BUILDING THE ELECTRICITY GRID
OF THE FUTURE: CALIFORNIA’S
CLEAN ENERGY TRANSITION PLAN
Governor Gavin Newsom
May 2023
2 CALIFORNIA'S CLEAN ENERGY TRANSITION PLAN
Preface ............................................................................................................................................................................................ 2
Executive Summary ................................................................................................................................................................... 3
California’s Climate and Clean Energy Goals ................................................................................................................... 8
Implementing California’s Clean Energy Transition .................................................................................................... 10
i. Planning for California’s High Electrication Future ............................................................................................. 10
Electric Resource Planning ..................................................................................................................................... 10
Maximizing Electricity Demand Flexibility ......................................................................................................... 11
Modernizing California’s Grid and Accelerating Connection of Clean Electric Resources ................... 12
ii. Deploying an Unprecedented Scale of New Clean Electric Resources ...........................................................14
Permit Streamlining ....................................................................................................................................................14
Procurement of Diverse Clean Electricity Resources ....................................................................................... 15
iii. Ensuring Electric Grid Reliability During Extreme Weather ............................................................................. 17
iv. Customer Electric Bill Affordability.......................................................................................................................... 18
Electric Rates and Equity ......................................................................................................................................... 18
New Financing Models to Reduce the Upward Trajectory of Electric Rates............................................... 20
Creating Efciencies Through Regional Grid Cooperation and Coordinated Operations .................... 20
New Technologies and Prioritizing Equitable Electric Bill Affordability ..................................................... 20
Conclusion: The Path Toward California’s Clean Energy Future ............................................................................. 21
Table Of Contents
CALIFORNIA'S CLEAN ENERGY TRANSITION PLAN 3
In July 2021, Governor Gavin Newsom released
California’s Electricity System of the Future, a roadmap
to a future where clean electricity increasingly powers
the daily lives of Californians. As California reduces
greenhouse gas (GHG) emissions from the state’s
electricity system (that is, the electric grid), the state
must also keep costs reasonable and plan thoughtfully
to ensure that electric service is affordable and reliable
for all.
The vision for a clean electric grid of the future is
one where:
• The electric grid is powered by low-cost,
carbon-free electricity at all hours of the day and
night, making clean electricity accessible to all
Californians.
• Transportation choices are zero-emission and
able to plug into the electric grid at places of
convenience for all customers.
• Buildings are increasingly decarbonized.
• The industrial sector is powered by clean electricity
and clean fuels, such as hydrogen.
• Advanced communication and digital technology
enable seamless customer demand exibility
that supports electric grid reliability and helps
keep electric service costs more affordable for all
customers.
California’s Electricity System of the Future recognized
the need to build clean electric generation and energy
storage at an unprecedented pace and scale. It was a
call to action to harness the potential of some of the
emerging technologies and electric grid concepts
that underlie the equitable transition to a 100
percent clean, resilient electric grid.
This document shows how the state is implementing
this vision to meet our 100 percent clean electric
future, and addressing the reliability challenges
of extreme events driven by climate change
to equitably deliver a clean, safe, reliable, and
affordable energy transition for all Californians.
Preface
California’s Electricity System of the Future
4 CALIFORNIA'S CLEAN ENERGY TRANSITION PLAN
Executive Summary
California’s clean energy agenda is ambitious, and we are exceeding many of our preliminary targets years ahead
of schedule. But to reach our ultimate goal of 100% clean electricity by 2045, we need to build more clean energy,
faster. Electrifying California’s economy and building a reliable, safe, affordable, and clean electric grid are
cornerstones of both our climate leadership and our economic plan for the future.
We are in a Race Against Climate Change
The state’s electric sector is at an inection point. California still depends on fossil gas-red electric generation
to maintain a reliable electric grid. The old electric grid was largely stable with predictable demand patterns and
little load growth - but climate change has made our old grid more vulnerable and created greater urgency to
modernize it.
Our modernized electric grid will be less vulnerable to extreme heat events, wildres, droughts, and oods, while
meeting the needs of California’s future.
