Hydropower Withers in Drought, Boosting Fossil-Fuel Generation

A drought worsened by climate change has caused hydropower supplies in California to reach their second-lowest level since 2001, leading electricity prices in the state to soar 150% in three months’ time.

Yet some of the biggest beneficiaries of the price surge, according to a credit ratings agency report yesterday, are fossil fuel-fired power producers whose emissions only exacerbate global warming.

California’s predicament — in which emissions-free hydropower is replaced by planet-warming power from natural gas plants — underscores the need to rapidly decarbonize the electric grid, according to sustainability experts.

“That way, if we do have challenges with generation from one renewables sector, we’ll be able to make up for it with renewables from another,” said Kristen Averyt, a research professor at the University of Nevada, Las Vegas, who’s focused on climate resilience efforts.

In May, monthly power prices in California were under $30 per megawatt-hour, Moody’s Investors Service said in the report. By July, they’d topped $80 per MWh — their highest level since at least 2016.

“High power prices are credit positive for non-hydro-dependent power generators that sell into the California power market,” the report said.