How California plans to keep the lights on: A look into recent regulatory developments

It takes time and extensive planning to build a new clean power plant in California. Figuring out how, where and when to generate clean electrons is a balance between ensuring that the energy transition is affordable, and that the state keeps the lights on. 

California regulators recently issued a proposal that will do just that. There are a lot of things to like, but as with everything, getting the details right is essential to securing an affordable, reliable and clean energy future. 

What is an Integrated Resource Plan?  

An Integrated Resource Planning (IRP) process is a recurring planning cycle that determines how California can meet future electricity needs. It evaluates electricity generation, transmission needs and demand forecasts to ensure the state can maintain reliability, control costs for ratepayers and reduce greenhouse gas emissions. The California Public Utilities Commission (CPUC) is the primary state agency that conducts this assessment. Recently, the CPUC released a new proposal through this process that has significant implications for the state’s clean energy transition. 

Two major determinations are at stake. First, the CPUC outlines a portfolio of future electricity resources designed to achieve California’s climate goals without compromising grid reliability or imposing unnecessary costs on ratepayers. Once finalized, the assumptions will be handed to the state’s primary grid operator, the California Independent System Operator (CAISO), which will determine the transmission infrastructure needed to deliver this clean energy efficiently across the state. Second, the CPUC proposes directing electricity providers to procure additional clean energy to meet growing demand. Because building power plants is expensive, determining that the generation is truly needed is a critical step to keeping rates just and reasonable. 

While the CPUC’s most recent proposal gets several things right, it also misses the mark on details that could significantly affect the reliability, affordability and pace of California’s clean energy transition. 

Finding the right mix  

To deliver new clean energy generation, California will require significant upgrades to the transmission system. However, building transmission infrastructure takes time. To plan ahead, the CPUC develops a “base portfolio” — a proposed future mix of energy resources designed to meet reliability needs while meeting California’s emission goals. The base portfolio is then handed off to CAISO, which analyzes what transmission upgrades are needed to deliver it. 

California is leading on offshore wind and it’s time for the plans to reflect that 

Offshore wind is a crucial piece of the puzzle to help clean the grid in an affordable and reliable manner. As a clean firm resource, offshore wind can supply electricity continuously or adjust output to meet peak demand. When paired with other clean energy resources such as solar and storage, offshore wind can help fill reliability gaps and meet emission reduction targets without compromising electricity availability.  

Recognizing its importance, the CEC set a goal of developing 25 GW of offshore wind by 2045, and as directed by AB 1373, the CPUC directed the state’s Department of Water Resources (DWR) to centrally procure up to 7.6 GW of offshore wind in 2024. Yet the recent proposal only plans for 4.5 GW of new offshore wind by 2045, split between Morro Bay and Humboldt. Regulators also assume that offshore wind project timelines will slip, leading the CPUC to advise CAISO to delay the transmission upgrades needed to deliver power from the Humboldt site until 2036.  

The CPUC points to recent federal uncertainty as the catalyst for these delays. Over the past year, the offshore wind industry has faced significant barriers, including five federal stop-work orders issued on East Coast projects in December based on ambiguous national security claims. Recent court decisions, however, have rejected the Trump administration’s flimsy assertions, greenlighting construction to resume in all five cases and helping restore industry confidence.  

California’s energy transition should not be slowed down or negatively shaped by tenuous federal claims and uncertainty. Instead, the state should be a national leader on offshore wind development. Ratepayers will be best served by reducing risk and uncertainty, and being very clear about the state’s long-term planning timelines despite short-term political volatility is a critical step. Limiting the ceiling for offshore wind capacity now would send mixed signals to developers and undermine the industry’s ability to achieve economies of scale that could ultimately lower costs for ratepayers. 

Meeting growing demand 

For the first time in a generation, California’s electricity demand is growing. According to the California Energy Commission (CEC), peak electricity demand is expected to increase by 53% by 2045. The surge is driven largely by data centers, building electrification and transportation electrification. Together, these trends mean California will need more electricity than previously modeled. To support this expanding electrified economy, electricity rates must remain both affordable and reliable. 

The state is attempting to meet the moment. Recognizing growing risks to grid reliability and the potential for future blackouts, the CPUC is proposing that electricity providers procure additional clean power. The CPUC recommends buying 2,000 MW of capacity by 2030, followed by another 4,000 MW by 2032. That’s enough electricity to deliver power to 4 million Californian households during peak demand. 

To encourage a mix of resources, the CPUC proposes limiting batteries, or short-duration electric energy storage, to no more than half of the new clean resources. Batteries are increasingly cost-effective and essential for balancing the grid, but they can only store energy for short periods and depend on sufficient generation to charge. Without adequate clean generation, the grid risks supply shortages during extreme weather events. Applying a storage limit across both tranches is critical to maintaining system stability as electricity demand continues to rise.  

Focusing on local procurement  

The IRP considers both statewide planning needs and local system constraints. While the CPUC proposes maintaining a greenhouse gas reduction target of 25 MMT by 2035, they must also ensure that local air quality pollution is eliminated. In areas with limited infrastructure to import power, dirty gas-fired plants often ramp up during peak demand, increasing emissions and threatening public health in these communities.  

While a comprehensive local procurement planning process is eventually needed to fully retire gas plants, implementing a modest clean energy procurement requirement in the most overburdened communities would be a meaningful first step. This approach would allow the state to evaluate long-term solutions that reduce reliance on local gas dependence while improving air quality in affected areas.  

What’s next? 

It’s important to acknowledge that this proposal is just that — a proposal. While there is a lot to like, including clear signals for power and storage procurement and assumptions to upgrade our transmission grid, the success of the process will depend on getting the details right. 

California has a real opportunity to lead boldly in the clean energy transition by accelerating clean firm power resources, like offshore wind, to build a grid capable of meeting the moment. Proactive leadership today can diminish reliance on fossil generation, reduce harmful pollution in vulnerable communities and help keep the grid affordable for all Californians.