California’s energy transition is well underway, with nearly 35,000 MWs of renewable resources already serving
the grid, and 9,000 megawatts (MW) of that capacity coming on-line in the last three years. To provide 100% clean
electricity, current studies show California will need to build an additional 148,000 MW of clean energy resources
by 2045. The new grid will continue to innovate energy demand side resources by increasing energy efciency,
adoption of customer solar and storage, and utilize technologies that allow customers to supply power stored in
their zero-emissions car batteries and other sources back to the grid. Optimizing demand side resources creates
greater grid efciencies and advances our goals of affordability and reliability.
But the only way to achieve our goals is to build more clean energy, faster. This is a roadmap to how the state will
increase our current clean electricity capacity by 400% over the next two decades.
33% renewable energy
Reduce greenhouse gas
emissions to 1990 levels
1.5 million zero-emission
vehicles sold
Goals set, goals met
CALIFORNIA'S CLEAN ENERGY TRANSITION PLAN 5
California has kickstarted the transition away from dirty fossil fuels. Our success comes from setting a vision
for our future, putting that vision into public policy, and investing in innovation and technology to help us
reach our goals.
Our state established a landmark policy (SB 100, 2018) requiring 100% of our electricity to come from
renewable energy and zero-carbon resources by 2045. This plan marks our progress toward that ultimate
goal and identies what is needed to reach 100% clean electricity by 2045. It outlines what we can expect in
the years ahead, as we begin the next phase of California’s transition to clean electricity.
Percent renewable and zero-carbon electricity serving CA
California is on track to achieve 100% clean electricity
with 59% of the state’s electricity already coming from renewable
and zero-carbon resources
10
0
20
30
40
50
60
70
80
90
100
100%
2045
90%
2035
59%
2021
37.2% Renewables
10.7% Large Hydro
10.8% Nuclear
41%
2013
21.9% Renewables
9.0% Large Hydro
10.3% Nuclear
California is Leading the Clean Energy Revolution
6 CALIFORNIA'S CLEAN ENERGY TRANSITION PLAN
California’s growing battery storage capacity
captures the state’s abundant renewable resources
2019
250 MW
2023 2035 2045
5,000 MW
*
19,500 MW
52,000 MW
*Projected as of June 1, 2023, based on California ISO interconnection queue.
In the next phase of the clean energy transition, our focus is to generate an unprecedented amount of clean,
reliable power – and to keep it affordable.
Modernizing our electric grid means adapting to how these newer forms of power differ from older, dirtier
sources. For example, newer, clean sources of electricity like solar and wind energy are more variable and
more intermittent. We will not be able to build a reliable, clean electric grid using solar and wind energy
alone. California needs more diverse clean energy resources – including batteries, clean hydrogen, and long-
duration storage - and a wide range of technologies and resources to meet the unprecedented growth in
demand for electricity at all hours of the day and different times of year.
Last year, California passed important regulatory reforms that will make it easier to build thousands of new
MWs of clean electric generation. The state has a comprehensive electric generation and energy storage
procurement planning process and is making it easier to fast-track new clean energy projects. Our state is
also investing in connecting and delivering these clean energy resources to California consumers. Now, we
must get to work and build the clean energy projects that help us reach our goals.
Energy efciency and technology will also be critical. Customers will have increased ability to voluntarily and
automatically reduce electricity use to provide power back to the grid when demand is high. State incentives
to harness the “smart” capabilities of cars, household appliances, and other equipment will reduce strain on
our electric grid and help customers reduce their electric costs. The electrical grid of the future will be smart
and dynamic, with buildings and vehicles providing power back to the grid during peak hours, and charging
during times of relatively low demand.
California is Creating Modern Rules to Build a Modern Electrical Grid
CALIFORNIA'S CLEAN ENERGY TRANSITION PLAN 7
The transition to a 100% clean electric grid will come quickly, but not overnight. Maintaining reliable and
affordable electric service throughout this transition is just as important. Public health and safety, the economy,
and the future of the state and this planet all rely on this transition. This transition is ambitious in scope and scale,
but is achievable with California’s innovation culture as well as clear, consistent policies that allow us to build the
grid we need and provide economic opportunity for all Californians.
To provide 100% clean electricity by 2045,
California will build an unprecedented amount of new utility-scale clean energy resources
Totals represent new and existing
resources. The2021 SB 100 Joint Agency
Report projects the need for 148,000 MW
of new resources by 2045.
In addition, California also expects new
capacity from energy efciency, customer
solar and demand response.
Source: 2021 SB 100 Joint Agency Report
California Has a Plan to Manage the Transition to Clean Energy
·-----------------------------------------.
