Newsom commissions analysis of why California’s electricity is expensive under renewable energy mandate

(The Center Square) – California Gov. Gavin Newsom has signed an executive order to look into why the state’s electricity costs are double the national average, push for more federal funding, shift more costs for electric companies that are currently paid by users to the state or to federal level. ratepayers and increase cash transfers to consumers every two years from the government’s carbon credit system, which could add $162 billion in extra energy costs to consumers next week.

According to July 2024 Federal Energy Information Agency data, California gets 45% of its energy from natural gas, which in California is more than ⅓ cheaper than the national average, so why is the total cost of electricity nearly double the national average?

Newsom’s roadmap to transitioning the state to 100% clean energy by 2045 and 90% by 2035 provides some clues.

“California continues to rely on fossil gas-fired power generation to maintain grid reliability. The old grid was largely stable, with predictable demand patterns and little load growth, but climate change has made our legacy grid more vulnerable and created greater urgency to modernize it,” Newsom’s office wrote in his 2023 clean energy transition plan. “To achieve 100% clean electricity, current research shows California needs to build an additional 148,000 MW of clean energy by 2045.”

“Consumers’ overall energy costs will change as more daily activities become electrified. Instead of paying at the gas pump, Californians will pay electric companies to fuel their cars,” the report said. “As more home appliances are electrified, customers can expect to use more electricity and less gas.”

Much of this capacity is expected to come from solar power, which is heavily subsidized by the state and has received a $107 billion investment in California through 2023. The transfer of wealth from non-owners to property owners in the form of installation subsidies and monthly solar fees may be a subject of debate. Under the government’s solar subsidy program, roughly 15% of the average non-solar household’s electricity bill goes toward paying for rooftop solar power to wealthier property owners, who typically install such systems with additional taxpayer subsidies.

The state also intends to invest heavily in offshore wind, which it says will require a $12 billion investment in the state’s ports alone to be able to begin construction of the system, which would require up to $27.4 billion for a portion of California’s lines transmission lines connecting Northern California offshore wind to consumers in California. Overall cost estimates for building 25 gigawatts of peak wind capacity (or about 10 gigawatts of actual baseload capacity due to the unreliability of wind power) range up to $300 billion.

In addition to being able to transmit all this renewable energy, California must spend an additional $20 billion on transmission upgrades to be able to charge the state’s electric vehicles, and that cost does not include the additional billions of dollars in spending on booming electric vehicles. chargers whose charging speed doubles every few years.

It’s unclear how the state intends to pay for the changes, beyond Newsom’s efforts to increase taxpayer support from the state and federal governments.

The state’s existing baseload renewable energy from nuclear, geothermal and hydropower (water from dams that drive turbines) may offer several more cost-effective alternatives.

Cost-effective hydropower, which is one of the most reliable forms of renewable energy other than geothermal and allows water to be stored through the creation of dams and reservoirs, appears to be off the table as the government pursues a policy of demolishing dams.

Geothermal energy, which uses heat from the earth to spin turbines, is also cost-effective, but is limited by the number of geothermal sites.

The Diablo Canyon Generating Station, the state’s last nuclear power plant, produces 2.2 gigawatts of energy at a cost per kilowatt that is more than ⅓ cheaper than operator Pacific Gas and Electric has paid other suppliers. Diablo cost approximately $18 billion to make at current prices. While keeping Diablo running until 2030 would cost an additional $8.8 billion, MIT estimates that not closing the plant could save Californians $21 billion through 2045.

“The governor and Democrats must take a hard look at the policies that have brought us to this point and make bipartisan decisions to fix California,” state Sen. Marie Alvarado-Gil, R-Jackson, said in Center Square. “Next week, CARB millionaires are set to vote on a policy that could raise gas prices by as much as 65 cents per gallon, but the public is largely unaware of it. Who will be held accountable? California families deserve transparency in government and real, long-term solutions.”

On Nov. 8, the California Air Resources Board will vote on a proposal to increase the value of California carbon credits by about $162 billion through 2046. These costs will fall primarily on Californians, but also on most Americans as the bill increases significantly. the cost of all transportation in and through California – be it trucks, buses, cars or planes.

The governor’s office noted that Californians receive two payments of $71 per year from the carbon credit system, or an average of $11.3 per month; given California’s estimates that LCFS will raise the cost of gasoline per gallon by 35 cents next year and that the average consumer will stop purchasing 10.6 gallons of fuel 5.8 times per month. That means the new carbon standard would add about $21.52 a month to the average Californian’s gas costs, or about twice what would be earned from small payments of carbon credits.