Market Alert: California Energy Emergency

August 3, 2021

Schneider Electric's strategic sourcing team is actively monitoring energy-related developments in California. In case you missed it, on Saturday, July 31, California's Governor Gavin Newsom formally issued a Proclamation of a State of Emergency. The proclamation finds that “because of the accelerating and compounding effects of continuing wildfires, ongoing drought, and extreme heat conditions caused by climate change, California currently faces an additional projected energy supply shortage of up to 3,500 megawatts during the afternoon-evening "net-peak" period of high power demand on days when there are extreme weather conditions.” Further, the proclamation points to the reality that there is “insufficient time or supply to install new energy storage or zero-carbon energy projects to address the immediate shortfall.”

As a result, Governor Newsom ordered a number of significant actions will be taken, including the establishment of a California State Emergency Program (CSEP) where utilities will pay large energy users an incentive of $0.75/kWh or $2.00/kWh to reduce electricity demand when “an extreme heat event, a sudden and severe reduction in transmission capacity (including reductions due to wildfire), or both, are projected to result in acute energy shortages this summer.”

The CSEP includes a number of specific provisions that establish the implementation and compensation framework. For more information, read the Proclamation of a State of Emergency and the CSEP, then drop us a line with any questions on how these new opportunities may affect your sites in California.

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