I'm so sorry, Josh, that like I had some role to play in getting
you down this rabbit hole. I mean, my God, is this getting
technical so quickly. But I mean, but it is super
important. I think we could actually really
increase credulization through this bill.
And listen, it's a it's a populist issue.
Figuring out affordability is a populist issue.
And you know, if we can say, hey, this is, this is right way
to do it, then we we can work together with them on it for
sure. Hello, my name is Jigar Shah and
I'm a clean energy entrepreneur. Hi, I'm Arnab Powell and I'm a
clean energy policy enthusiast. Wow.
And you're going to have to keep scripting that and trying new
things every time. Or not.
I know I still haven't gotten it yet.
Well, today we are going to have our good friend Josh Becker on
and talk a little bit about. You know what he's doing to
transform the state of California.
Sort of exciting times. Yeah, I mean, it's state Senator
Josh Becker for us, So we, we got to get that right.
Not only is he, I think, you know, one of the leaders in this
country on our issues and this space in general.
I he's just a, a, a very interesting human being.
And I think he's got a, a great background in life story and I
think he's really, you know, formed a community in the
legislature. So I think it'd be interesting
to just here where he thinks where we're at, because I think
in a in a world where we see a lot of negativity, I think he's
still doing a lot of positive things.
Well, one thing I was curious about though was, I mean, you're
also following closely. The governor's race, right,
because. I mean it.
Feels like a lot has changed, right?
Like Swalwell had to drop out. Now there's like a few other
candidates. But it still feels like a, you
know, like neck and neck race with three different people.
Yeah, I mean, in some ways the race is completely changed, and
in other ways, it's the exact same as where it's always been,
which no one really knows is going to be next governor of
California. It seems like former congressman
and Attorney General Becerra and, you know, your friend Tom
Steyer seemed to be in the lead here.
And then there's two Republicans who might have a chance that
normally wouldn't. So, you know, I think for the
first time in the generation, like people have no idea what
the governor of California is going to be.
That's crazy. Well, excited to talk to Josh
Becker. Thanks for joining us as always
or not, you're always the person who brings all the best insights
to these kind of conversations. Yeah, I, I don't know if that's
actually true, but I just like being on this podcast, so thanks
for having. Energy Empire empire is powered
by octopus energy. I hear it at every conference.
We need more generation, more transmission.
You're saying we don't? We do, but we're ignoring
something faster. Sitting in people's homes and EV
is basically a 60 kWh battery idle most of the day across the
US. That's gigawatts we're not
using. Utilities have pitched demand
response for 20 years and it still hasn't scaled.
Why is this time different? Because we're not asking
customers to change behaviour, we're automating it.
The grid treats customers like demand that actually distributed
infrastructure. Connect those assets and you can
shift load overnight at scale. So the constraint isn't
technology, it's coordination. The solutions already deployed,
we just need to use it. Thanks, Natasha.
That was Natasha Crowe, vice president of marketing and comms
for Octopus North America. If that's the version of the
Grid you want, check them out. The link is in the show notes.
Josh Becker as I live and breathe.
Welcome to the podcast. Good to be here.
You and I go so far back. I mean, I think we first met
probably in the arts. Right.
And then you were a venture. Capitalist, you did all sorts of
cool stuff. You served in government, right,
on an important committee, and now you're an elected senator
that not only is elected from one of the most important parts
of California, but you're actually, you know, like running
a lot of the energy policy in the state of California.
Yeah, I mean, ran for the legislature is the best thing
I've ever done. I mean, I love it here.
I love my colleagues getting good stuff done and it's a lot
of fun. Well, let's just jump right into
it. I think as you know, the climate
work in California continues. We have deployed so many
batteries, solar, wind power, clean energy broadly, and it
worked right. Wholesale market prices have
never been lower. And so we.
Have a huge amount of power, and so much so that we're actually
now sharing all that excess power with.
Friends in neighboring states like Nevada and Arizona and and
Oregon. But you know, but one of the
things that's been stubborn to deal with is, you know, the
wildfire costs and the the overbuild on the wire side,
which is really driven rates up. And you've got a whole bunch of
ideas on, you know, how to really start to control those
costs. So we'd love to hear more about
your agenda this year. Yeah, we got a lot of ideas.
We'll see what to see and get them passed.
