The Heart of California’s Darkness

By Kevin D. Williamson

Thursday, September 17, 2020

 

California is in agony: Riots have raged uncontrolled, and so have fires — some of them wildfires consuming the woods in places such as Plumas and Butte Counties, some of them arson consuming shops in Hollywood and the courthouse in Oakland. In 2018 and 2019, nearly 800 businesses left the state, according to the Hoover Institution — last November, Charles Schwab announced that it is moving its headquarters from San Francisco to a Dallas suburb. As a heat wave rolled over the Bay Area, where many homes do not have air-conditioning, residents were forced to stay inside with their windows closed because of the acrid smoke blowing in from nearby wildfires. In mid September, the state was convulsed by the ambush and attempted murder of two sheriff’s deputies in Los Angeles. At the Republican National Convention, California was mocked and held up as a cautionary tale — elect Democrats, and this is what you get.

 

But more than the fires, more than the public-sector union-goon politics in Sacramento, and more even than the riots and arson and police ambushes, horrifying as those are, nothing speaks to the degradation of California quite as eloquently or as forcefully as the rolling blackouts that left a portion of the state in the dark and broiling at the end of the summer. The utility-imposed blackouts — the first of their kind and extent in almost 20 years — are a reminder, unwelcome in Sacramento, that supply and demand cannot be ignored, bribed out of existence, or politicked away.

 

There is some disagreement about the exact cause of California’s recent power outages — or, more accurately, there are competing narratives, ideologically informed.

 

Conservatives and some business groups have blamed California’s politically mandated shift to so-called renewables (wind, solar, etc.), which not only has limited California’s in-state generating capacity, forcing the retirement of practically all of the state’s coal-fired infrastructure, but also has forced restrictions on California’s imports of electricity — an issue of some concern for the nation’s largest consumer of out-of-state juice.

 

Some environmentalists, on the other hand, have pointed to these same problems as evidence of the failure of market-based solutions in the face of climate change, with out-of-state providers unable to deliver surplus electricity during California’s heat wave because they were suffering a heat wave of their own. As temperatures continue to rise and heat waves grow more intense, their argument goes, there won’t be enough electricity to trade during periods of peak demand; and adding new electricity plans powered by cheap and readily available hydrocarbons would only make the problem worse in the long run. What is needed instead, they argue, is action on climate change, including even more restrictions on electricity generation, along with more-intensive conservation efforts.

 

Neither of those accounts is exactly wrong, but neither is exactly right, either.

 

Californians do pay very high rates for electricity thanks to source restrictions (and general Californian-ness), but those restrictions have not stopped the state’s installed in-state generating capacity from growing substantially in the past 20 years, from a total of 55,530 megawatts (MW) in 2001 to 79,845 MW in 2019, according to the California Energy Commission — meaning that California’s generating capacity has grown more quickly than its population has.

 

California managed to expand its generating capacity while cutting coal-fired capacity from 422 MW in 2001 to 55 MW in 2019 and, in a lamentable demonstration of the triumph of green ideology over real-world carbon-reduction goals, significantly reducing nuclear power at the same time. Photovoltaic solar grew from a meager 2 MW in 2001 to 11,278 in 2019, wind-powered capacity more than trebled, and hydroelectric production increased a bit, too.

 

(Of interest is that while California’s in-state capacity has increased, its actual in-state generation declined slightly, from 202,480 gigawatt-hours in 2001 to 200,475 gigawatt-hours in 2019.)

 

Solar, wind, and hydroelectric impose environmental costs of their own in addition to economic costs, but California’s move to renewables does demonstrate that it is possible to restrict fuels, especially coal, while expanding generating capacity — with two important caveats: First, fossil fuels have continued to play the dominant role in California’s electricity mix, with natural gas declining only slightly, from 55 percent of installed generating capacity in 2001 to 51 percent in 2019. Second, wind and solar cannot be switched on and off like a light switch. In particular, solar cannot be switched on very effectively after sunset, which was part of the problem in the recent blackouts: Sunshine power went offline right around the time Californians were returning to their stuffy homes and turning on their power-hogging air conditioners.

