By MPCO staff
As the state’s primary energy policy agency, the California Energy Commission (CEC) is responsible for a number of activities that help keep the lights on for the state’s more than 39 million residents. One of the most important is forecasting what energy demand will look like a year, five years, even 10 years down the road.
Like weather, the stock market, or other types of forecasting, it is a science using the best available information with variables that change over time such as population growth, the economy and the impacts of climate change.
“Energy demand forecasts are based on many inputs and the latest data available,” said Heidi Javanbakht, demand analysis branch manager for the CEC’s Energy Assessments Division. “They are updated annually to realign with the most recent information, however there are events, such as the pandemic, that can be difficult, if not impossible, to predict.”
The energy demand forecast is used for planning by the California Public Utilities Commission and the California Independent System Operator, and by the state’s investor-owned utilities – Southern California Edison, Pacific Gas and Electric Company, and San Diego Gas & Electric.
“The forecast helps the agencies and the utilities conserve resources, protect the environment, ensure energy reliability, and facilitate planning,” said Javanbakht.
The forecast looks at energy demand trends and predicts how they will change near-term and long-term. It is a detailed process using:
Economic and demographic projections
Projected changes in utility rates and other cost factors
Estimated impacts of energy efficiency and electrification efforts
Historical and projected weather and climate change data
The demand forecast is developed as part of the Integrated Energy Policy Report (IEPR). The IEPR identifies the state’s most pressing energy issues and helps the CEC and other agencies develop corresponding energy plans and policies.
The 2023 forecast predicted that the state would experience increasing electricity demand, particularly in the transportation sector as fossil-fuel vehicles give way to electric vehicles (EVs). Demand was also expected to increase as the state continues to pursue building electrification and develops new regulations for space and water heating.
On the other hand, some of the increase in demand would be offset as the state pursues its nation-leading energy efficiency policies, continues to increase onsite solar, and manages summer peak demand through increasing amounts of energy storage.
“There is still uncertainty around what the new normal is after the pandemic, and economic and demographic projections are fluctuating year-to-year as new information and data are incorporated,” Javanbahkht said. “New decarbonization strategies are continually being proposed and incorporated into forecasts as they become more certain. It is also important to better characterize the increased variability and more frequent extreme weather in the forecasts.”
The 2023 forecast projected lower annual electricity sales through 2032 than what was projected the year before. The forecast decreased because of:
Slower population growth than was previously projected by the California Department of Finance.
Increases in rooftop solar adoption compared to previous assumptions.
Increases in electricity rates compared to previous assumptions.
Because the forecast is used to plan for the amount of generation resources needed, the CEC heard concerns that a lower forecast of peak electricity demand could leave the state unprepared for an extreme heat event. While the demand forecast is critical to ensuring sufficient resources for average conditions, it is not used in reliability planning for extreme events. The CEC conducts separate reliability analyses to determine the need for contingency resources, such as the Strategic Reliability Reserve, that may be needed in extreme events.
“It is a continuous process, and the information is always being reviewed,” Javanbakht said.
For instance, CEC staff improved the 2023 IEPR forecast by updating the hourly electricity load profile to better reflect the profile from recent history. This resulted in an earlier projected peak hour, which is in line with recent history, and also meant more solar generation would be available to offset the demand. This, and other factors, led to a peak that was lower than predicted in the 2022 IEPR update.
The CEC is developing the 2024 IEPR update with adoption scheduled for early 2025. It is a public process with workshops and meetings scheduled throughout the year. Javanbakht said the 2024 energy demand forecast is expected to include updated economic and demographic projections, and adjustments to the projections for data centers and on-site solar generation.
For more information on the 2024 IEPR including a calendar of events, visit the CEC’s IEPR web page.