USA – CALIFORNIA Trends and Developments Contributed by: Nora Sheriff, Gwenneth O’Hara and Samir Hafez, Buchalter LLP
idly phasing-out federal tax credits, tariffs, and fed- eral siting and permitting constraints affecting some renewable resources. In the Commission’s view, those changes warranted another procurement order before any longer-term RCPPP framework is adopted. At least one quarter of the 6,000 MW order, or 1,500 MW, must come from either clean firm resources or long-duration energy storage. The decision explains that this requirement is intended to ensure procure- ment of the attributes reflected in the TPP base case portfolio and needed to support grid reliability. The Commission further stated that it adopted the 25% requirement because it remained concerned about overreliance on short-duration battery storage and found, based on LSEs’ compliance data, that entities had procured long-lead-time resources only up to, but generally not beyond, earlier requirements. Diablo Canyon Power Plant, California’s only remain- ing nuclear facility, is its largest source of continu- ous zero-emitting generation. Unlike solar and wind resources, its output is not dependent on weather or time of day, and it provides sustained baseload gen- eration that directly supports reliability. Diablo Canyon: An Emerging Debate Over Extension with Affordability at its Core In April 2026, the US Nuclear Regulatory Commission approved renewed operating licences for Diablo Can- yon’s two units through 2044 and 2045. California law, however, currently authorises operations only through 2030, under SB 846. Accordingly, also in April 2026, a coalition of more than 25 organisations publicly urged the legislature to extend Diablo Canyon’s operations to 2045, citing reliability, affordability, and projected demand growth. The economic case for extension has been strength- ened by recent modelling. An April 2026 MIT Cent- er for Energy and Environmental Policy Research (CEEPR) research commentary found that continued Diablo Canyon operation through 2045 can reduce overall system costs by displacing alternative genera- tion and delaying or avoiding additional investment in new capacity and transmission.
The analysis estimates savings of approximately USD7.6 billion in present value over 2031 to 2045 under one comparison case and more than USD20 bil- lion under a policy baseline that depends more heavily on new procurement. The modelled savings are driven primarily by reduced reliance on natural gas genera- tion and by deferring or downsizing incremental solar, storage, offshore wind, and transmission investments. An extension would not, however, be a simple matter of matching state law to the federal licence. It would require revisiting the statutory and regulatory frame- work established under SB 846 for cost recovery and risk allocation. The current framework was built around a limited extension through 2030 and incor- porates specified cost assumptions and ratepayer protections. The MIT analysis highlights that CPUC modelling of Diablo Canyon depends on detailed assumptions regarding fixed operating and maintenance costs and fuel costs derived from utility testimony and prior pro- ceedings. Extending operations to 2045 would require California to determine whether those assumptions remain appropriate for a longer operating horizon and how updated costs, capital needs, revenues, and sys- tem benefits should be reflected in rates. Global Impacts Energy affordability in California during 2025–2026 has been shaped by a combination of global geopolitical developments and domestic policy changes. Although California is not directly dependent on Middle Eastern imports for electricity, global oil and liquefied natural gas (LNG) markets remain tightly interconnected. The disruptions associated with the Iran conflict contribute to volatility in global fuel markets, particularly natural gas and refined petroleum products. For California, this translates into upward pressure on wholesale electricity prices and transportation fuels. At the same time, tariffs on energy-related equip- ment and supply chain inputs affect clean energy deployment costs. Tariffs on solar modules, invert- ers, and battery components have increased project costs, particularly for utility-scale solar and storage resources.
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