But yeah, listen, I you know, we've all been at this a long
time. I remember I worked on EP as
first Clean Air Marketplace conference in 1992 and walking
around and saying, Oh my God, I'm sure all this great
technology will be deployed in no time, including these
electric vehicles and, and, and didn't happen.
So I realized, you know, we need both innovation and markets.
I mean, sometimes people promote and we love when we have friends
on the right who, who actually embrace clean energy, but they,
you know, they say, you know, innovation over regulation or
you know, markets not mandates. And the truth is we really need
both. I mean the success, even though
we have a cap and invest system here in California, really a lot
of our gains in electricity came because we had the renewable
portfolio standard. We said you have to have 5% of
clean energy for utilities, then 15%.
Nobody thought we'd get that, then 25%, then 50% and on up.
So it's been that combination here.
But what we're seeing now is a real concern in California
really across the country around rates.
And we've a number of different things that we'll, I'm sure
we'll talk about, about what we need to do.
But part of that is to use our existing grid more effectively.
So you've been a senator for some time.
I feel like when you were first elected, nobody really paid that
much attention to their electricity bill.
They didn't really understand all the components.
It now feels different, right? It feels like people have all
become investigative journalists and like actually.
Are digging deep into you know how where this is coming from
and it does feel like folks are starting to understand that
they're sort of taking on. The investment strategy of PG&E,
right, this isn't just about the number of kilowatt hours that
they're using I. Don't know how.
How is your constituents like? How have they evolved in terms
of their thinking about electricity?
I mean, the reality is, is just, we've already seen the, the, you
know, the warming in my area when I first moved to 25 years
ago, you know, you didn't need air conditioning, Nobody had air
conditioning. And then you need, we had one
wall unit because it fit, you know, my daughter's room face
the sun and then another wall unit.
And then we had a mobile unit and cost started to go up.
You know, fortune for us. We got heat pumps.
So we now have air conditioning as well as greenhouse gas free
heating. But you know, people just
started paying a lot more attention to the bill.
So they don't really know all the specifics.
They just know they're really unhappy.
So, you know, I think as California tries to electrify
the rest of the economy, you talked a little bit about, you
know, agriculture and some of these other things.
But I think. One of the things that we're
faced with right now is, as you know, gasoline prices have gone
through the roof, and folks are thinking about, you know, EVs
too, right? And so it feels like there's
unlikely bedfellows that have come together right now to
actually do big things, right, to actually change things in a
fundamental way such that we can reduce electricity bills by
2030%. You know, like, I think when Tom
Styer first said that in his campaign, maybe in January, we
said, oh, we can reduce rates by 25%.
I think people are like, he's being hyperbolic and now it
feels like everyone's talking about reducing rates by a lot.
That's certainly been the focus, you know, here in the
Legislature for a long time. With respect to Tom.
We've been working on this for a long time.
I mean, you take a look at the bill last year, for example, we
said that, you know, a lot of the utility spending is, you
know, on wildfire. We can't really make sure we're
getting the bang for the buck and aligning what's going to be
done at a local level, regional level, state level in terms of
the spending. Utilities are spending $10
billion a year on wildfire. Great.
But are they doing the hard stuff, right?
Are they doing the stuff they should be doing and are we
getting the bang for the buck in doing that?
We took $6 billion of their spend on wildfire.
We said you have to use to do that with securitized debt, not
with equity. So you can't rate base that
there's a lot of screaming and but you know, it did happen.
You know, really the big risk for utilities is the existential
risk is, you know, wildfire and bankruptcy.
And we, you know, started to take that off the table with a
wildfire fund that we set up. So and this year we'll have
taken another big look at sort of the liability piece of all
that. So you you put forward Senate
Bill nine O 5 and you really try to go directly at the utility
incentives. Do you want to talk a little bit
about the problem you're trying to solve with that bill?
Yeah, we're trying to get, you know, lectures raised down
again. And fundamentally, one thing I
learned, you know, being in the private sector, you know, it's
all about aligning the incentives.
