USA – CALIFORNIA Trends and Developments Contributed by: Nora Sheriff, Gwenneth O’Hara and Samir Hafez, Buchalter LLP
optimised results than the current multiplicity of many separate balancing authorities. Summer 2026 Reliability Assessment: Improved Margins, But Continued Exposure to Extreme Conditions As California approaches the summer of 2026, pub- lic assessments of grid conditions point to a more favourable near-term reliability outlook than in recent emergency years. That conclusion emerged from two related sources: the 4 May 2026 Summer Energy Reliability Workshop hosted by the CEC, at which the CEC, the CPUC, CAISO, and other participants presented summer preparedness assessments; and CAISO’s separate 2026 Summer Loads and Resourc- es Assessment, which evaluates expected summer supply and demand conditions in the CAISO balanc- ing authority area. The outlook for summer 2026 is stronger than in recent years. CAISO forecasts a 2026 peak demand of 46,844 MW under 1-in-2 conditions and reports a 2,547 MW surplus relative to its planning benchmark. CAISO also states that more than 2,100 MW of resource-adequa- cy-eligible capacity was added between September 2025 and April 2026, with another 6,194 MW expected by the end of June 2026. CAISO’s forecast places the annual peak on 2 September 2026, hour end- ing 18, underscoring that California’s system stress is expected to persist into the late-summer evening period rather than peak only in midsummer. The broader resource picture also reflects substantial recent buildout. At the May 2026 workshop, CPUC staff reported that more than 31,000 MW of new resources, including imports, had been added since 2020, and that approximately 16,000 MW of storage nameplate capacity was online as of March 2026. However, this outlook is qualified in several impor- tant respects. CAISO states that its forecast does not include certain “Known Loads” identified in util- ity planning processes, and that those loads could increase 2026 annual peak demand by approximately 1,569 MW under the California Energy Commission’s local reliability scenario. CAISO further states that excluding those loads may understate peak exposure
and overstate projected reserve margins if those loads materialise on expected timelines. The assessments also make clear that favourable resource-adequacy metrics do not eliminate reliability risk. At the May 2026 workshop, presenters pointed to elevated summer heat risk, including increased chances of above-normal temperatures across parts of California and the broader West, a hot start to summer, and continued above-normal temperature risk into August and September. Those conditions can increase California demand while also reducing the availability of imports from neighbouring regions experiencing similar stress. For that reason, the principal concern is less ordinary summer peak demand than compound stress events. CAISO expressly notes that its summer assessment does not account for coincident extreme events such as drought, widespread regional heat events, or other disruptions, specifically wildfires. Wildfires, hydro con- ditions, energy transfer limitations, and inverter-based resource variability continue as reliability risk factors. The CPUC’s 2026 IRP Order Responds to Load Growth In February 2026, the CPUC adopted a new IRP pro- curement decision requiring additional clean capacity for 2030 through 2032 and transmitting a base case electricity portfolio and a sensitivity portfolio to CAISO for analysis in its 2026-2027 Transmission Planning Process (TPP). The decision is framed as an interim step between the earlier mid-term reliability orders and the still-pending Reliable and Clean Power Pro- curement Program (RCPP), which remains under con- sideration. The order requires CPUC-jurisdictional load-serving entities to bring online 2,000 MW of net qualifying capacity by 1 June 2030, another 2,000 MW by 1 June 2031, and an additional 2,000 MW by 1 June 2032. Qualifying contracts must run for at least ten years. The Commission indicated that this additional pro- curement is intended to address reliability needs in the 2029-2032 period, citing significant forecast load growth associated with data centres, and continued vehicle and building electrification. It also cited rap-
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