Four years ago, California regulators approved a proposal to retire the state’s last operating nuclear facility, the 2.2 GW Diablo Canyon power plant by 2025.

This month, however, lawmakers scrambled during the last hours of the legislative session to pass a bill – Senate Bill 846 – to preserve the option to extend the plant’s life through the end of the decade. This reversal, prompted in part by Gov. Gavin Newsom, D, comes amid broader concerns around ensuring grid reliability in California. 

What went wrong? Experts point to multiple challenges they say have affected efforts to replace the Diablo Canyon power plant with clean energy resources, including regulatory delays and disruptions to global supply chains in the wake of the COVID-19 pandemic. 

“I think the expectation, that a fairly substantial amount of new resources would come online prior to 2024 and 2025, basically does not look like that’s actually in the cards,” Jan Smutny-Jones, CEO of the Independent Energy Producers Association, said. “That’s not to say that progress is not being made on those resources, but certainly [it’s] not being made at a pace that will allow the state to shut the plant down” on schedule, he added. 

The Diablo Canyon nuclear plant came online in 1985 and produces around 18,000 GWh of electricity annually. In 2016, Pacific Gas & Electric, which operates the plant, filed an application to retire its two units in 2024 and 2025, respectively. As part of that application, the utility sketched out a plan to replace the plant’s power with three tranches of clean resources, including 2,000 GWh of energy efficiency, 2,000 GWh of carbon-free energy and a 55% renewables commitment. 

However, the California Public Utilities Commission opted not to greenlight that plan and the associated $1.3 billion in funding that PG&E had requested for it. Regulators reasoned that it was not clear whether PG&E could actually procure that magnitude of energy efficiency resources.

Instead, the commission decided to push the broader question of how to replace Diablo Canyon into its integrated resource planning proceeding. Given the time until the plant’s scheduled retirement, the rapidly evolving electricity market in California, and the growth of renewables and community choice aggregators, “it is not clear based on the limited record in this proceeding what level of GHG-free procurement (if any) may be needed to offset the retirement of Diablo Canyon,” they noted in their decision to approve the retirement of the plant. 

It would be easier to make that determination as part of the integrated resource planning process, regulators reasoned. 

‘Let’s not buy too much too soon’

Some experts, however, remain skeptical of the decision to move the question around replacing Diablo Canyon into the integrated resource planning process. Diablo Canyon wasn’t the only resource that California was planning to retire, V. John White, executive director of the Center for Energy Efficiency and Renewable Technology, noted – the state was also gearing up for the closure of a series of natural gas plants. Regulators, however, seemed to have implicitly concluded that the state did not need to buy replacement resources right away, and that renewables were more expensive, White said. 

“Their philosophy was, let’s not buy too much too soon. So they punted everything … into their integrated resource planning proceeding. And that turned out to be a black hole,” that didn’t lead to resource procurement until much later, White said. 

The CPUC has since approved an 11.5 GW procurement package of clean energy resources to help replace Diablo Canyon as well as the 3.7 GW of natural gas plants slated to retire in the coming years. 

But “because they delayed that procurement, they also delayed transmission and so suddenly even though we’re ready now to buy those resources to replace the retiring fossil [fuels] and nuclear, we’re not able to because we got such a late start,” White added. 

The CPUC could have acted more quickly to bring new resources online, agreed Ralph Cavanagh, energy co-director of the Natural Resources Defense Council’s climate and clean energy program. However, he said, the original joint proposal to retire Diablo Canyon – which NRDC was a part of – has not failed in any way. 

“It did what it was designed to do – it kept the plant online, it kept the workforce intact, it treated the communities fairly, and it set in motion … the nation’s largest clean energy resource procurement,” he said. 

Delays to renewable energy projects

Another factor that has thrown a wrench into the plan to effectively replace Diablo Canyon is delays to clean energy projects. Last month, Karen Douglas, senior energy advisor to the governor, told lawmakers that while regulators expected some 4,000 MW of new resources to come online by this summer, closer to 2,500 MW of that actually materialized. Assuming similar delays to the procurement that the commission has authorized, the state will end up below its electricity reliability targets, she said. 

There are two aspects to the supply chain problem that are affecting projects in California, according to White – solar panel supply chains have been disrupted by a Department of Commerce anti-dumping circumvention investigation into cells imported from Cambodia, Malaysia, Thailand and Vietnam, as well as the Uyghur Forced Labor Prevention Act, which went into effect at the end of June. 

Supply chain issues are contributing to the challenges in bringing more resources online, Smutny-Jones agreed. In addition, the state is facing hurdles thanks to a large volume of interconnection requests, as well as building out transmission to get electricity to load centers.

“There are a number of factors that kind of fall into place – each one of them in and of themselves is not something which is “the reason,” but collectively, it creates friction in the ability to move rapidly in terms of getting the resources we need in place,” he said. 

Having said that, “we’re making steady progress,” in lowering the carbon footprint of the electricity sector, he said. 

What happens next?

Newsom signed SB 846, the bill which allows for the nuclear plant’s two units to be extended through October 31, 2029 and October 31, 2030, respectively, into law last week. The legislation also provided PG&E with a $1.4 billion loan to relicense the plant. The utility has filed an application for federal funding through the U.S Department of Energy’s Civil Nuclear Credit program, it said in a Sept. 2 press release. 

“We are proud of the role Diablo Canyon plays in providing safe, reliable, low-cost and carbon-free energy to our customers and Californians,” PG&E Corp. CEO Patti Poppe said in a statement. 

Stakeholders are split on the potential implications of the extension of Diablo Canyon until the end of the decade. Gene Nelson, legal assistant with Californians for Green Nuclear Power, said that there will absolutely be a need for the nuclear plant even beyond 2030.

“The sun doesn’t always shine and the wind doesn’t always blow – we always have to keep the lights on though. So the idea that somehow or another we can power this state with solar and wind is just a marketing concept, and it’s a marketing concept that sells lots of natural gas,” Nelson said. 

CEERT’s White, meanwhile, said the key lesson offered by the Diablo Canyon extension is that “we can’t rely on models to tell us what’s going to happen – we have to keep track of what’s going on in real-time,” when it comes to clean energy development. 

The state needs a multi-year, inter-agency implementation strategy, with the governor’s office acting as a coordinator, to deploy clean energy infrastructure, he said.