California lowers energy demand forecast

OREANDA-NEWS. The latest long-term forecast by the California Energy Commission projects a slowing economy and sluggish electricity demand, dimming profitability prospects for investor-owned utilities and merchant generators in the state.

The state agency is citing slower growth rates of personal income, employment and household formation in its decision to pare its energy demand forecast for the next decade. Electricity demand in California should reach a high of 70,003MW in 2024, 1.8pc lower than last year's forecast. The current base-case scenario projection expects peak load to increase at 1.15pc on average in the next decade, according to the agency's Energy Demand Updated Forecast report released yesterday.

Statewide electricity consumption should increase at an annual pace of 1.23pc through 2024, reaching 316,875 GWh in 2024. That compares with average increase of 1.36pc in 1990-2000 and 0.48pc in 2000-13. The agency expects growth in southern California to slow proportionately more than in the north. The state agency also increased its estimate for electricity rates that residential consumers will face in southern California utility service territories, reflecting the new forecast.

The agency's forecast accounts for distributed generation. Self-generation is expected to shave 4,431MW of peak demand by 2024, up from 3,014MW last year.

Wholesale power assessments through 2021 are increasing at a faster pace than energy demand, Argus data show. The trend reflects changes in California's supply mix, in which renewables are capturing more of total generation while hydropower output should stagnate or fall because of drought.

Energy efficiency and self-generation are flattening peak load but not necessarily peak hour prices. Gas-fired generation has to ramp up at increasing rates in evening superpeak hours to make up for rapidly declining solar output, so real-time price volatility has been rising and that trend should continue.