Wildfire impacts and California’s energy supply

As California endures yet another record-breaking wildfire season, state and local governments, regulators, utilities and citizens are grappling with how to best balance the state’s interests in protecting its citizens from wildfire, ensuring reliable electric supply, and meeting ambitious renewable energy generation goals.

Competing Risks and Demands

California is no stranger to wildfire.  What has changed over the past decade, however, is the severity and scope of these fires, their proximity to populated areas, and the risks that they pose to the state’s electric supply.  As of the date of this writing, more than four million acres have burned throughout the state during the 2020 fire season alone.  These fires threaten both communities and natural resources, as perhaps most starkly demonstrated by the 2018 Camp fire, which burned nearly 19,000 structures and killed 85 people.  

In addition to the immediate threat to life and property posed by wildfire, California’s fires are placing increased stress on the state’s electric supply.  Following the 2018 Camp fire, which was found to be attributable to a failed transmission line on Pacific Gas and Electric’s (PG&E”) distribution system, the state government and the California Public Utilities Commission (CPUC) have taken steps to “reduce the likelihood of utility involvement in wildfires.”  These efforts include, among other things, enabling Public Safety Power Shutoffs (PSPS), which allow the state’s investor-owned utilities to shut off power during severe wildfire conditions.

PSPS shutdowns have not been without controversy.  In November 2019, the CPUC opened an investigation into the utilities’ implementation of the shutdowns in response to concerns that the utilities were not properly weighing the risks and impacts to communities and businesses during PSPS shutdowns.  Intended to be a measure of last resort, PG&E, Southern California Edison and San Diego Gas and Electric initiated 12 PSPS shutdowns in October 2019, affecting hundreds of thousands of customers and, some fear, hampering effective communications efforts between emergency responders and communities at immediate risk of wildfire. 

Pursuant to Senate Bill 901 (2018), the CPUC has also required investor-owned utilities subject to its jurisdiction to submit wildfire mitigation plans to address the risk of wildfire, with the first plans submitted in 2019.  These plans detail utility efforts including vegetation management, asset inspection and repair, system hardening, and system automation to reduce the risk that the transmission and distributions systems will spark a wildfire.  However, it will take years, if not over a decade, to complete the work.

Against this backdrop, California is also pressing forward to meet the state’s aggressive renewable energy portfolio standards (RPS), which mandate that 60% of California’s energy be derived from renewable resources by 2030, and that 100% be carbon-emissions free by 2045.  While some frame the state’s RPS targets and renewable energy development as complementary to managing the challenges that wildfire pose to electric supply, others argue that the state should pause its RPS mandates and permit utilities to redirect funds allocated to meeting renewable energy targets toward vegetation management and infrastructure improvements.  

Operational Concerns

Wildfire activity also presents real-time challenges for utilities and renewable energy project developers and operators.  As recently reported in Renewable Energy World, the California Independent System Operator (CAISO) estimates that solar generation declined nearly 30% in the first two weeks of September from generation averages in July due to the impact of wildfire smoke.  Coupled with an increased risk of generation curtailment due to PSPS events,  wildfire-caused generation reductions could present challenges for solar projects’ production and revenue targets.

CAISO also relies heavily on imports from other Western states to meet capacity needs during high load event.  However, as the recent blackouts throughout the CAISO service territory over the past summer have shown, imports to meet peak needs are becoming increasingly scarce as these states also experience record-breaking heat waves and increased electricity demand within their own borders.  PSPS shutoffs could also further impact the CAISO’s ability to import energy from out-of-state to meet peak demand during hot, windy weather, triggering both a PSPS and high air-conditioning load. 

Moving Forward

As recent events have shown, climate change is driving the need for critical energy infrastructure investment and development.  Increased wildfire risk will require grid hardening and modernization to ensure that California’s transmission and distribution systems don’t spark wildfires in our increasingly hot and dry climate. 

At the same time, increasing temperatures are also causing greater energy demand as Californians retreat to the air conditioned indoors during extended periods of hot weather.  More electric energy is needed to meet this increasing load, especially during net demand peak hours, as California’s solar generation rolls off the system at the end of the day.  At the same time, wildfire impacts on transmission and distribution systems, and on generation itself, can further reduce available capacity. 

Pausing California’s efforts to develop additional renewable and other clean energy resources – as some have suggested is necessary – is not the solution; investing in carbon-intensive energy resources that will exacerbate the already devastating impacts of climate change would be a mistake.  Rather, now is the time for all stakeholders to collaborate and determine how to best invest in long-term solutions that will help solve the Gordian knot of challenges presented by climate change, increasing wildfire risk, and electricity demand.  It is critical that California invest both in hardening its transmission and distribution systems and in substantial additional renewable and other carbon-free generation and energy storage capacity.   

Resiliency is a major focus of DISTRIBUTECH International, set for Dallas, January 26-28, 2022.

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Seth Hilton is a partner at Stoel Rives LLP where his practice focuses on the California energy sector, representing clients before California's energy regulatory agencies including the California Public Utilities Commission and California Energy Commission, as well as in stakeholder proceedings at the California Independent System Operator.

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