California Has Decided Its Energy Future: Now It’s Georgia’s Turn

California Has Decided Its Energy Future:
Now It’s Georgia’s Turn

A couple of weeks ago, California Governor Jerry Brown signed into law a bill that sets California on the path toward generating all of the state’s electricity from clean sources. The word “clean” is somewhat of a hedge as it leaves the window cracked open for nuclear power to be included in this zero-carbon objective. However, California’s recent history all but points to their real objective of 100% renewable energy since the state recently voted to shut down its last remaining nuclear plant, Diablo Canyon, and subsequently passed legislation requiring that Diablo’s generation be offset by zero-carbon resources.

The California dream is 100% renewable energy—zero coal, zero natural gas and zero nuclear. Moreover, Governor Brown hopes that California’s 100% clean energy bill will serve as a model for other state and national governments and will “wake up the national leaders” on the need to confront climate change.

Meanwhile, on the other side of the country, the lone U.S. nuclear construction project at Plant Vogtle faces a critical vote on Monday, September 24.

I’ve written and spoken more times than I can count about the need for these new reactors and this new nuclear capacity. In particular, I’ve tried to convey the national security implications of Vogtle as America’s lone nuclear construction project and that the success of this project isn’t merely a Georgia issue—it’s a U.S. issue. Some links to those articles are here, here, here, here, and here. However, I’ll keep this post closer to home and focus on the realities within Georgia’s borders. Two political realities, one engineering reality and one economic reality that Georgia cannot dismiss offhand, because they aren’t going away.

The political realities: 1) Coal is all but dead in the U.S. and as Georgia retires its coal fleet and loses the baseload capacity of coal-fired power, it will not build any more coal plants to replace them in the foreseeable future; and 2) A price on carbon will eventually be levied; whether we accept the science on climate change or not, a price on carbon is only a matter of time, election cycles and political calculus and it will increase the price of electricity if the only zero-carbon alternative is renewable energy.

The engineering reality: Georgia has only one currently viable renewable energy resource within the state that it can look to in the future—solar PV. But it isn’t a substitute for nuclear or for coal or for natural gas because it doesn’t share the operating characteristics of any of these three. Georgia needs to continue increasing the share of solar in the state, but it can’t look to solar as a substitute for lost coal or nuclear capacity.

As for the economic reality: the current economics of electricity markets cannot see the two aforementioned political realities. Therefore, marginal costs are a poor substitute for energy policy and the economics of today’s natural gas prices should not dictate the next 25-30 years of Georgia’s electric power sector. Policy and policymakers are responsible for doing that—but they must see it and understand it first.

Georgia Policy vs. California Policy

By way of legislative action, California is restructuring its entire electric power sector for one core reason: to battle global climate change. In 2016, global CO2 emissions were 33,017,000,000 metric tons (mtons). In 2016, California’s electric power sector emitted 47,007,640 mtons, which is 0.142% of global CO2 emissions. For this, California is applauded by environmental extremists and anti-nuclear activists for their contributions to addressing the global issue of climate change. However, California’s policy will not be impactful at the global scale and it isn’t without cost. The three figures below illustrate the electricity profiles for Georgia and California along with historical residential rates whereas Table 1 summarizes the changes that have occurred from 1990-2016.

Figure 1. Residential electricity rates for Georgia and California.

Figure 2. Georgia electricity and emissions profile.

Figure 3. California electricity and emissions profile.

Table 1. Summary of Georgia and California electricity and emissions from 1990-2016

It’s notable that from 1990-2016 both Georgia and California moved away from coal. During that period, Georgia reduced CO2 emissions from its electric power sector by 7,697,146 mtons, an 11.3% reduction, while California reduced CO2 by 5,648,003 mtons, a 10.7% reduction. During this time, Georgia’s utility sector worked with the Georgia Public Service Commission on a pragmatic approach to steadily offset coal with natural gas while incorporating calculated measures of solar.

However, nothing speaks more loudly than electricity rates and reliability. As California has taken its very progressive policy approach that essentially moves away from coal, natural gas and nuclear, the resulting impact on rates is telling. From 1990-2016, California’s residential rates increased 74.2%, from 9.98 to 17.39 cents/kWhr. During this same period, Georgia’s residential rates increased 54.2%, from 7.46 to 11.50 cents/kWhr. Currently, June 2018 YTD, California’s residential rate is 18.74 cents/kWhr, 5th highest in the lower forty-eight states, whereas Georgia’s rate is 11.32 cents/kWhr. The U.S. average is 12.78 cents/kWhr.

As for reliability, the North American Electric Reliability Corporation’s (NERC) 2018 Summer Reliability Assessment warned that the California Independent System Operator (CAISO), which oversees the operation of California’s bulk electric power system, “faces significant risk of encountering operating conditions that could result in operating reserve shortfalls”. California recently dealt with such outages, something rarely seen in Georgia.

If the metrics are reduced carbon, low electricity rates and improved reliability, Georgia is doing something right and California is doing something else. And this is not the model for the U.S. But, does this lend itself to continuing the construction of Units 3&4 at Plant Vogtle?

Yes.

With the addition of these two reactors, Georgia knows what it will be getting. Proven and reliable, zero-carbon baseload electricity that will continue to diversify the state energy portfolio, offset the loss of baseload coal-fired power with baseload zero-carbon nuclear power, continue Georgia’s carbon reduction trend without sacrificing reliability and, for 60-80 years, protect Georgia citizens and Georgia’s economy against the volatility of natural gas prices, the inevitable price on carbon and the intermittency of solar. Without these reactors, Georgia will be walking blindly into a future that it can only guess at—and that isn’t wise and prudent energy policy. That’s an avoidable miscalculation. There is no question that the U.S. must reduce the costs of constructing nuclear plants. However, to walk away from the construction of Vogtle Units 3&4 based predominantly on the economics of today’s electricity market will likely put an end to the prospects of nuclear for the foreseeable future. Moreover, it will turn the state’s economic sails into the winds of natural gas and solar PV, which will not be enough to power the ship in the direction Georgia wants and needs to take.

National Security and Climate Change

As I pointed out previously, and in the links provided, my arguments in support of U.S. nuclear power and the Vogtle project have included the national security implications of the U.S. ceding global nuclear power leadership to China and Russia. It’s argued by some that this alone isn’t justification for continuing with Vogtle Units 3&4. But there’s other sound rationale, which is what I’ve offered here and in other articles as well. However, it always strikes me as fundamentally hypocritical that arguments in support of Vogtle as a U.S. national security issue are often scoffed at by individuals who will praise California for its efforts to address a global climate issue. This reflects an ideological gap between some states as to their respective energy policies where efforts by one state to address a global issue are lauded while efforts by another state to address a U.S. national security issue are dismissed.

But what is the logic for opposing nuclear power, the only energy resource that addresses both national security and global climate? Apparently, it’s a logic that only California understands and is now enacting by legislation.

Closing Comment

Since 1990, Georgia has maintained some of the lowest electricity rates in the country, continually reduced CO2 emissions from its electric power sector and provided reliable electricity for the economic development of the top business state in the U.S. Georgia has done this with nuclear power, and it’s a bettor’s gamble to think that Georgia can continue this trend without nuclear power.

Difficult as it may be, and I’m not so naive as to believe it isn’t difficult, Vogtle isn’t merely a decision about today—it’s a decision about the future and it has national security, climate change and economic development implications. And if we want to know what a future without coal and nuclear looks like, we need to look no further than the model California is proposing for all U.S. states. But it isn’t cheap, it isn’t reliable and it isn’t the direction Georgia should take.

 

…ilyh…

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