 

In the future, it is likely that there will be more air conditioners in California homes rather than fewer, and it is unlikely that further gains from consumer-oriented conservation efforts will amount to much, because California already has the lowest per capita retail sales of electricity in the country, according to the U.S. Energy Information Administration. About two-thirds of California’s electricity is consumed by industrial users, with only a third consumed by residential users; California already imports about a third of its electricity, meaning that its industrial demand accounts for the entirety of its in-state generating capacity. On the other hand, in generating about a third of its electricity from renewables, California has the ability to provide for all of its residential users from its preferred sources.

 

Among California’s big industrial electricity consumers are marquee technology firms such as Google. (The often-heard datum that Google corporately consumes as much electricity as the whole of San Francisco is true, but not a very useful comparison in this context because the figure reflects Google’s operations worldwide.) Both politically and economically, California probably cannot afford to make it more difficult for electricity-hungry technology firms and other industrial consumers to do business in the state.

 

Californians already consume about a third less electricity per capita than the national average, thanks in part to the state’s mild weather but also to the early conservation and efficiency efforts that have kept the state’s household electricity consumption relatively flat since the 1970s while such consumption has climbed steeply in the rest of the country. The low-hanging conservation fruit has been harvested, and there are powerful political incentives hampering future efforts. So California probably should not put too much hope in savings from conservation.

 

Global warming is a useful progressive shibboleth, but it is by nature a global issue, and it is unlikely that even the most robust politically viable program undertaken not only by California but by the United States would be sufficient to have a meaningful effect on long-term temperatures. A world that cannot figure out how to enable free trade in soybeans is not likely to come up with a good way to persuade the entirety of the developing world to artificially lower its future standard of living in order to keep Jack Dorsey’s ice-maker running overtime in Sea Cliff.

 

What to do instead? California might consider turning to its technology innovators for inspiration.

 

Uber, a firm that California has done its utmost to ruin, introduced a great many Americans to surge pricing. Consumers hate it, but it is effective. In short, prices go up in real time when and where demand spikes, something that works very well for Uber and other similar services and could work well for electricity as well. “Some critics are saying the blackouts demonstrate that California can’t pull off a renewables-dominant grid, but that’s the wrong lesson,” writes Severin Borenstein of UC Berkeley’s Energy Institute at Haas. The real lesson of the blackouts is

 

how little progress we’ve made towards incorporating demand responsiveness in the transformation of our electricity system away from fossil fuels. . . . The fastest and cheapest contribution to keep supply in sync with demand when the weather is variable and much of generation is intermittent is to reshape demand to more closely track supply. California policymakers talk about demand responsiveness, but efforts so far have been pretty halfhearted.

 

The main effort to harmonize supply and demand in California’s electricity market has been a program of official pleading for voluntary conservation efforts when electricity is running short. When it comes to getting supply and demand to play nice, political persuasion does not have a very good record — but prices do. Borenstein’s recommendation for a more aggressive program of “critical peak pricing,” which would “give customers lower prices throughout most of the year but impose a much higher price when supply is tight,” is on the right track.

 

Another technology maven who might be of some use to California here is Washington’s Bill Gates — not in his role as the man who created Microsoft but in his role as the main mover behind TerraPower, a nuclear-energy startup whose innovative reactors might be well suited to complementing California’s renewables-oriented electricity mix. The TerraPower reactors are attractive for a few reasons: For one thing, they are partly powered by depleted uranium, making a fuel source out of a waste product that the United States currently has 700,000 metric tons of; for another, TerraPower’s cooling system (which uses molten salt instead of water) doubles as an energy-storage mechanism, allowing the firm’s reactors to raise or lower output by about 50 percent of baseline capacity. Conventional nuclear reactors, on the other hand, have essentially two levels of output: on and off. That variable output would make TerraPower’s miniature reactors an ideal match for the uneven output of a renewables-heavy mix.

 

Surge pricing and improved nuclear power offer some real opportunities — and they face real obstacles, too. One of those is a Republican activist establishment that is fanatically committed to treating climate change and many other environmental concerns as a crypto-Marxist conspiracy against the Ford F-150 and Kentucky coal miners. That kind of thinking is not terribly influential inside California, but it does carry some sway at the federal level. The most pressing issue inside California is a political culture that wants to enjoy the behavioral effects of higher energy prices without suffering the economic and political pain that goes along with them and that has an ideologically blinkered view of nuclear power, informed by 1950s Godzilla movies.

 

But there are promising technical approaches out there waiting for any enterprising California policy entrepreneurs groping around in the dark for solutions.