And fundamentally right now, you know, the utilities are on
bigger profits and exactly have bigger bonuses by spending more
money. That's just the way the
incentives are are set up and we do see some good signs out
there. The PG&E is piloting a lot of
good ideas like flexible interconnections and try to work
smarter. But as they say, you know, I
hope it's not a strategy. We need to make sure that we
have the right incentives to though, you know, be incentives
to do the right thing. Now part of that is looking at
the return on equity. There's certain investments like
undergrounding, for example, that shareholders would agree
to, you know, demand a, a lower return on because those are
things that again, get to the fundamental existential risk of
utilities versus something like, you know, buying a new
transformer. So there's part in there to look
at having a different return on equity.
And you know, there's part around getting the, the
incentive structure of the VP level and higher the utilities
to keep rates below inflation because that's, you know, that's
at the end of the day the measuring stick that we're
trying to do. So there's a number of pieces in
there, but really trying to get those incentives right.
Well, one of the things that you keyed in on is also around
executive compensation, and you're really trying to link
executive compensation to controlling electricity cost.
How do you think that would work and why does it matter?
Well, instead of rewarding the people running utilities for
maximizing spending and profits, we want to create some cost
discipline. And this will say 20% of your
annual compensation is based on keeping rates from rising faster
than inflation. So we're not even talking about
lowering rates, just keeping them from rising in real terms.
If you can't do that, if you can't, you know, keep raising
rates, then you don't get the bonus.
So I think it's important because, you know, only the
people running the utility day-to-day and the people make
thousands decision what to do and what not to do.
They're the ones that figure out how to prioritize, how to be
more efficient, how to deliver safe, reliable, clean,
affordable power within a budget that doesn't raise rates.
So, you know, every business in the world has to figure out how
to operate within a budget of what their customers are willing
to pay. And we have a monopolistic
system here. And so they don't have some of
the same constraints. And so this will put some of
that discipline back in. Now the other thing that you
focused on is metrics. As you know, any good business
person knows you manage what you measure and you've got specific
things in there that you want them to measure.
We do want to go through that. Yeah.
I look at this really more of like a, you know, a dashboard
sort of school card. So you ask them to do a lot of
different things. So, you know, we don't want to
focus just one aspect of their performance.
So this is like a, you know, KPI that you would see at a company
for utilities. We care about safety,
reliability, cost drivers like spending and utilization of
assets, customer service like how quickly can they handle
customer requests or to interconnect new generators and
climate targets like what percent of electricity is coming
from zero carbon sources. So by laying out a set of
performance metrics, we just see this is just good government,
we're running clarity that these are the things that that we
really care about and we've seen that.
Again, just think this or this could be very helpful.
You know, I mean there does seem to be a very large anti utility
sentiment right as bills have gone.
Up and you know, I think for a while people thought it was a
California. Thing, but now you're seeing
that with Duke Energy in North Carolina, you're seeing that
with Con Ed in in New York City, you're seeing that with a lot of
places where people have had higher rates.
And I'm curious, you know, whether you think that, you
know, these bills are anti utility or anti investment.
Listen, you know the way our system is set up, we need health
utilities, their their ability to raise capital and do all the
important work that it takes to operate their grid while also
reducing the risk of fires switching over clean energy,
supporting low growth to power economy.
You know, they're vital to the success.
And ultimately, you know, their borrowing costs do affect the
costs that get passed on to to repairs as well.
But, you know, we need to trust them as partners in this
mission. Again, I think we have some some
good leadership now that we're working with, but we don't want
to constantly worry that they're trying to bloat their spending,
say as much as possible to maximize profits for investors.
So, you know, this is really like, OK, let's talk about how
we fix that problem. Let's align the incentives and
then get back to working together to deliver safe, a
reliable, affordable, a clean power.
So I I think that there is a way that again, we can work
constructively but within the right framework.
Well, you know, back in the 19. 70s Amber Lovin's talked about
the soft path, right, which was really energy efficiency and,
and all of that stuff. And California frankly, has led
the way on the soft path, right? And figuring out how to do more
with less. And it's grown its GDP
tremendously without having to grow electricity sales as much,
right? I, you know, part of where we're
headed now, as you referenced it earlier, is grid utilization.
And you know, and like figuring out how we actually use the
grid. We've already paid for more
efficiently before we build more stuff, which we will need to
build more stuff. But how do we use what we
already paid for more efficiently?
Do you think that that's too wonky?
