I grew up in California, and they often face their hottest weather in September. It's uncomfortable for everybody. I always thought it odd that the high school football team had their preseason training just as the temperature soared. But that's how it is in the Golden State, school starts, and the heat wave begins.

We are at the beginning of September, and like clockwork, California swelters. The heat puts a tremendous strain on California's electrical system, as everyone turns on their air-conditioners to stay somewhat comfortable.

The principal electric distributor in California is CAISO. The California Independent Systems Operator. Their job is to ensure that everyone continues to have power, but that's a mighty tall task this year. In the 23 years they kept track, CAISO had only had one day when peak power demand exceeded 50 Mega Watt hours. Right now, it is a daily occurrence as demand keeps climbing.

CASIO reports that their total system capacity is 57+ Mega Watts, so with today's requirement predicted to come in at better than 51 Mega Watts, it leaves little room for error.

So I thought this would be an excellent time to see how California manages its heat wave. Arguably, California is the country's most progressive state, leading the way in its transition to new, greener energy. Just the kind of energy system that President Biden keeps pushing for.

CAISO provides a detailed look at their energy sources throughout the day, revealing some fascinating results.

As the day begins, the natural energy hero is the renewables, wind, and solar. Renewable energy fits nicely within the Biden/California script. After sunrise and before noon, Renewable energy accounts for better than 30% of the state's energy demand—nothing to sneeze at. But, as we'll see, it comes with some caveats.

After noon things start to heat up, and the real hero of the story, natural gas, takes over as the number one electricity provider. No matter what the rhetoric, it's apparent that California is currently operating on natural gas generation. It provides roughly half of Cali's energy requirement for the rest of the day and night.

As the sun sets over the Pacific, things begin to change again. With dusk comes the decline of all things solar. The windmills still work, but the solar panels shut down until tomorrow morning. And those renewables that worked so well in the morning fade to 1/5th their primary production level.

Batteries, which have been charging most of the day, come to life. And for the next four hours, batteries contribute about a tenth of the evening power. Or about half the level of more traditional nuclear and coal-powered plants. Of course, Nuclear and coal work around the clock, while the batteries max out at a little over 4 to 6 hours.

Then something very odd happens. It is obvious late at night, but as I look back on the charts, it has been there all the time, 24 hours every day. "Imports," that right every day California goes outside its borders to purchase electricity from other States and suppliers. Nearly a quarter of all California electricity late at night comes from somewhere else. Hello Nevada, Arizona, and as far away as Colorado, you help keep the lights on in California.

So, as I take a step back and look at the power picture of California, it becomes clear that the power hero for California is natural gas around the clock. Without missing a beat, nat/gas supplies better than half of Cali's electric needs.

At dawn, the renewables emerge, wind and solar, but like a Hollywood Diva, when the curtain descends, so do they. At night there's very little out of the Renewables.

And it's at night that we see the reality of California power come out of the shadows. Imports from across the border are the second highest source of nighttime electricity in this very green state. Where they come from, we're not exactly sure. Could it be from Nuclear? or (gasp) coal? Quite likely, as some neighboring states have those kinds of power plants.

As a former state resident, I look back on California fondly. It is an incredibly diverse state, with wonderful people and tremendous resources.

It has been called the place for dreamers. However, it seems to lack discipline. And while the world needs dreamers, it also needs someone who will "turn on the lights."

I believe CAISO puts this picture out there for all to see. They hope that some of the leadership in Sacramento will. But to emerge from this crisis will take good management and financial skills.

Anyone can do the exercise that we just performed, and it will tell the same story.

Economic News

Energy continues to be the number one economic topic worldwide, with even Cern, the giant Hadron Collider, talking about going offline until the energy crisis ends. While in Norway, their top energy company estimates that this year's energy costs will rise by $1.5 trillion.

Overnight China announced that its balance of trade for August was down about 20% from the month before. I suspect this was due to their lockdown over the latest Covid outbreak. And also from a slowing in US imports.

Interesting how Chinese exports have become a backhanded way to measure the US Economy.

Here in the US, new mortgage applications were down for the fourth week in a row as the interest rate for a 30-year mortgage creeps nearer and nearer to that 6% level.

Then later this morning, the US will announce our balance of trade numbers. We expect a decline along with the Chinese as we see less commercial activity on both sides of the Pacific.

In earnings reports, used car auctioneer, Copart reports, Casey's General Stores, and everyone's favorite trading stock: Game Stop.