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i,
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Battery
Storage
Geothermal
Offshore
Wind
Long
Duration
Energy
Storage
Utility-Scale
Solar
Wind
·-----------------------------------------·
MW
Total Clean Electricity Resources
200,000
___________________________
-------------------------------------------------
180,000
___________________________
-----------------------
160,000
--------------------------------------------------
140,000
--------------------------------------------------
120,000
_
---- ---- ---- ---- ---- ---- ---- ---- ----
-------------
100,000
___________
---------------------------------------
73,000
MW
80,000
_________
-----------------------------------------
60,000
----------------------------
35,000
MW
40,000
----------------------------
20,000
-------
0
-------
2022
2030
183,000
MW
2045
8 CALIFORNIA'S CLEAN ENERGY TRANSITION PLAN
California’s Climate and Clean Energy Goals
California has a unique opportunity to build upon
the state’s history of innovation, economic growth,
and science-based policymaking to lead global
efforts to adapt to and mitigate climate change.
The state is positioned to simultaneously confront
the climate crisis and build a more resilient, just,
and equitable future for all communities through
a bold suite of climate goals including:
• Carbon neutrality by 2045
• 100% clean electricity by 2045
• 25,000 MW of offshore wind by 2045
• 100% ZEV new car sales by 2035
• 7 million climate-friendly and climate
ready homes by 2035
• 6 million heat pumps in buildings by 2030
In 2022, the California Air Resources Board (CARB)
adopted an update to the state’s climate plan –
leading the world with a comprehensive roadmap
to achieve net zero pollution.
Cut Air Pollution
71%
Slash Greenhouse
Gas Emissions
85%
Drop Gas
Consumption
94%
Create New Jobs
4 Million
Save Californians in
Health Cost from
Pollution
$
200 Billion
$
Source: California Air Resources Board
The Plan is Expected to Yield Major
Benets for Californians
CALIFORNIA'S CLEAN ENERGY TRANSITION PLAN 9
In 2030, electric vehicle charging is expected
to account for less than 5% of peak demand.
2019
2010 661
2016 72,683
2013
39,805
2019 147,347
2011 6,743
2017 93,587
2014 58,663
2020 145,099
2022 345,818
2012 17,839
2018 157,143
2015 64,134
2021 250,279
Q1 2023 124,053
2010
2023 2035
6.8 % 21 % 100 %
ZEV Market Share
Over 1.5 Million ZEVs Sold
California’s Climate and Clean Energy Goals
California is focused on transforming the transportation sector, which is responsible for more than half of the state’s
climate emissions. As outlined in this energy transition plan, the state is closely coordinating planning between the
power and transportation sectors.
California’s zero-emission vehicle market is accelerating
as the state drives toward the phase-out of sales of new gasoline-powered vehicles by 2035
10 CALIFORNIA'S CLEAN ENERGY TRANSITION PLAN
Implementing California’s Clean Energy Transition
i. Planning for California’s High Electrication Future
California is on a path to achieve 100% clean electricity by 2045. Through the SB 100 process, California will
track our ongoing progress, continue to conduct rigorous analysis of implementation considerations, as well as
coordinate planning across state agencies to meet 100% clean electricity by 2045. The next Joint Agency SB
100 Report, due January 1, 2025, will lay out the pathways to achieve SB 100 reliably, affordably, and equitably.
Achieving SB 100 for all Californians, while maintaining affordability and reliability is the guiding policy for
resource planning and evolving the grid of the future.
Electric Resource Planning
Building a clean electric grid that supports
widespread electrication of California’s economy
starts with planning for future electricity demand that
is growing and increasingly responsive to real-time
electric supply conditions.
The California Public Utilities Commission (CPUC)
implements programs designed to ensure the
more than 40 electric retail sellers that serve 75%
of the state’s electricity demand procure enough
electricity generation resources to meet their share
of the forecasted electricity demand. These planning
programs include the Integrated Resource Planning
(IRP) process, which identies the optimal mix of new
electric resources needed to meet the state’s clean
electricity goals. These resources include energy
storage that can capture excess power from solar and
wind for later use.