I know we talked. About it with Line Vision and
our good friend Rachelle and you know, Arnab went through the
deploy action report that, you know, they had put out earlier
in a previous podcast. And so I don't know where do you
put that because, you know, energy efficiency obviously is
well known, but you know, gradualization feels a little
technical. Well, the way that.
I've been able to explain it that I think resonates with, you
know, most folks I've talked to is to say our grid is like,
think about like the Walmart parking lot.
They don't build the Walmart parking lot for, you know,
January 6th, Tuesday at 10:00 AM.
They have to build it for the Saturday before Christmas and
therefore, you know, most of the time there's a lot of excess
parking and our quids like that as well.
The quid is only strained, and this was a big realization for
me. In California, the quid is
strained around 40 hours a year. 40 hours, that's like less than
a half a percent right of the hours a year.
Yeah, but we can't fail. No governor wants to fail.
No legislature wants to have blackouts.
And so we have to meet that peak.
And so, you know, traditionally we just sort of build, build,
build to make sure we have that peak.
And that reality is we have massive excess capacity most of
the time. And so I think we explained it
that way, people that kind of brings out the light bulbs to
say, Oh yeah, OK, good. So we want to do 2 things.
One and this is, you know, we can align with utilities on
this, bring on beneficial load all the electric vehicle load a
data centers. If we do it the right way, which
I'm sure we'll talk about it, that can be beneficial load all
these. You know, I have a bill this
year around industrial. You know, there's emissions
generally 23% of California's emissions, it's an error.
We've made almost 0 progress, OK.
How can we provide the right incentives to electrify that of
that food processing plant in Fresno and get them on the grid,
give the incentives to at the time, especially the time of day
when we've got massive excess capacity.
So this caused beneficial load and then this other piece of
other ways of meeting that peak, right?
How can we cut it rather than just building, building,
building, how can we shift load during that peak and provide all
the all the right incentives, reward people for doing the
right thing. All those, you know, batteries
that people have now installed in their homes and ultimately
all those batteries that the Super powerful ones that are in
people's cars, How can we use that to shift the peak so that,
you know, again, we don't have to worry about about hitting
that mount. So we sort of explain it that
way. It seems to be resonating.
That's great. You know, the other thing I'm
curious about though is you were talking about metrics before.
Is this something else that we need to collect data on in terms
of gradualization and so that there's more transparency around
it? Yeah.
Well, we know today that California's generation capacity
is only used about 45% of capacity on average.
So that's pretty low, but it's not the main problem.
As we talked about, the spending problem is really happy mostly
the distribution level. Every time someone needs a panel
upgrade, the utility puts in a bigger pole transformer.
We're upgrading circuits and substations all over the state
with little regulatory oversight just to deal with a potential
problem forecast for some time in the next five years.
In some scenario when the utility is looking at a place on
distribution grid where there might be a problem 10 hours a
year, but most of the time the utilization is less than 50%.
Probably far cheaper to install a battery or make use of some
demand flexibility from customers in that area rather
than upgrade that infrastructure.
But that's not really happening today.
And that's what one thing I think that we need to change.
So kind of rate in the the the build baby build approach to
managing distribution system really to understand at a much
more granule level what the utilization is for all these
individualized circuits. And I think we're going to see
very low numbers. You know, Australia, they were
finding utilization rates less than 20%.
Oh yeah, no, I think in California PG&E is estimating
that their wires are used less than 35% of the time.
So it's it's pretty low. I totally agree.
So switching over to my hobby horse, you know, you've also
instituted or put forward Senate Bill 913.
And you know, I've been frustrated by the fact that
there's 3000 megawatts of behind the meter battery storage,
right? You've got the DSGS program,
you've got people with electric vehicles, you have people with
smart thermostats, you have people with smart appliances.
And there doesn't seem like there's actually any way for
them to get compensated for helping out their neighbor at
strategic times, particularly those 40 hours a year you were
talking about. So what's?
Broken in the current system. Yeah.
Well, first of all, you know, you've helped educate me on
this, you and Arna both over the last couple years.
And I think it's helped us focus in in this area.
You know, California's added 17 gigawatts of battery storage,
most of that just since I've been here in the last six years.
We have two, two and a half million EVs, very powerful
batteries, 2 million heat pumps, and we can, you know, continue
to add more distributed capacity resources each year.
