California to Retire Three Backup Natural Gas Plants Amid Grid Reliability Concerns

California is poised to retire three aging natural gas power plants that have served as critical backup for the state's electrical grid, a move that has raised concerns about grid reliability during periods of high demand.

These plants – the Alamitos Generating Station in Long Beach, the Huntington Beach Generating Station, and the Ormond Beach plant in Oxnard – are slated to have their grid reliability contracts expire at the end of the year. Delphine Hou, deputy director of the California Department of Water Resources' energy office, confirmed the sunsetting of these contracts during a recent California Energy Commission meeting.

Environmental advocates have long sought the closure of these facilities, citing concerns over the billions of gallons of water used for cooling, which they argue harms marine life. The Alamitos and Huntington Beach plants are confirmed to cease operations, while the Oxnard site may potentially be repurposed for battery storage.

While some experts suggest that the state's rapidly expanding battery storage capacity will adequately replace the retired plants, others express skepticism. Arne Olson, of the energy analytics firm Energy and Environmental Economics, noted that significant advancements in battery and solar capabilities might render these older plants obsolete. However, critics warn that relying solely on newer technologies could be "wishful thinking."

State legislative analysts have also flagged potential issues, pointing out in a summer report that expanded battery storage may not fully replicate the multi-day resilience offered by natural gas plants during extreme weather events. A scenario involving a prolonged heat dome combined with reduced solar output due to wildfire smoke, similar to conditions experienced in 2020 and 2022, could strain the grid beyond the current capabilities of battery storage, the report suggested.

Patrick Rau, senior vice president of research at Natural Gas Intelligence, highlighted that even with increased renewable energy sources, natural gas remains a necessary backup fuel. He also noted that rising electricity demand from data centers and artificial intelligence could further challenge grid stability, a demand that battery storage alone may not meet.

Despite these concerns, energy officials maintain that the grid will remain reliable. Mark Rothleder, an executive at the California Independent System Operator (CAISO), pointed to the recent heat wave, where the plants were on standby but ultimately not needed, as evidence that they may not be essential. He expressed confidence that the state will be "in good shape going forward after the end of the year without these resources."

California Independent System Operator (CAISO) executive Mark Rothleder stated that recent heat waves, during which the plants were on standby but not utilized, served as proof of their diminishing necessity. He expressed confidence that the state will manage without these resources beyond the end of the year.

California energy officials are also pursuing new energy procurement, with plans to acquire an additional 6 gigawatts of zero-emitting or eligible renewable energy between 2029 and 2032. However, a July report from the energy commission indicated that potential grid shortfalls could still occur by 2036, even with the planned procurements. Siva Gunda, vice chair of the state energy commission, remained optimistic, stating that procurement efforts are sufficient to ensure reliability through 2030 and that further procurement will address later gaps.