CA Emergency Proclamation to Quickly Increase Energy Generation, Suspend Certain Environmental Requirements
On Friday, July 30, 2021, Governor Gavin Newsom issued a Proclamation of a State of Emergency (Emergency Order or EO) stating that climate-change related weather events including drought, extreme heat and wildfires have caused reductions in the availability of power generation from hydroelectric resources and grid interconnections. Due to these trends, the EO predicts a 3,500 megawatt (MW) shortfall during peak periods this summer and fall, and potentially a 5,000 MW shortfall in summer 2022. The EO grants emergency powers to the California Energy Commission (CEC), California Public Utility Commission (CPUC) and the California Independent System Operator (CAISO) to speed up programs that can reduce demand on the power grid and that bring new power generation online quickly.
The EO creates a framework for an electricity demand reduction program, an expedited process to expand energy production at existing power plants, an expedited process for new peak power generation that can be brought online before October 31, 2021 and an expedited permitting process to incentivize large-scale battery storage that can be brought online by October 31, 2022.
The demand reduction framework authorizes payments to large electricity users, such as heavy industrial or commercial users, to reduce their demand reduction at key times determined by the CAISO. Users who agree to reduce their electricity demand will be paid by the state government and also will be exempted from a variety of permitting requirements if they use backup power generation during the specified hours to take their demand off the grid. Included in the permit requirement waivers are CEC and California Air Resources Board (CARB) requirements, to the extent such conditions act as limits on the amount of power that can be generated. There are also provisions to reduce the use of land-based electricity by ocean-going ships berthed in ports to onboard or auxiliary engines during emergency events, and the concurrent waiver of related CARB requirements.
Any entity that uses the above program to generate additional power and exceeds its permit requirements to do so must report its additional fuel usage, additional energy produced and other information to the CEC, CARB and local air quality control board. Because these exceedances will have a negative effect on air quality, CARB is directed to create a state-funded mitigation plan that particularly focuses on mitigating the impacts to disadvantaged communities and sensitive populations.
For existing power plants that seek to amend their permits to increase their power production by October 31, 2021, if the CEC deems the power would reduce the energy shortfall and should be increased, the EO suspends applicable requirements of the California Environmental Quality Act (CEQA), the California Coastal Act and the CEC amendment process. Instead, the CEC is directed to create an expedited permitting process. The EO specifically states this waiver is applicable to geothermal and solar generation and battery storage; it does not exclude other types of generation.
Lastly, the EO suspends CEQA for other types of energy projects as well: quickly available new generation of 10 MW or greater that meets certain conditions and new or expanded battery storage of 20 MW or greater that can provide peak energy for 2 hours or more by the end of October 2022. Both of these types of projects will be subject to an expedited CEC permitting process in lieu of permitting by local land use jurisdictions.
Given its broad scope, the EO represents an effort to quickly increase available generation – even fossil-fueled generation – in the face of significant energy shortfalls that could lead to statewide power outages. Even the temporary suspension of environmental review and permit limitations seen here is something the state has resisted in the past, and may face opposition. Generators should be aware that they are still subject to federal permit limitations such as those imposed by the Clean Air Act, Clean Water Act or Endangered Species Act. But the EO also shows the state’s commitment to renewables by investing in battery storage systems, which are key to supporting intermittent energy sources like wind and solar.