And that, you know, process is largely due to the measural
benefits that people get. They're saving money through
price incentives. However, we really need to be
doing a better job to let them shift their behavior when the
grid needs it. So we have mechanisms to do
this. We have something called the
Resource Adequacy program in California and with Kaiso's
reliability markets, the problem is that the requirements for
participation in that program and RA program and Kaiso's
market rules have not evolved in a manner that considers the
attributes or operational characteristics of those
resources. So for example, the current
concert does not credit electricity that's exported past
the customer's utility meter. So RA valuation is currently
limited to how much electricity customers are using a joint
demand response events. So valing the exports past the
customer's utility meter will allow customer owned resources
to provide additional value, you know, beyond that reduction of
net. Demand I'm so.
Sorry, Josh, that like I had some role to play in getting you
down this rabbit hole. I mean.
My God, is this getting technical so quickly?
But I mean, but it is super important.
I think we could actually really increase gradualization through
this bill. Yeah, Yeah.
I mean the reality is, I mean, listen, to simplify it, it's
just like the market rules are not set up.
And we've been, you know, playing around with that for a
number of years trying to change this or that.
And you know, that's the problem we're trying to solve, solve
here. I mean, you know, they forecast
to give another 4 to 6 gigawatts of customer set of battery just,
you know, by 20-30 alone. And we mentioned, you know, EVs
are another resource with bidirectional charging.
So we have to change the market rules to allow those folks to
participate. Totally.
So you're saying the market rules aren't set up, You know,
why is that? And like, why don't they they
count today. Why are you having to do all
this? Well, I mean, listen, I mean, I
think for good reasons, they've set our rates or agencies have
set requirements for what qualifies as resource adequate
adequacy. They want to ensure that
utilities are procuring resources that help me local
system and all the resource out O that oversight is important.
But those same requirements you can make it really difficult for
these resources to count in the same way because they have
different attributes than traditional.
Well, I don't know. I'll interrupt you here, Josh.
And I'll say because you can't say it.
That the CPUC basically. Has gone to war with distributed
generation and didn't really like them participating.
And so even though the Federal Energy Regulatory Commission is
required under third quarter 2222.
You know, California independent system operator to provide this
benefit. They have done everything in
their power to sabotage how much people get paid.
I thank the Lord that you've decided to put this forward to
try to rectify a wrong here. I mean, it's crazy that people
have spent all this money on batteries and can't get
compensated to help their neighbor.
Yeah. I mean, listen, fundamentally, I
mean, they, you know, they say they're working on this and
they're, you know, they have a few pilot programs and things
like that. But yeah, this cuts to the
chase. You know, this requires them to
consider this atrophy, you know, allow flexible contract terms
and program rules and things that we need to make these
resources count. So I'm really excited about it.
I'm hopeful we can get this one through this year.
And you think 913 is what it's going to take for these home
batteries to to count the same as a big power plant for for RA
or are you it is it like the first step?
And then we have to work with the new governor and, you know,
work on implementation, Like, what does this look like?
Because you're good at passing bills.
But you're one piece of the puzzle here, right?
Yeah. I mean, I think that we have to
make it easy to sign up. And what's great is that, you
know, under the DSGS program kind of proved that, you know, I
had a friend who had a Powerwall and they received an alert, said
do you want to participate, you know, have your battery
participate in this program. And they said yes and clicked a
button. That was it.
I mean, it should be that easy to participate.
So, you know, again, it's about finding the incentive, you know,
changing the market rules so they're they're fair in this
way, but then also making it easy for people to sign up.
Well, and the reason it's so important?
As you and I have talked about is it's Looney Tunes to me that
all of these companies are based in your district.
They're all based in California, right?
They all got their start in California.
They've got their headquarters in California and their biggest
markets are in Massachusetts and Texas.
And so I really. Like the fact that you're
stitching all of this together in a way such that these
companies which have gotten their venture capital in
California can actually start to deploy their solutions in
California. And so, I mean, I think it's, I
think it's. Glorious work you're doing here
with SB-913. Yeah, that's.
Right. And we had a big win in
Virginia, as you guys know. You guys were a big part of
that. You know, Maryland and
California should be leading. That's actually one of my big
things is to actually, you know, especially in a time of the
headwinds from the federal administration with absolutely
backward policies on clean energy, we need to get the
leading edge climate states to work together to share ideas.
