Energy policy is often described in moral terms, with “green energy” representing the forces of good and fossil fuels representing the forces of darkness. But really it’s about math. California politicians have spent decades fighting a losing battle against math. In August, math finally won.
The rolling blackouts that cut off power during an August heat wave were the entirely predictable — and often predicted — result of a series of energy policy decisions designed to impose politicians’ energy preferences on a market that wasn’t ready for them.
Renewable energy advocates were quick to claim that green energy policy wasn’t to blame because wind and solar power did not fail. But that’s not accurate.
The first outages in August were caused in the evening when the state needed to switch from solar to natural gas. One 470 megawatt gas plant tripped offline and 1,000 megawatts of wind power were lost when winds died down, the state’s electricity grid operator reported.
“All available resources are needed to meet the growing demand,” the California Independent System Operator explained when describing the situation.
There’s a reason for that — a political one.
California energy policy has created an artificial shortage of reliable base load energy.
And those same policies are being pursued by activists in New Hampshire and throughout New England.
Since at least the late 1990s, California has sought to force the energy market away from fossil fuels and toward renewables. The policy has “worked,” if its stated goal is the only metric. California set a goal to have a third of its electricity generated by renewable sources by 2020, and it reached that goal in 2018.
But the cost was huge. The state didn’t just encourage electricity producers to hit the politicians’ arbitrarily chosen target. It rigged the market to prevent producers from providing consumers the most reliable energy at the cheapest price.
As early as 2002, the U.S. Energy Information Agency pointed out that California had not built enough power plants. “Investment in new power generation capacity has not kept pace with the increasing demand for electricity,” concluded an EIA report on the causes of California’s energy crisis. “California’s generation capability decreased 2 percent from 1990 through 1999, while retail sales increased by 11 percent. Further, no new generation capacity has been constructed in California for over a decade.”
California politicians made it extremely hard to build anything but renewable power generation facilities. As wholesale electricity prices rose, the state capped retail prices and even, amazingly, prohibited utility companies from signing long-term contracts for the purchase of electricity.
The cumulative effect of these and other green energy policies, including net metering, was to create an unnecessarily limited supply of extremely expensive energy.
California utilities have been left with no choice but to buy base load power on the spot market from out-of-state providers. Instead of having an abundance of reliable natural gas plants in-state, California relies on out-of-state generators whose transmission lines run for hundreds of miles.
California has among the nation’s highest electricity prices (close to those in New England), despite having huge fossil fuel reserves, because politicians wouldn’t let the market work. An economist who recently moved to California wrote that his monthly electricity bill of $1,000 would be just $250 in neighboring Texas.
By 2020, the state was meeting its renewable energy targets and setting even more ambitious ones. But the supply of reliable base load power that could be tapped when the sun wasn’t shining and the wind wasn’t blowing had become dangerously low.
When a regional heat wave spiked demand thought the West and fewer than 1,500 mw of power went offline one evening, suddenly there wasn’t enough available electricity to meet the state’s needs.
This can happen in New Hampshire, which already has high electricity rates, some market-distorting energy policies, and vocal activists who insist that math can be ignored if the state’s motives are pure enough.
The lesson from California is not that states shouldn’t find ways to move toward more renewable energy. It’s that deliberately preventing the market from working has the result of… preventing the market from working. When the market doesn’t work, supply doesn’t rise to meet demand. In energy markets, that can lead to rolling blackouts.
ISO New England has warned about this possibility for years. New Hampshire lawmakers ignore the warnings at their — and our — peril.