Since 2019, the IRP process has resulted in the
procurement of 18,800 MW of new, clean electricity
generation and energy storage resources expected
to come on-line through mid-decade. In addition,
the CPUC’s resource adequacy program ensures
that electric retail sellers under CPUC’s jurisdiction
have enough electricity generation resources under
contract and available to serve their forecasted
electricity demand for each month of the year. Sellers
must also hold a carefully designed reserve to serve
as a cushion for unanticipated conditions, such as
unplanned outages of electric resources and extreme
weather events that may cause demand surges.
In addition to these processes and programs, and
in close coordination with the CPUC and CEC, the
California Independent System Operator (California
ISO) develops a 10-year Transmission Plan that
identies a suite of electric transmission projects
that may be needed for electric grid reliability,
economic benet, and policy-driven purposes.
This plan ensures that enough electric transmission
capacity is available to convey power produced
by the new clean electric resources that electric
retail sellers are procuring to meet their IRP
requirements.
The more than 40 publicly owned electric utilities
(POUs) also adhere to a similar IRP process that
is managed by the CEC. Through this process,
the electric POUs outline strategies for achieving
state goals at the least cost to customers, while
maintaining electric service reliability. These IRPs
are adopted by each utility’s governing board and
submitted to the CEC every ve years.
CALIFORNIA'S CLEAN ENERGY TRANSITION PLAN 11
Implementing California’s Clean Energy Transition
i. Planning for California’s High Electrication Future
In this clean energy transition, Californians will
increasingly utilize novel and innovative tools to
voluntarily control their electricity consumption
to save on customer bills and maximize
grid efciencies. These demand exibility
opportunities increase the resources on the grid
and correspondingly reduce the need to build
additional resources.
A foundational component of fostering this
exible electricity demand is “smart meters.”
California’s large investor-owned utilities (IOUs)
led the nation in installing 12 million smart
meters, enabling customers to better manage
The CEC is improving tracking of electric
consumption data and addressing key
limitations in planning models by:
• Enhancing climate/temperature scenarios.
• Interpreting interval electric consumption
meter data to develop insight into temporal
and geographical changes
in electric usage.
• Expanding electrication modeling
scenarios, including when, where,
and how much.
their electricity demand through time-varying
electric price signals or demand response
programs. This transformative investment
allows California to advance demand exibility.
In addition, demand management standards,
advanced rate design, and exible appliance
standards are helping create a vibrant
marketplace of demand exibility solutions.
This provides more options for customers to
manage their appliances, equipment, and
devices to save money on electric bills and
participate in energy conservation programs
when the grid is stressed with high demand
during extreme heat events.
Maximizing Electricity Demand Flexibility
12 CALIFORNIA'S CLEAN ENERGY TRANSITION PLAN
California is strategically building new and
upgrading aging transmission and distribution
infrastructure to meet the rapid grid expansion
needed by 2045. The CEC and CPUC are working
with the electric utilities and stakeholders to
enhance planning tools, improve delivery processes,
and target investments in key areas of the grid.
Transmission System
California is preparing and anticipating the growth
of clean electric resources that will connect to the
grid. To support the timely delivery of clean energy
resources, the CEC, CPUC, and California ISO
have critical and interrelated roles in transmission
development and upgrade projects: the CEC’s
electricity demand forecasts, the CPUC’s IRP
process, and the California ISO’s annual transmission
planning process.
The modernization and coordination of these
processes are essential to improving efciencies
that will allow the rapid pace of interconnection
of new clean energy resources. In December
2022, the CEC, the CPUC, and the California ISO
signed a memorandum of understanding (MOU)
to memorialize the critical collaboration of these
energy institutions to coordinate processes and
enable vital efforts to accelerate the identication of
and preparation for new clean electricity resources
that will connect to the grid.
To further the state's electric grid planning efforts,
the California ISO developed and released its
rst-ever 20-Year Transmission Outlook in 2022.
The Outlook explores longer-term electric grid
requirements and options for meeting the 100%
clean electricity by 2045 goal. The outlook used
scenarios developed by the CEC, CPUC, and
California ISO to allocate and map a potential
set of new carbon-free and renewable electric
resources for 2040 in alignment with the 2045
goal. The California ISO is working with the CPUC
and CEC on the parameters for an update and
will be releasing a new outlook in early 2024 that
extends to 2045.
