Key Takeaways

• California’s drought has had a major impact on the state’s energy production, particularly hydroelectric power which is the largest renewable energy source in California, accounting for nearly 15% of the state’s total electricity generation.
• Lake Oroville, which is California’s second-largest reservoir and a key source of hydroelectric power and has experienced a 75% drop in storage level to date due to the drought.
• Although, with California’s reservoirs being replenished and the snowpack reaching above-average levels, hydroelectric facilities may see an increase in power generation.

California’s drought crisis has been ongoing for several years, but the situation has become increasingly dire in recent months. According to the United States Drought Monitor, over 90% of the state is experiencing drought conditions, with some regions facing the most severe drought on record. In some parts of the state, the drought is classified as “exceptional,” the most severe category. The drought is not only impacting the state’s water supply but also causing devastating wildfires. With water scarcity becoming an increasingly urgent problem, Californians are navigating a complex set of challenges, from managing dwindling water supplies to rethinking long-term water management strategies.

Understanding the Severity of California’s Drought

California’s drought is a complex phenomenon that is influenced by a variety of factors, including climate change, weather patterns, and human activities. The state is no stranger to droughts, having experienced multiple prolonged dry spells throughout its history. However, the current drought is particularly severe, with some experts suggesting that it could be the worst in over a thousand years. The state’s water supply comes from a combination of surface water, groundwater, and snowpack. Surface water comes from rivers, lakes, and reservoirs, while groundwater comes from underground aquifers. Snowpack is also a crucial component of California’s water supply, as it provides a slow and steady release of water throughout the spring and summer. The economic impact of drought on California’s agriculture industry has been significant. According to a new analysis from UC Merced, the 2021 drought cost the agriculture sector $1.1 billion and resulted in the loss of thousands of jobs. The lack of water has led to a decrease in crop yields, particularly for crops like almonds, grapes, and pistachios, which require a lot of water to grow. Farmers have had to reduce their acreage or leave fields fallow, resulting in lower production levels and higher prices for consumers. The Public Policy Institute of California (PPIC) also published a policy brief that outlines the economic impact of drought on California’s agriculture industry. The brief notes that during a drought, farmers must rely more heavily on groundwater, which can lead to over drafting and a decrease in groundwater levels. This can result in long-term damage to the state’s aquifers and decrease the amount of available water for future years. The brief also notes that the impact of drought is felt beyond the agriculture industry, as businesses that rely on agriculture, such as food processing and transportation, are also affected.

The impact of drought on water reservoirs and supply

One of the most visible impacts of California’s drought is the shrinking of its water reservoirs. The state’s reservoirs are currently at historic lows, with some at less than 20% capacity. This is a significant concern as the state relies heavily on these reservoirs to meet its water needs during the dry summer months. The low water levels also increase the risk of wildfires, as vegetation around the reservoirs dries out and becomes more susceptible to ignition. California’s major reservoirs, such as Lake Oroville and Shasta Lake, have seen their water levels drop to record lows, with some reservoirs at only 50-75% of their capacity (refer to the below image). This has led to concerns about the availability of water for drinking, agriculture, and other critical uses. To address the immediate water shortage, the state has implemented a range of measures, including mandatory water restrictions, increased groundwater pumping, and the construction of emergency water projects. However, these solutions are temporary fixes that do not address the underlying problem of dwindling water supplies.

The role of snowpack in California’s water management

Another critical factor in California’s water management is the snowpack. The state’s mountain snowpack serves as a natural reservoir, storing water during the winter and releasing it slowly over the summer months. This snowmelt provides up to 30% of the state’s water supply, particularly in the dry regions of Southern California. According to a report by the California Department of Water Resources, the state experienced a dry winter season in 2021-2022, resulting in below-average snowpack in many areas. As of April 1, 2022, the statewide snow water equivalent (SWE) was just 34% of the April 1 average. However, climate change is threatening the reliability of snowpacks as a water source. This year, the snowpack is significantly below average, with some areas measuring less than 50% of normal levels. This will likely exacerbate the state’s water shortage and increase the risk of wildfires. Rising temperatures are causing the snowpack to melt earlier and faster, reducing the amount of water that is available during the summer months. This trend is expected to worsen in the coming years, making it increasingly challenging to rely on snowpack as a long-term water management strategy.

Analysing California’s hydropower output

Drought not only affects California’s agriculture industry but also its energy production, particularly hydroelectric power. Hydroelectric power is the largest renewable energy source in California, accounting for nearly 15% of the state’s total electricity generation (source). However, the current drought has led to a decrease in the amount of water available to produce hydroelectric power, which has had significant impacts on the state’s energy production. An example of this is Lake Oroville, which is California’s second-largest reservoir and a key source of hydroelectric power and has experienced a 75% drop in storage level to date due to the drought (refer to the image: Storage in Selected Major Reservoirs). Hydroelectric power plants require a consistent flow of water to generate electricity but, during a drought, the water levels in rivers, lakes, and reservoirs drop, resulting in reduced water flow to power plants. As a result, hydroelectric power plants such as the six-turbine Edward Hyatt Power Plant at Lake Oroville, have been forced to decrease their output or shut down entirely, resulting in a decrease in electricity generation. The impact of drought on hydroelectric power output in California is significant and has led to a decrease in electricity generation. This, in turn, has the potential to cause power shortages and blackouts, which can have far-reaching impacts on the state’s economy and residents. Recent rainfall and snowfall in California may significantly increase the state’s hydroelectric power output. However, at the regional level, EIA’s Short-Term Energy Outlook (STEO) forecasts that total hydropower production in the western market region (California, Southwest, plus Northwest and Rockies) in the 2022–23 water year will decline slightly, by 4%, from the last water year. Although, with California’s reservoirs being replenished and the snowpack reaching above-average levels, hydroelectric facilities may see an increase in power generation. This increase in hydroelectric power could have a significant impact on the carbon intensity and electricity emissions of California’s power sector, as it could help to reduce the state’s reliance on fossil fuel-based power generation. The use of renewable energy sources like hydropower is an important step in reducing greenhouse gas emissions and mitigating the impacts of climate change. Analyst Contact:

• Megha Jha (mjha@ckinetics.com)
• Craig Rocha (cmrocha@ckinetics.com)