The structure of LTC pricing terms in relation to underlying commodity prices (e.g. fixed price, price indexation, upside sharing or cap & floor terms).
- Intrinsic value: The degree to which LTC value can be hedged against current forward market prices (i.e. the ‘in the $$$’ of the contract).
- Market conditions: The prevailing market pricing of flexibility contained in the LTC (e.g. driven by liquidity, price volatility, pricing/availability of alternative forms of flexibility).
- Duration: The term of the contract which influences available liquidity to manage LTC exposures as well as the level of uncertainty over future price evolution.
- Portfolio drivers: Other portfolio related value driven by factors such as ‘insurance premia’, risk limits, security of supply mandates or strategic considerations.
In summation, IMHO, California is screwed yet again… Power costs are going to go up, and probably sooner rather than later, they are going to run out of power, the ability to produce it at a sustainable level with just solar and wind, and be out of money to buy power.
