How the Golden state is leading the way to a new US energy system
California is highlighting how a different approach to energy can help build a better future for consumers, utilities and government
California’s energy turnaround is remarkable for both its speed and scope. While natural gas still dominates the energy mix, falling costs are quickly increasing the deployment of solar PV, which is expected to rise from installed capacity of 17GW today to 48GW in just a decade. By 2050, it’s expected that 62% of the state’s energy mix will be made up of renewables and 65% of cars will be electric.
Our modeling suggests these trends will see California hit tipping point 1 — grid parity — in 2028, three years before the next region — the Northeast — will get there. If the state government succeeds in plans to roll out a target of achieving 100% renewables by 2045, we may see this milestone achieved even earlier.
A policy of Californian collaboration
California’s energy transformation has not been hindered by the recent withdrawal of support for renewables at a federal level. Its shifting energy mix highlights how state-based policy and initiatives can drive change within the very localized US energy markets. California’s cap-and-trade program may be one of the world’s strongest, and revenues raised through the sale of permits to large polluters is funding innovative policy and programs. A collaborative approach between state government, utilities, industry and consumers is also a key factor behind rising rates of renewables and electric vehicles (EVs).
- For example, EV uptake is supported by policy requiring automakers to derive 15% of their sales from zero-emission vehicles by 2025, incentives of up to US$7,000 on purchases of EVs and an ambitious rollout of charging stations by utilities.
- We also see examples of utilities helping corporate consumers meet clean energy targets. San Francisco’s public electricity utility worked with cloud computing giant Salesforce.com, Inc. to source 100% renewable power for two office buildings.
- At a community level, local government in West Hollywood, where many people live in apartments or condos, has partnered with utility EnergySage to make it easier for all residents, regardless of their type of dwelling, to access energy generated by rooftop solar panels. And several Los Angeles city councils have joined community choice aggregation programs, which allow them to purchase their own power from several sources, bypassing the local public utility.
California’s rapid adoption of distributed energy resources and EVs will raise challenges around grid capabilities and infrastructure upgrades. And just as the uptake of these technologies was enabled by state-based initiatives, it will be up to California to manage their successful integration. Meanwhile, many other US states are looking west for inspiration for their own energy transformation.