In May 2023, the California ISO Board of Governors
approved the 2022-2023 10-year transmission
plan that is notable for approving the largest
tranche of new transmission in the California ISO’s
history. The plan includes 45 projects, totaling
$7.3 billion in new investments in the transmission
grid, aligned with the direction established in
the 2022 20-Year Outlook. The plan also reects
a more proactive and strategic approach to
studying and recommending new transmission
infrastructure needed to reliably and efciently
meet California’s clean-energy objectives over the
next decade, establishing the zones targeted for
resource development and proactive transmission
development that will shape future resource
interconnection and procurement.
In addition – consistent with the strategic direction
established in the MOU – the California ISO is
transforming its interconnection process so that
it better coordinates electric resource planning
and development with new and existing electric
transmission and the subsequent queuing of
projects in its interconnection application review
and study processes.
Modernizing California’s Grid and Accelerating Connection
of Clean Electric Resources
CALIFORNIA'S CLEAN ENERGY TRANSITION PLAN 13
To accommodate electried end uses and
distributed energy resources, upgrades to the
electric distribution system are needed and must
match local needs. These upgrades, which are paid
for by customer bills, require a higher degree of
planning than in the past to be equitable, timely,
and cost-effective. Every electric utility, including
publicly-owned and the electric investor-owned
utilities, are modernizing the planning processes
of their electric distribution grids to better identify
current and future electricity demand. The CEC
and CPUC will continue to explore strategies
where distributed energy resources and demand
management technologies can best be used to
support electrication while minimizing costs to
customers.
The CPUC continues to work with the large investor-
owned electric utilities to identify and rene their
interconnection processes tariff to expeditiously
connect new distributed energy resources. Some of
these accomplishments include the incorporation
of improved analytical tools, the creation of a fast
track process to streamline project delivery, and
facilitating interconnection process automation. The
CPUC also hosted an Interconnection Discussion
Forum, bringing together utilities, developers, and
other stakeholders to explore a wide variety of issues
related to interconnection practices and policies
to foster proactive, constructive communication,
share information and best practices, and informally
resolve or prevent interconnection disputes,
including the designation of ombudsman for each
utility for resolution of interconnection disputes.
The CPUC is currently in the process of updating
distribution planning frameworks to leverage
enhanced data to inform distribution planning and
supplement communication between utilities and
local governments to inform long-term distribution
planning and support interconnection and
energization. These enhancements will sustain
continued growth in building and transportation
electrication in addition to economic growth and
new housing.
The work to integrate distributed energy resources
will also support efforts to expand a workforce
that is trained, skilled, and capable of constructing
the needed infrastructure to accomplish these
objectives.
Distribution System Upgrades
14 CALIFORNIA'S CLEAN ENERGY TRANSITION PLAN
Implementing California’s Clean Energy Transition
ii. Deploying an Unprecedented Scale of New Clean Electric Resources
There is much to celebrate in California as carbon-free and renewable electric technologies and resources are
ourishing, electricity demand is becoming more exible, and the use of fossil-fueled electric generation has
declined.
At the same time, California still depends on gas-red electric generation to maintain a reliable electric grid.
This dependency is especially true in the early to late evenings when electricity demand remains high while solar
generation drops off and before onshore wind electric generation ramps up. Given that most of California’s gas-
red electric generators are in or near disadvantaged communities, reducing reliance on these facilities is also a
matter of equity. Going forward, California will build a diverse clean energy portfolio with rm, exible resources as
well as increased energy storage to guarantee reliability 24 hours a day, 365 days a year. Such resources include:
• Offshore wind turbines that can capture the powerful and sustained ocean wind.
• Increased amounts of energy storage, including batteries, clean hydrogen, and long-duration energy storage,
capable of storing large amounts of energy that can provide power back to the electric grid over a consistent
and continuous period.
Realizing California’s clean electricity goals reliably, affordably, and equitably requires an unprecedented scale of new
clean, diverse electric resources to match electricity demand growth. This acceleration requires rethinking and updating
permitting, procurement, and project development processes to bring clean energy infrastructure on-line quickly.
Permit Streamlining
Improving state and local permitting is necessary
to expedite the needed pace of building new
clean electric resources. To that end, Assembly
Bill 205 (Chapter 62, Statues of 2022) established
a new, voluntary environmental review permitting
process for clean electric resources at the CEC that
will provide greater certainty on timing. It will hold
the environmental review process to a maximum
of 270 days from when a permit application is
deemed complete. The bill also established a 270-
day judicial review target if projects are litigated
and does so while maintaining a robust public and
environmental review process.
