Pacific Gas & Electric Co. plans to retire the Diablo Canyon nuclear power plant in California under a joint proposal with labor and environmental groups that was unveiled on June 21. PG&E said that the joint proposal would increase investment in energy efficiency, renewables and storage beyond current state mandates, while phasing out PG&E's production of nuclear power in California by 2025.
Diablo Canyon is the sole existing nuclear power plant operating in California after the San Onofre nuclear power plant was shut down in 2013. San Onofre is in the initial stages of decommissioning.
The parties to the Diablo Canyon joint proposal are PG&E, International Brotherhood of Electrical Workers Local 1245, Coalition of California Utility Employees, Friends of the Earth, Natural Resources Defense Council, Environment California and Alliance for Nuclear Responsibility.
The proposal is contingent on a number of important regulatory actions including California Public Utilities Commission confirmation that PG&E's investment in Diablo Canyon will be recovered by the time the plant closes in 2025.
"Underpinning the agreement is the recognition that California's new energy policies will significantly reduce the need for Diablo Canyon's electricity output," the investor-owned utility said in a news release. In the proposal, PG&E committed to a 55 percent renewable energy target in 2031.
PG&E said that there are several contributing factors, including the increase of the state's renewable portfolio standard to 50 percent by 2030, "the challenge of managing over generation and intermittency conditions under a resource portfolio increasingly influenced by solar and wind production, the growth rate of distributed energy resources, and the potential increases in the departure of PG&E's retail load customers to community choice aggregation."
Diablo Canyon to retire at expiration of NRC licenses
Under the terms of the joint proposal, PG&E will retire Diablo Canyon at the expiration of its current Nuclear Regulatory Commission operating licenses. The parties will jointly propose and support the orderly replacement of Diablo Canyon with greenhouse gas-free resources, PG&E said.
"Recognizing that the procurement, construction and implementation of a greenhouse gas free portfolio of energy efficiency, renewables and storage will take years, the parties recognize that PG&E intends to operate Diablo Canyon to the end of its current NRC operating licenses, which expire on November 2, 2024 (Unit 1), and August 26, 2025 (Unit 2)," the utility said. The two units at Diablo Canyon together produce approximately 2,300 net megawatts of power.
PG&E said this eight- to nine-year transition period will provide the time to begin the process to plan and replace Diablo Canyon's energy with new GHG-free replacement resources.
PG&E does not believe customer rates will increase as a result of the joint proposal because the utility thinks it is likely that implementing the proposal will have a lower overall cost than relicensing Diablo Canyon and operating it through 2044. Factors affecting this include, in addition to lower demand, declining costs for renewable power and the potential for higher renewable integration costs if Diablo Canyon is relicensed, the utility said.
Proposal includes three competitive procurement tranches
The parties propose that PG&E be allowed to procure GHG-free replacement resources in three competitive procurement tranches.
In the first tranche, the utility will be authorized to obtain 2,000 gross gigawatt-hours of energy efficiency savings to be implemented over the 2018 to 2024 time period.
In the second tranche, PG&E will be authorized to procure 2,000 GWh of GHG-free energy resources through an all-source solicitation that calls for the start of energy deliveries or the addition of energy efficiency programs or projects to the system in the 2025 to 2030 time period.
Under this tranche, no later than June 1, 2020, PG&E will issue an all-source request for offers for 2,000 GWh per year of GHG-free energy resources or energy efficiency.
In the third tranche, with energy delivery starting in 2031, PG&E will purchase incremental, RPS-eligible resources through competitive solicitations to voluntarily achieve a 55 percent RPS. The utility will maintain this voluntary commitment through 2045 or until superseded by action of the state legislature or the CPUC.
In the section detailing the third tranche, the proposal states that the parties "recognize that the retirement of Diablo Canyon in 2025, a large baseload source of energy, will impact the efficient and reliable balancing of load and resources in PG&E's service territory."
On the one hand, removing a large baseload resource during periods of peak solar production will reduce the need for periodic curtailment of RPS resources and enhance RPS resource integration during these periods, the proposal said. "On the other hand, the retirement of Diablo Canyon may have impacts on system ramping and the need for additional energy storage," PG&E and the other parties to the proposal said.
PG&E and the other parties said that the challenges associated with resource integration, and system and local reliability, must be reviewed and resolved by the CPUC through its integrated resource planning process, in collaboration with the California Independent System Operator.
"The parties will strongly support at the CPUC and before the CAISO the use of cost-effective GHG-free resource solutions, some of which may include additional large pumped storage and utility-owned storage projects," the proposal said.
PG&E and the other parties said that they support a change in existing policies to allow allocation of resource costs for integration and storage through the CAISO's transmission access charge or alternatively through a cost allocation mechanism.