by conor bernstein
We now know the rolling blackouts that gripped California last summer weren’t an anomaly. They were, in fact, a preview of a reliability crisis that has grown to stretch across the Western grid.
The Western Electricity Coordinating Council (WECC) is warning that the West simply doesn’t have enough power supply to meet a region-wide period of high demand this summer. States are likely at risk of blackouts for days or even months. It’s a shocking warning, but it shouldn’t be surprising considering how much baseload generation has been pushed off the grid in favor of less reliable alternatives.
A feature of the energy transition is a new willingness by states and grid operators to ensure grid reliability by leaning on imports of power to balance demand should the weather not cooperate or demand soar above the available local supply of generation. This new system operates on the assumption that states experiencing a deficit will always be able to import power from neighboring states, which might not always be the case. If there’s no power to import from neighbors, there’s simply no power.
A heat wave that blankets multiple states all at once — just like the one last year that kicked off California’s blackouts — could wreak havoc across the grid. With historic drought conditions already covering much of the West, hydro generation diminished, and ever-greater reliance on intermittent renewable power, it’s increasingly likely the Western grid simply won’t be able to keep up with demand.
WECC now notes that not a single one of its subregions generates enough power to provide sufficient supply during periods of high demand; every single region relies on imports to fill the gaps and avoid blackouts.
Higher Prices and Fear
As Bloomberg reported in May, traders were already betting on supply shortages and sending power prices soaring. At one Western hub, electricity prices had nearly quadrupled since last summer’s blackouts. “We are already seeing record-breaking prices across the West, some of which can be attributed to a fear factor being priced in,” said JP McMahon, a market analyst for Wood Mackenzie.
While traders scramble for available supply, consumers have been left paying more than ever for an electricity system that appears less reliable by the month. Electricity prices in California averaged $18.55 per kWh in 2020 — fully 70% higher than the national average.
Loretta Lynch, who served as Public Utilities Commission president for California during the 2000-2001 energy crisis, told Politico to expect even more pain for consumers. “We’re going to have extraordinary rates,” she said. And Californians are likely to have these extraordinary rates while facing more blackouts.
Lessons to be Learned
A balanced electricity mix that properly values existing, dispatchable capacity is the bridge to the future. Even as we add new sources of renewable power, it’s increasingly clear we should be in no rush to dismantle the energy sources that currently underpin our energy system, especially with soaring electricity demand from electric vehicles now on the horizon. The path forward can’t be a more expensive, less reliable supply of power. If the West’s perilous summer is a preview for what the rest of the nation can expect, it’s time for a detour.
Conor Bernstein is a spokesperson for the National Mining Association, the industry’s trade group based in Washington, D.C.
