Natural Gas Isn't Needed To Replace Diablo Canyon

The historic Joint Proposal to retire and replace Diablo Canyon has led some to contend that California’s use of polluting natural gas will inevitably surge as a result. They just won’t believe that clean energy technologies can fill the gap – even though that is precisely the commitment in a groundbreaking plan joined by NRDC, Friends of the Earth, the Pacific Gas & Electric Company, and others to retire and replace California’s last remaining nuclear plant over the next nine years.

In fact, this proposal rests explicitly on a finding that “the most effective and efficient path forward for achieving California’s  statutory goal for deep reductions of greenhouse gas  emissions is to retire Diablo Canyon at the close of its current operating license period and replace it with a portfolio of greenhouse gas free resources.” And the Joint Proposal includes “a shared commitment” to “the orderly replacement of Diablo Canyon with greenhouse gas free resources,” based on the conclusion that this represents “the reliable, flexible and cost-effective solution for PG&E’s customers.”  

This means the parties to the Joint Proposal have committed to doing all they can to make sure that no natural gas or other fossil fuels replace generation from the giant plant near San Luis Obispo. The ultimate decisions rest, of course, with state regulators supervising the process.

Based on independent analysis that helped inform the Joint Proposal from the outset, NRDC estimates that PG&E customers will save at least a billion dollars by replacing Diablo Canyon with a mix of energy efficiency, renewable energy like wind and solar, energy storage, and flexible “demand response” initiatives (compensating customers for altering their time of energy consumption), compared with operating Diablo Canyon beyond 2025 when its current Nuclear Regulatory Commission license expires.

The availability and cost-effectiveness of non-fossil replacement resources is attested further by the widely respected M.J. Bradley firm, in an assessment commissioned by PG&E, reviewed by NRDC and Friends of the Earth, and released with the Joint Proposal.

So what’s the issue?

Critics complain that the Joint Proposal doesn’t specify the exact sources of the roughly 17,000 gigawatt-hours (GWh) of electricity that Diablo Canyon produces annually now. The proposal includes three stages of competitive resource procurement, overseen by PG&E, which will begin in 2018 in advance of the plant’s closure and lead to acquisitions averaging more than 5,000 GWh per year in the two decades following retirement of the nuclear plant, assuming approval by the California Public Utilities Commission (CPUC).

What about the rest?

The Joint Proposal recognizes that more electricity resources will be needed, and it identifies the relevant timeframe, the principal potential contributors, and important uncertainties that need to be resolved before a full replacement portfolio emerges. As the proposal indicates, “the Parties cannot, and it would be a mistake to try to, specify all the necessary replacement procurement now; what the Parties have proposed in the Joint Proposal are significant and appropriate steps in the journey.”

PG&E should not be making commitments today to all the replacement resources covering a period that begins in 2025 and extends over the additional 20 years that the plant would have run with renewal of its NRC licenses. While there are plenty of cost-effective options on the table already, technology is likely to get still better and cheaper with the passage of time.

To understand how replacement will be managed, it is important also to note specific uncertainties that remain to be resolved, including: 

  • The potential to reduce the need for PG&E to provide as much electricity to customers by 2025, thanks to tighter statewide energy efficiency standards and additional savings by PG&E customers, further expanding an “energy efficiency resource” that has already brought California cost-effective electricity savings that are the annual equivalent of four Diablo Canyons (70,000 GWh/year);
  • Customers’ additions of onsite power generation (such as with rooftop solar panels), which continue to surge and already contribute the equivalent of about half a Diablo Canyon annually, coupled with enhanced contributions from renewable energy generation that will no longer have to be switched off during the afternoon in order to make room for the electricity being generated 24/7 by a giant always-on nuclear plant;
  • Investments in renewable energy and other zero-carbon resources by “Community Choice Aggregators (CCAs),” which some California municipalities are opting to use as substitutes for PG&E in an effort to accelerate renewable energy development. (CCAs reflect a state policy enabling local governments to aggregate their residents’ electricity demand in order to procure alternative energy supplies, without changing ownership of transmission and distribution systems). No one can predict with certainty how much of the electricity needs now served by PG&E will shift to the CCAs, but they will have an important role under any scenario. 

If all these potential sources, coupled with the planned PG&E procurements, do not achieve full replacement of Diablo Canyon’s generation, the Joint Proposal makes provision for remedial  resource procurement by PG&E, overseen by the Public Utilities Commission: “The full solution will emerge over the 2024-2045 period, in consultation with many parties and with the oversight of the CPUC, the California Independent System Operator (CAISO), the California Energy Commission (CEC), the California Air Resources Board, the Governor, and the Legislature.”

And of course, as the Joint Proposal recognizes, California law (SB 350) already requires the CPUC to oversee “an integrated resource planning (IRP) process for (all providers of electricity service) that helps to achieve the State’s greenhouse gas emission reduction target of 40 percent below 1990 levels by 2030 while continuing to deliver safe, reliable, least-cost service to customers.” That mandatory framework will help ensure that the resources replacing Diablo Canyon are fully consistent with California’s climate leadership, and that total statewide greenhouse gas emissions will continue to decline after the two-unit plant is retired.

What’s next?

All parties to the Joint Proposal recognize the importance of replacing Diablo Canyon with clean and affordable non-fossil energy resources, which excludes natural gas. We will bring that message to all involved in making it happen, and the process has already begun. NRDC will be an active participant in all relevant planning and regulatory proceedings to ensure that the replacement goals are achieved. Years of concerted and coordinated effort will be needed from those who have joined in this crucial venture, and we will do our part.

The State Lands Commission took an important first step last week by approving extension of the permits that allow Diablo Canyon’s two units to draw cooling water from the ocean. The extension runs through the end of the units’ federal operating licenses in 2024 and 2025, respectively, allowing time for the clean energy transition that is the Joint Proposal’s central objective.

The next step is to present the Joint Proposal to the CPUC, which will have the opportunity following public proceedings to endorse an inspiring model for other states and nations to follow when they need to replace aging nuclear plants without increasing climate-changing carbon emissions.

About the Authors

Ralph Cavanagh

Energy Co-Director, Climate & Clean Energy Program

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