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Natural Gas Seen Receding in California as Generation Glut Draws Debate

California may be the nation's second biggest consumer of natural gas after Texas, but it continues to burn fewer therms to produce megawatts, and that is a trend likely to continue.

Opposition to gas continues to grow in the state, where Aliso Canyon, the state’s largest underground gas storage field, is under pressure to close permanently and gas-fired generation projects face criticism.

At the same time, statewide energy statistics from the California Independent System
Operator (CAISO) show a continuing decline in the volumes of gas used to produce electricity, while among the overall sources of capacity available to the California grid operator, gas is still the dominant resource at 53%, compared to renewables at 29%.

The gas proportion of power generated last year dropped sharply to 32% after remaining
steady at 40-41% in 2013 through 2015, according to CAISO. Over this period there also was a net drop in overall gas-fired capacity as 325 MW of gas-fired (mostly peaking)
generation was added over the past three years while more than 2,000 MW of gas-fired generation capacity was mothballed or retired, a CAISO spokesperson said.

In the aftermath of the prolonged methane leak at the Aliso Canyon underground gas storage facility, there has has been a growing distrust of natural gas as an energy source. This belies the fact that greenhouse gas (GHG) emissions from power generation have steadily declined the past three years, according to CAISO statistics.

Nevertheless, several coastal gas-fired generation plant repowering projects are in different stages of development while one has been suspended. These projects are all part of the state's phase-out of sea water-cooled generation plants, scheduled to conclude in the early 2020s. Called once-through-cooling, the technology applied to the coastal plants built 40-60 years ago affects up to 19 gas-fired plants along California's coast.

The net effect is that 16 plants serving the CAISO grid totaling about 17,500 MW of gas-fired capacity are to be reduced by the mid-2020s.

A significant number of units, totaling nearly 6,000 MW, are already retired, not counting 2,246 MW represented by the retirement of Southern California Edison's (SCE) San Onofre Nuclear Generating Station (SONGS).

Two years ago the California Public Utilities Commission (CPUC) approved SCE contracts for gas-fired power plants at two of the coastal sites operated by AES Corp. at Huntington Beach and Long Beach (Alamitos). The plants were supposed to replace existing facilities at those sites and a third coastal site at Redondo Beach, in part to make up for the loss of SONGS, a CPUC spokesperson said.

The old gas-fired plants, plus SONGS, amount to more than 5,000 MW, but the new plants only total 1,382 MW because of  "California's investments in energy efficiency and renewables,” said the spokesperson.

As part of the new gas-fired plant approvals in 2015, the CPUC also approved 500 MW of
energy efficiency, demand response and battery storage.

Additionally, state officials are now pushing legislative proposals aimed at cutting back
even more on gas use in power generation, including closing Aliso.

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