Eligible projects include:
• Clean electric generation projects
• Energy storage systems
• Non-fossil/non-nuclear thermal plants
• Facilities that manufacture or assemble
renewable energy/energy storage systems
or components
Under this “opt-in permitting process,” CEC
certication is in lieu of most other local, state, and
regional permits. Finally, this new process requires
projects to include skilled and trained standards
for workforce, community benets, and local
scal benets, increasing opportunities for public
engagement and local benets.
CALIFORNIA'S CLEAN ENERGY TRANSITION PLAN 15
Most of the new electric generation procured to date
has been solar, energy storage, and wind. While solar
is the predominant electric generator during the day,
as the sun sets, natural gas-red generators ramp
up power production to meet peak demand in the
evening and before onshore wind generators start to
produce in the later nighttime hours.
As the electric grid decarbonizes, clean electric
resources that can store excess onshore wind and
solar power and are "on call” to deliver electricity are
essential to maintaining electric grid reliability at all
times. The state has initiated the development of new
long-duration energy storage technologies and clean
“rm” electric resources capable of generating power
continuously. For example, the CEC’s Long-Duration
Energy Storage Program is providing $140 million to
long-duration energy storage projects throughout
the state to help commercialize and scale new
technologies.
In addition, the CPUC has ordered the procurement
of 2,000 MW of new long-duration energy storage
projects and 2,000 MW of clean rm electric
resources, such as geothermal, by 2028.
The CPUC has ordered the 40 electric retail sellers
under its jurisdiction — electric investor-owned utilities
(IOUs), community choice aggregators (CCAs), and
energy service providers (ESPs) — to procure an
unprecedented quantity of clean electric resources
and the efforts are yielding results. However, project
development complexities and market fragmentation
among sellers have failed to result in signicant
Procurement of Diverse Clean Electricity Resources
procurement of certain diverse resources – such as
offshore wind, geothermal generation, and long-
duration energy storage – needed to meet the state’s
clean and reliable portfolio. These electric resources
often have lengthy development timelines due to the
unique and complex permitting, interconnection,
and construction requirements. In addition, these
resources are typically the most expensive, more
complicated, and larger than other electric resources
that do not possess the same types of characteristics,
attributes, and proles needed for our future clean
and reliable grid. While they provide electric resource
diversity benets in a model portfolio, such electric
resources are not being procured because of the
inherent development risks, timing uncertainties, and,
in some cases, signicant cost.
To address these challenges, a central procurement
mechanism combining the buying power of
customers could cost-effectively procure these
types of resources, with the resulting benets
spread among all customers. Consideration of such
a mechanism is critical for California to achieve
100 percent clean electricity. In addition, this
procurement mechanism could be a key tool to
develop offshore wind electric projects in federal
waters off the California coast. California's Central
and North Coasts present the state with a remarkable
opportunity to develop thousands of megawatts of
electric generation capacity and can generate power
during key times of the day and year. Developing
these projects will require new and expanded electric
transmission infrastructure to bring the power
generated to portions of the state with the most
electricity demand.
16 CALIFORNIA'S CLEAN ENERGY TRANSITION PLAN
Tracking Energy Development
(TED) Task Force
The Tracking Energy Development (TED) Task
Force, which is composed of the CPUC, CEC,
California ISO, and the Governor’s Ofce of
Business and Economic Development (GO-
Biz), was formed in response to the planned
rotating power outages in 2020. It provides
electric resource development assistance,
as appropriate, for new electric generation
and battery storage projects, with a priority
on contracted projects needed for summer
electric grid reliability.
TED Task Force members meet regularly to
review project information, identify barriers,
track supply chain issues and coordinate action
across agencies. These efforts have helped
many projects to stay on track in meeting the
respective commercial operation dates.
The TED Task Force will continue to closely
track and monitor the progress of high-priority
projects expected to come on-line in the near
term (2023–2025). Priority will go to:
• Electric generation and battery energy
storage projects with executed power
purchase agreements/contracts.
• Electric transmission lines and other
infrastructure, including studies for electric
generator and energy storage, that are
identied as priorities by the TED Task
Force or under agreement with other state,
federal, or local agencies.
