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Today, Californians pay the second highest electric rates (26.03 cents per kilowatt-hour) in the country. Only Hawaii, which is dependent on imported energy to generate electricity for its isolated grid, costs more. California suffers from none of Hawaii’s disadvantages, yet ratepayers shoulder the burden of power price escalation unlike any other state in the nation. In recent years, utility bills in the state have increased nearly 50% for residential customers, surpassing inflation and the national average.
For a decade, the state has made electrification a major focus in nearly every part of its economy –– from houses and buildings to vehicles and forklifts. As ratepayers are learning, investments catalyzing that kind of shift carry a hefty price tag –– just as much as projects aimed at fortifying California’s increasingly fragile power grid against severe weather and wildfire risk. In a recent Wall Street Journal opinion piece, Governor Gavin Newsom put these investments in some perspective by saying, “Since 2017, wildfires have destroyed communities from Paradise to Los Angeles, placing unprecedented pressure on customer electric bills.” He went on to say, “So far this year, clean energy fully powered California’s grid an average seven hours every day.”
Giving credit where it’s due, a grid fully energized by renewables for just under a third of the day is notable. What I see as the next best opportunity for California is to have the state powered by a 24/7 low carbon grid. It’s possible if two big truths are embraced:
1) The easy/free energy transition is a myth. The California Energy Commission reports that more than two-thirds of California’s electricity now comes from clean sources such as solar, wind, and geothermal. This might be considered a victory if not for the fact that in 2024, the average monthly electricity bill in California was $186.00 – over 29% higher than the average U.S. residential bill of $144.00. Last year, the state’s Public Utilities Commission approved six rate increases for Pacific Gas & Electric alone.
The fact that nearly 1 in 5 California households are behind on their electric bills obviously has state lawmakers are concerned. The legislature recently made passage of a package of measures designed to curb electricity prices, its highest legislative agenda priority.
2) Solar and wind are not the only clean energies. Widening the path to accept a range of energies that are both clean and affordable is the most pragmatic way forward for California. Obvious to me are smart ideas like these:
- The Air Force and the Pentagon’s Defense Innovation Unit just signed a contract with Radiant for “the world’s first portable, mass-produced nuclear microreactor” with the objective of powering an entire Air Force base. Innovative and carbon free nuclear has to be on California’s energy roadmap. The trouble is that after a nearly 50-year moratorium, the state has only one operating nuclear power plant at Diablo Canyon. This needs to change. Deployment of flexible power generation like this is exactly what the California grid needs. By the way, the U.S. has been manufacturing and safely using microreactors for nearly 70 years in submarines.
- Ports up and down the California coast have a long history of using propane for material handling equipment, vehicles, and power generation because it’s clean, easy to use, abundant, and affordable. Moreover, on a per gallon basis, propane costs 50% less than diesel or gasoline and new propane-powered port tractor engines boast 99% lower NOx emissions than diesel tractors, experience less engine wear, and require less maintenance costs and downtime for replacing aftermarket filters and fluids. Propane forklifts, port tractors, container-moving straddle carriers, and site generators can provide all the horsepower needed without the air quality pain that diesel brings or the rare earth mineral mining that electric vehicle batteries require.
If California can acknowledge the truths above, and because of its expansive geography and oceans-to-mountains-to-desert topography, the state can achieve a clean-affordable-reliable power trifecta by adopting decentralization as its grid model.
Start by “islanding” the grid into small sections to reduce cascade-failure probabilities. California has strung together approximately 25,500 miles of transmission lines and 239,500 miles of distribution lines, of which approximately 147,000 miles are overhead. The Public Utilities Commission estimates that burying the state’s overhead lines would cost ratepayers $559 billion, but why bury lines when you can distribute generation into smaller, more manageable arrays?
The question is important because costs are only going to increase. Demand for copper, for example, a key ingredient in electric transmission lines, is skyrocketing along with its price.
With data centers leading the way, decentralization, anchored by clean fuels like propane, also matches the urgency of the moment. In its most recent short-term energy outlook, the Energy Information Administration projected power demand will rise to 4,186 billion kilowatt-hours (kWh) in 2025 and 4,284 billion kWh in 2026, up from an already record 4,097 billion kWh in 2024. Large off-grid solar + propane microgrids, the design and construction of which are familiar to the power industry, can be operational in 5 years or less, years sooner than grid-anchored solutions.
Compared to massive, centralized power plants and transmission infrastructure, microgrids are easy to install, repair, and quickly rebuild if knocked out by severe weather. The state has an action plan for distributed energy resources (DERs), but the plan has failed to achieve its potential because, critics argue, “overly complex and restrictive rules and compensation structures” prevent progress.
This doesn’t have to be true. DERs are a perfect alternative to long-run transmission lines controlled by centralized grid thinking (the same notion is true for both electricity and natural gas lines). When intermittent sources like solar and wind are paired with batteries and clean, easily deployed energy sources like propane and renewable propane in a microgrid, carbon reduction, efficiency, affordability, and resiliency are all achieved.
Take a next step by favoring combined heat and power (CHP) on-site power generation. CHP units running on ultra-low carbon fuels like renewable propane produce electricity very near to the point of use. Factories, manufacturing facilities, data centers, desalination plants, supermarkets, and 24-hour facilities like hotels with significant thermal load requirements are perfect for CHP.
CHP brings with it two distinct advantages that Californians should love. First, it is highly efficient. Traditional, centralized power plants lose as much as 67% of their energy through waste heat, but CHP systems capture and utilize this heat for space heating, industrial processes, or even cooling through absorption chillers. By capturing and using waste heat, CHPs can achieve total system efficiencies of 65% to 80% –– some can even reach 90%.
Second, CHP virtually eliminates transmission line power loss. The longer the distance electricity travels, the greater the resistance and power loss. In California, generated power lost in transmission adds up to nearly 100,000 gigawatt-hours of power lost annually –– enough to power millions of homes or a few data centers for a year. The near/onsite nature of CHP units virtually eliminates power transmission loss.
It’s not difficult to see a path toward much more affordable and reliable power for California. The good news is that the state has everything it needs to leverage the investments it has made in renewables with proven technologies and clean fuels that are ready to deploy today.
