Drought Has Big Impact on California Power Market

Rain and snow has returned to California, ending the record-setting drought with record-setting precipitation.
The drought led to forest fires, dead orchards, and brown lawns.
It also took a big bite out of ratepayers’ wallets and increased global warming emissions, due to the loss of low-cost, zero-emission hydropower.
In a study released April 26 by Peter Gleick—a noted water expert at the Pacific Institute in Oakland—researchers found that lower hydropower production cost California ratepayers almost $2.5 billion in higher power prices, and may have raised power sector carbon dioxide emissions 10%, due to increased output from gas-fired generators.
Gleick’s team used data through September 2016 to calculate the figures.
California has 14 GW of hydro capacity, with little growth in recent decades due to environmental, economic, and political constraints.
Hydro output dropped by two-thirds between 2011 and 2016, losing a total of 65,600 GWh of low-cost, zero-emission electricity over the five-year drought.
According to Gleick’s report, the drop in hydroelectricity output was replaced by burning more natural gas, more imports from out-of-state sources, and growing levels of other renewable generation, especially wind and solar.
Retail power demand was almost completely flat through the drought, with a 3% dip in 2016.
To calculate the higher cost, Gleick first found the marginal cost of replacement power during the drought, which averaged $35/MWh.

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