CALIFORNIA'S CLEAN ENERGY TRANSITION PLAN 17
iii. Ensuring Electric Grid Reliability During Extreme Events
Implementing California’s Clean Energy Transition
Climate change-driven extreme weather events
such as heat waves, wildres, drought and oods are
creating unprecedented stress on the grid. At the
same time, supply chain constraints and other factors
have delayed new resources from coming on-line.
As California transitions to the electric grid of the
future, climate change will continue to create more
variable electricity demand and test the reliability
of the entire system. California is taking action
to bolster electric grid reliability in the near and
midterm as it accelerates the deployment of clean
electric infrastructure and enhances long-term
planning.
To address these heightened reliability risks, the
CEC, CPUC, and California ISO are updating and
modifying their electric grid reliability requirements
beyond traditional core planning and procurement
assumptions. In addition, the state created the
Strategic Reliability Reserve (SRR) to serve as
an insurance policy against extreme weather
events with programs overseen by the CEC and
Department of Water Resources (DWR). The SRR
provides supplemental electric resources beyond
the additional electric resources being developed
based upon updated planning and procurement
requirements, such as an increase in the CPUC
Resource Adequacy program Planning Reserve
Margin and new inputs and assumptions in the CEC
electricity demand forecasts.
In 2022, the SRR was composed of state-owned
and -leased electric generation assets and
power imports funded by the SRR to meet
peak electricity demand during the summer
months. Moving forward, DWR’s SRR programs
will strategically retain resources that would
otherwise retire to avoid competing with electric
retail sellers, providing a lower-cost solution and
allowing the state to retain key electric resources
until replacements are on-line and available.
The SRR also contains emergency demand
response programs at the CEC that build upon
emergency actions taken by the CPUC and the
state in 2021. The CEC’s Demand Side Grid
Support program and CPUC’s Emergency Load
Reduction Program provide direct payments to
customers who reduce their electricity use in the
event of a grid emergency. Meanwhile, the CEC’s
Distributed Electricity Backup Assets Program
funds the development of new distributed electric
generators and incremental upgrades to existing
generators that can provide additional output
during extreme weather events.
With the investments to date, the SRR will continue
to serve as a critical state-supported stopgap as
California transitions, scales, and builds its electric
grid of the future. New tools and investments,
such as the SRR, are the exact types of creations
California needs to smooth its progress toward
successfully powering its economy with clean
electric resources.
18 CALIFORNIA'S CLEAN ENERGY TRANSITION PLAN
Implementing California’s Clean Energy Transition
The 100% clean electric grid of the future will power
the entire economy including factories, businesses,
cars, trucks, buses, home heating and cooling
systems and more. Total customer energy costs will
shift because more daily activities will be electried.
Instead of paying at the gasoline pump, Californians
will pay their electric utility to fuel their vehicles.
As more household appliances are electried,
customers can expect to use more electricity and
less gas.
As the state continues to expand clean energy
generation and storage projects, increase demand
exibility, and realize the potential of grid-integrated
electric vehicles and buildings, the per-unit electric
generation costs to customers will be lower. As
California electries its economy, customers will
benet from economies of scale because the xed
costs of the grid will be spread over a greater
number of per unit of sales as customers buy
electricity for more uses.
Californians maintain moderate electric bills thanks
to California’s energy efciency leadership and
ability to manage demand. This includes building
codes and standards that require minimum levels
of efciency for buildings and appliances which has
spurred innovation and lowered costs for customers.
Electric Rates and Equity
Transition of California’s electric grid and
decarbonization of the economy require careful
consideration of electric rates and ways that electric
service costs are allocated among customers.
Costs for all types of electric generation and grid
modernization are paid primarily through electric
bills. As lower-cost resources are procured and
developed, everyone benets through lower bills.
The CPUC’s IRP process provides the path for least-cost,
best-t clean electric resources to serve California’s
electric needs. Likewise, publicly owned utilities are also
building cost-effective portfolios of electric resources to
serve their customers.
Aligning the costs of electric services with the prices
charged to customers via rates and through bills is
essential for equitably allocating these costs. AB 205
(Chapter 61, Statutes of 2022) requires the CPUC to
establish an income-graduated xed charge on the
default residential electric rate tariff to cover the xed
costs of providing electric service in the electric IOUs
territories by July 2024. This rate reform, coupled with
the established time-of-use rate structure that covers
the variable cost of electric generation, will reduce
the per-unit price of power, help control rate volatility,
support creation of better price signals that will
enhance widespread electrication efforts, and have an
embedded equity structure for the state’s lower-income
communities.
