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FUEL FROM THE SKY: SOLAR POWER’S POTENTIAL FOR WESTERN ENERGY SUPPLY Exhibit 2: Generating Capacity Additions and Demand Growth in the West, 1970-2004 300,000 250,000 200,000 150,000 100,000 50,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 New Capacity Demand + Reserve Total Supply No data 00 Year The Making of the Electricity Crisis In the 1970s, the West added power plants at an average rate of 7,000 MW per year. Demand growth rates decreased in the 1970s below what was projected, which resulted in significant surplus capacity by the early 1980s. During the 1980s power plant construction continued, though at a slower average pace of 5,600 MW per year. In the 1990s, as a result of the combi- nation of a capacity surplus, the inability of the utilities to get recently constructed power plants into their rate bases, and the influx of independent power producers (IPPs), power plant con- struction essentially stopped for the entire decade, while demand growth picked up and ate away at the surpluses until demand eventually outstripped supply. Over the past few years, reserve margins in California moved steadily downward to reach crisis levels in 2000. From 1988 to 1997, the 10-year average forecast reserve margin for California was 29.4%. The Cal ISO’s first calls for voluntary reductions in electricity usage due to low reserves occurred during the summer of 1998, even though hydro availability was higher than expected. The situation reached a crisis in 2000 when the Cal ISO called for conservation meas- ures for 30 days through mid-September. Shortage-driven power prices hit price caps numerous times in the summer of 2000, including almost every day in August. In 2000, inadequate reserve margins in California, delayed power plant construction, a historic low snowpack in the Northwest, and natural gas pipeline transmission constraints into California created the perfect electrical storm: the California energy crisis. While 2000 and early 2001 6 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 Demand and Supply (MW) Incremental New Capacity (MW)PDF Image | Solar Fuel From The Sky
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