California's Last Nuclear Plant is Poised to Shut Down. What Happens Next?

As California's last nuclear facility — the 2.2 GW Diablo Canyon power plant — approaches its scheduled retirement date, some energy experts worry that the state hasn't fully prepared for what comes next.

The Diablo Canyon plant is located on California's Central Coast and produces some 18,000 GWh of electricity annually — almost 10% of the state's energy portfolio. Since the closure of the San Onofre Nuclear Generating Station eight years ago, it has been the sole operational nuclear power facility in California. In 2018, regulators allowed Pacific Gas & Electric (PG&E) to close down the plant's two reactors when their licenses expire in 2024 and 2025. But as those dates draw nearer, experts are questioning what it will mean for California's reliability and greenhouse gas (GHG) emission goals.

"You have this huge amount of carbon-free resources that will be coming offline three to four years from now — which is in reality like tomorrow, when you're trying to develop other new resources," Jan Smutny-Jones, CEO of the Independent Energy Producers Association, said.

"So it's really significant that it's going away and the question then is, what do we replace it with?" he added.
A 'critical inflection point'

The Diablo Canyon nuclear plant came online in 1985 and has been the target of numerous protests over its lifespan, especially after the discovery of a nearby earthquake fault. But the plant has also played a key role in ensuring the reliability of California's electric grid.

When PG&E first filed for permission to retire the plant, the utility also outlined a plan to partially replace it with three tranches of carbon-free resources — a combination of 2,000 GWh of energy efficiency, 2,000 GWh of carbon-free energy, and a voluntary 55% renewables commitment.

The California Public Utilities Commission (CPUC), however, declined to authorize that plan, instead shifting the question of how to replace Diablo Canyon to the agency's integrated resource planning proceeding. The regulators said in a 2018 decision that they intended to ensure the plant's closure didn't lead to an increase of greenhouse gases, but "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."

More recently — and especially in the wake of the rolling blackouts that occurred in California last August — some stakeholders are taking a closer look at how Diablo Canyon's retirement will affect electric reliability in the state. Last October, the California Independent System Operator (CAISO) warned in a filing that the system will hit a "critical inflection point" after the nuclear plant retires, with resource needs that are much higher than initially anticipated to ensure reliability.

"It's [around] 2,100 MW of power that is baseload — and so that is a particular challenge in terms of reliability, particularly since the state has had a policy of trying to move away from fossil fuels," Dan Richard, a solo energy consultant and former senior official at PG&E, explained.

CAISO has been modeling for a potential loss of Diablo Canyon since before its retirement was proposed, spokesperson Anne Gonzales said in an emailed statement. In its 2018-2019 transmission plan, the system operator recommended transmission upgrades to address reliability issues from the plant's closure — two dynamic reactive devices in the central and northern PG&E bulk system, both of which are currently being installed, Gonzales added.

California has a robust renewable energy portfolio, but that raises questions of effective capacity versus installed capacity, Richard said. Moreover, Diablo Canyon will be retired against the backdrop of the electrification of California's transportation system, which is likely to increase electricity demand.

Without careful planning, California will be forced to rely on short-term procurements after the nuclear plant is shuttered, scrambling around to add a little power here and there, said Smutny-Jones. Meanwhile, a group of gas-fired plants that were initially supposed to go offline at the end of 2020, before being extended for reliability reasons, might have to stay online until there are adequate resources to replace them.

"There's a whole cottage industry of people who want to do nothing more than shut down gas plants as quickly as they can… in an effort to get to the 2045 goals as quickly as possible," Smutny-Jones added. "I think that unless we properly manage this, we run the risk of additional erosion of reliability, and potentially resulting in excessive cost as well."

CPUC looks to geothermal, long-duration storage

Last month, the CPUC issued a ruling to address potential reliability challenges in 2024 through 2026, due to a variety of factors including the retirement of Diablo Canyon and natural gas plants. In total, the agency recommended procuring 7,500 MW of resources from 2023 through 2025, and is contemplating partially meeting that need through 1 GW of geothermal energy and 1 GW of long-duration storage, with a minimum duration of eight hours.

Long-duration storage and geothermal resources can both help to produce energy more consistently around the clock, agreed Mark Specht, an energy analyst with the Union of Concerned Scientists (UCS) — regulators seem to be looking out over the long term and recognizing that these are resources the system will need sooner or later.

"We may as well build sooner, especially given their very high grid reliability contributions," he added.

But bringing those resources online in the next four or five years could be a challenge, Specht said. And Richard is concerned that long-duration storage technologies — with the exception of pumped hydro, which faces its own siting and permitting challenges — are not sufficiently evolved yet.

Diablo Canyon's retirement could also jeopardize California's GHG emission goals. California enacted legislation in 2018 that requires state regulators to prevent the plant's closure from leading to an increase in emissions. But without enough planning, natural gas power plants could step in to fill the gap, leading to a potential 15.5 million metric tons of additional GHG emissions between now and the end of the decade, according to a report from UCS — roughly equivalent to the impact of 306,000 gasoline passenger vehicles during the same period.

"You saw that back in the 2014 timeframe, when the San Onofre Nuclear Generating Station went offline," Smutny-Jones said. "We had been reducing CO2 from California-based plants at a pretty steady downward line and then all of a sudden, it started bouncing upwards… it wouldn't be surprising to see a very similar pattern occur in 2025."

For nuclear advocates, the solution is clear: stop the plan to shut the Diablo Canyon power plant down, and maybe even build more nuclear plants in California. Retiring the plant is a risky move, given that California is vulnerable to earthquakes and the potential for that capacity to be replaced with natural gas generation, according to Gene Nelson, government liaison at Californians for Green Nuclear Power.

"The idea that we should turn off a reliable, earthquake resistant nuclear power plant to serve narrow commercial interests is not in the public interest," Nelson said.

But others are skeptical that Diablo Canyon's scheduled retirement can be stopped.

"A lot of parties came together to reach a balanced settlement on the closure of the plant, so I think the momentum is certainly in that direction," Richard said. But stakeholders are somewhat split on the broader question of how nuclear power can fit into California's clean energy transition, so "I don't see any momentum for that right now, but I would not be surprised if that conversation does come to the table," he added.

Specht, however, says that ship has sailed. UCS' recent report concluded that the best way to replace the plant's generation is through a combination of diverse renewables and storage, and one way to go about this would be to set California on the path to a more aggressive emissions reduction target. Last year, the CPUC adopted a 46 million metric ton target for the state's electric sector by the end of the decade, but also asked load-serving entities to consider further reducing emissions to 38 MMT.

"Just by choosing one of those lower targets, it drives more investment in clean energy earlier in the decade and helps mitigate any increase from emissions from Diablo Canyon shutting down," Specht explained.

The location of the Diablo Canyon plant could also provide opportunities for resources to replace it. Since the facility is such a major generating asset, there are massive transmission configurations coming out of it, with feeder lines traveling north and south, said Michael Colvin, director of regulatory and legislative affairs at the Environmental Defense Fund.

As a result, it has served as a sort of major junction for moving power around the state. Once the facility retires, California will have additional headroom on those lines and could potentially site new generation, like offshore wind, nearby.

"It's a fairly central part of that service territory, so you can connect to some more transmission and have additional capacity without having to string new wire," Colvin said.