In addition to programs that support low-income
households, California has provided electric rate and
bill relief to the state’s lower-income and disadvantaged
communities who have been disproportionately
impacted by the COVID-19 pandemic. Over the last
two years, California distributed $1.6 billion to address
household energy debt that accrued as a result of the
COVID-19 pandemic. These investments have provided
utility debt relief to more than 3 million customers.
iv.
Customer Electric Bill Affordability
CALIFORNIA'S CLEAN ENERGY TRANSITION PLAN 19
Implementing California’s Clean Energy Transition
iii. Customer Electric Bill Affordability
20 CALIFORNIA'S CLEAN ENERGY TRANSITION PLAN
Last year, AB 205 expanded the scope and budget of the California Infrastructure Bank’s (IBank) Climate
Catalyst fund to include nancing new electric transmission infrastructure that can access clean electric
generation projects. Using the initial investment of $200 million, California is exploring opportunities to
leverage this funding with federal dollars. Realizing the potential to leverage federal nancing for clean energy
infrastructure is an important opportunity to support electric bill affordability as California builds out its clean
electric grid.
Technologies to advance decarbonization offer an opportunity to lower electric bills and implement the clean
electricity transition in an equitable and inclusive way so those benets are realized for all Californians, especially
lower-income and underserved communities. The state is investing nearly $1 billion to support building
decarbonization with a prioritization on low- and moderate-income households, as well as disadvantaged
communities. These technologies will also help customers access lower rates through demand exibility by using
power during times of the day when costs are the lowest.
Finally, the 2022-23 State Budget Act dedicated $2.8 billion to new, clean energy technologies like offshore wind,
long-duration energy storage, industrial decarbonization, and hydrogen and battery energy storage. These
investments will support customer electric bill affordability by advancing the commercialization, and scaling
the deployment, of promising technologies that will reduce the state’s dependence on unsecure, volatile, and
imported fossil natural gas for electric generation. This allocation includes leveraging federal funds to reduce
costs to generate clean electricity and invest in the resilient electric grid of the future.
The California electric grid is part of a larger regional electric grid called the Western Interconnection. California
electric utilities and the California ISO have strong electric transmission interconnections, regional coordinated
planning, and operations with neighboring electric utilities and balancing authorities across the West.
Since 2014, the California ISO has administered a real-time wholesale electric power market that now includes
about 80 percent of electricity demand in the Western United States. This Western Energy Imbalance Market
(WEIM) has produced more than $2.3 billion in cumulative cost savings for market participants, including more
than $1 billion in savings for California customers. These savings show the value of clean electric resource
diversity and transmission connectivity across a wide geographical footprint.
The California ISO, western electric utilities, and stakeholders are now looking to build on the WEIM through
the establishment of an Extended Day-Ahead Market (EDAM). EDAM could provide a deeper day-ahead
optimization of resources across a wide geographic footprint and provide greater visibility and access to diverse
resources. Enhanced regional coordination and market opportunities have the potential to play a key role in
achieving California’s goal of providing 100% clean electricity to customers cost-effectively and reliably.
New Financing Models to Reduce the Upward Trajectory of Electric Rates
New Technologies and Prioritizing Equitable Electric Bill Affordability
Creating Efficiencies Through Regional Grid Cooperation and Coordinated Operations
CALIFORNIA'S CLEAN ENERGY TRANSITION PLAN 21
Conclusion:
The Path Toward California’s Clean Energy Future
California has set ambitious goals to build a future that requires more clean, safe, affordable, reliable energy.
We have made tremendous progress toward moving away from dirtier sources of energy, but many challenges
remain. The state will continue to move faster to build more clean energy generation and transmission capacity to
modernize our electrical grid in the face of accelerating climate change.
Many of the ambitious goals we have set for ourselves have already been reached – some earlier than we
expected. Building on that progress, California remains committed to leading the ght against climate change
and will take the necessary actions to protect energy reliability during the clean energy transition.
Harnessing the innovation, drive, and tenacity our state is known for, California is well-positioned to build on our
early successes and deliver clean, reliable, affordable energy for all Californians for generations to come.
