Sunblock

How a big, beautiful bill crushes California.

“The best policy is to declare victory and leave.”—George Aiken

Shortly after the Second World War, Pacific Gas & Electric (PG&E) began construction of a natural gas and oil power plant in Moss Landing, California, on the coast between Monterey and Santa Cruz. Originally designed with five burners, two additional gas units were constructed in the mid-1960s, bringing the total installed capacity to nearly 2.6 gigawatts (GW). Moss Landing became the largest power plant in the state and a lynchpin in California’s sprawling electricity grid.

After a series of retirements, new construction projects, and various ownership changes over the decades, Moss Landing was down to just 1 GW of capacity when Vistra Energy took over the struggling facility in early 2018. Given its existing connections to California’s grid and the state’s green energy ambitions, Vistra decided to reinvigorate the site by adding a cutting-edge battery storage facility and eventually built out a combined 750 megawatts (MW) / 3,000 megawatt-hours (MWh) of batteries in three separate phases. When the third phase was completed in May of 2023, Moss Landing became the largest operational battery storage system in the world.

In January of this year, much of the billion-dollar facility went up in smoke:

“Hundreds of people were ordered to evacuate and part of Highway 1 in Northern California was closed early Friday after a major fire erupted at one of the world's largest battery storage plants. The fire started Thursday afternoon and sent up towering flames and black smoke, and about 1,500 people were instructed to leave Moss Landing and the Elkhorn Slough area, The Mercury News reported…

‘There's no way to sugar coat it. This is a disaster, is what it is,’ Monterey County Supervisor Glenn Church told KSBW-TV. But he said he did not expect the fire to spread beyond the concrete building it was enclosed in.”

Green New Fire | Getty

As Church tersely observed, the fire was indeed a disaster—and not just for Governor Gavin Newsom’s ambition to turn California into a green energy superpower. According to a recent report in The New York Times, a toxic brew of nickel, cobalt, copper, and manganese was released as far as five miles from the plant, sickening local residents and affecting nearby farmland. It was a stark reminder that “green” is predominately a political label, not a scientific one. (We await Greenpeace’s policy reversal on its support for grid-scale batteries.)

Beyond the direct environmental impacts and the fact that California lost about 5% of its battery backup capacity with one fire, the disaster comes at an inopportune time for the state. After years of accumulating massive amounts of intermittent renewables while closing equivalent quantities of reliable, baseload power, California needs scores of billions of dollars to secure its future grid—along with substantial support from federal taxpayers. Perhaps out of a mix of ideology and future electoral competitiveness, Trump’s budget agenda will put California in the proverbial hurt locker if his Big Beautiful Bill becomes law. As is typical, the situation is more dire than the legacy media is reporting, so let’s do some of our own.

To understand the scope of the issue, it is important to visualize the transformation California’s state leaders have embarked on. From 2009 to 2023, the Golden State produced 39.8 terawatt-hours (TWh) less electricity from nuclear, natural gas, and coal combined—three baseload sources that offer strong predictability to grid operators. Over the same period, this loss was barely offset by solar installations, which generated 40.5 TWh more in 2023 than in 2009. In essence, California transformed its grid into a system that is nearly impossible to manage cost-effectively, a big reason power bills are skyrocketing in the state.

The situation is made far worse by the predictable reality that the sun either shines or it doesn’t, and the more solar capacity a grid relies on, the more violently supply swings. When the sun disappears for extended periods, the state must import costly electricity from its neighbors on short notice. When the sun shines brightly, California often generates more electricity than it can use—frequently paying neighbors to absorb the excess. It’s enough to make Enron blush:

“California is making so much solar energy that large commercial operators are increasingly forced to stop production, raising questions about the state’s costly plan to shift entirely to carbon-free sources of electricity. In the last 12 months, California’s solar farms have curtailed production of more than 3 million megawatt hours of solar energy, either on the orders of the state’s grid operator or because prices had plummeted because of the glut, according to an analysis of data by The Times…

The waste would have been even larger if California had not paid utilities in other states to take the excess solar energy, documents from the state’s grid operator show. That means green energy paid for by California electricity customers is sent away, lowering bills for residents of other states.”

Heads I win, tails you lose | Getty

Amazingly, even as Newsom works to save California’s last operable nuclear facility—the Diablo Canyon Power Plant—environmentalists argue that the blame during times of excess solar production lies with the remaining baseload facilities that don’t make room for solar when it decides to show up for work:

“The contract for the Diablo Canyon nuclear plant was set to expire by the end of next year. But a bill passed two years ago by the legislature has kept it open an additional five years, closing one reactor in 2029 and the other in 2030. The plant, near San Luis Obispo, generates nearly 10% of California’s total energy. But critics say it’s actually giving the state too much energy, especially in the spring when hydropower production is at its highest.

Energy economist Richard McCann works with the consulting firm M. Cubed. He said in 2023 California generated enough hydropower to match the power we already got from the nuclear plant.

‘That combination made it so that we had a lot of excess power in the system. It’s not that there was excess solar power. It was excess power. And the bigger culprit for that excess power is Diablo Canyon, which was supposed to be retired,’ McCann said.”

The fallacy in McCann’s foot-stomp of an argument is that it focuses solely on periods of excess generation, ignoring what grid operators must do to keep the lights on when the sun is on vacation. His reference to hydropower gives the game away, because it too is intermittent, albeit over longer timescales. In many ways, this makes the situation even more difficult to manage, as further CEC data demonstrates:

All of which brings us back to batteries, because the only theoretical way California can salvage a workable grid from the current patchwork of utopian intermittency is to install far more backup power than it has today. The bill that passed the US House of Representatives eliminates the Clean Electricity Investment Credit for any grid storage project that does not start within 60 days of the bill’s passage or is not complete by 2028. It also accelerates the phaseout of existing tax credits for solar, wind, and batteries—credits without which most projects would never have been built. Industry experts and legal analysts warn that if enacted, this bill will all but halt new grid storage installations, even in California.

We have long argued that energy madness can only end in the aftermath of a true crisis—that once enough people felt enough pain, sanity would surely prevail. We close by wondering if even that prediction was too optimistic. When the inevitable and cascading series of crises eventually befalls California, it is no longer clear that, in a hyper-partisan political environment, a proper, physics-based root cause analysis is even possible. The problem won’t be identified as the digging of the hole. No. It will be that Orangemanbad finally took away the shovels.

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