So I really enjoy that when I'm reaching out to other state
legislators in leading edge climate state to to share ideas.
And again, this is 1 where Virginia led and that's great.
And you know, you got to get California gear too.
And for the record, you know, Virginia got the first bill
signed by the governor, but you, you had a bill last year that
would have done some of the data elements of that.
So, so you do get some credit for going first even if we
didn't get it signed first, I'll take it.
I think that's exactly right. One of the things I'm also
curious about is it I, it feels like there's a bunch of
batteries going in, as you suggested between now and 2030
because of the NEM 3 point O fight, right?
Where basically all net metered systems now need to have
batteries. You've got a bunch of electric
vehicle manufacturers who are suggesting that they're going to
have vehicle to grid technology added to all of their cars.
Rivian just announced that, right, Because they want to be
able to help you run your house off your car if you know you're
an emergency situation. You've got Reem and AO Smith
saying that all new water heaters that they ship are going
to be smart water heaters, right?
You got Carrier coming out saying they've got all these
heat pumps now with a battery associated with it.
I mean, it's exciting times, right?
But one of the things that I find fascinating is that no one
seems to be including the the community choice aggregators,
right? I mean, how do you find we have
all these different people in California, right?
And you have the utilities, they're sort of responsible for
the wires. That's where the savings are.
But you got the community choice aggregators, which are host,
they're supposed to be prosumer, right?
They're supposed to be the ones who the customer likes, they get
their bill from them, etcetera. Yeah.
I mean, how do you bring it all together to to get Californians
to realize that this is really a revolution that they should be?
A part of. Yeah, well, the community, it's
a good point. The community choice
aggregators, like they're made-up.
Their board is all local electeds and that should be
their strength, right? They're closer to the ground, so
to speak. And I've actually said to my
team, you know, every newsletter I send out, I have 100,000
people that open my newsletter, you know, anytime that if they
have a promotion or an incentive or, you know, a program for
people to sign up to, you know, sign up their batteries,
whatever it is. Yeah.
That we help spread that word too.
So yeah, I think it's a good point.
We have to remember all this stuff is still kind of
relatively new where people hand batteries in their homes at all,
let alone batteries that could be then used to help and support
the grid and knit together to form critical infrastructure.
So you don't want to be too hard on ourselves, right?
This is all still, you know, relatively new stuff.
But I think, you know, we, we do have that opportunity.
This is simplifying the utility bill will also be helpful.
It's super confusing right now, you know, for my wife and I,
when we try to go through it, we have the climate credit that
comes from our cap and invest system.
We took some steps this year to both enlarge that and have it go
the times of the year when people really need that.
So, and hopefully be more prominent.
So they actually sort of feel that as well.
So I think there's a, a chance here.
We've stopped rates, you know, largely from from increasing.
And again, you know, kudos to some of the utilities who are
doing some good work on that area too.
But now we need to start actually lowering rates.
And, and then we that's, you know, how, how ultimately that
that trust has won. But I think that education piece
around this whole new area is really important because it's
most people still don't quite grok it just yet.
Yeah. And look, I, I think we should
look at this positively and I think we should look like, look
at like, what does success look like here?
I think you know, and we've talked so much in the weeds
about everything, but I do want to take a little bit of a step
back. You know, you're, you know, one
of the things I think you know is makes it easy to work with
you is you know, you're, you're you're pro climate, you're
you're pro consumer, you're pro technology.
All those sort of, I think positions are put you in a good
place to help bring down costs for folks.
But bringing down costs isn't always just a, a partisan issue.
I think there's plenty of Republicans that want to bring
down costs. And, you know, while you always
stick to your values, like you were always open with working
with progressives, moderates, Republicans, if it's in the name
of the things you, you believe in and care about.
And, and my longer winded question here is it may not
matter in California, but like, can we get Republicans to
support us on this stuff? Because it's pretty kitchen
table. It's pretty common sense.
Use more of your grid, bring down costs.
Like like where do you think they stand on this?
Yeah, I think, I think it got some.
I have to go back. I think, you know, certainly we
did the western grid. We got Republican votes for
that. Certainly we did get Republican
votes for, for for 913. So I think, you know, treated in
that way as like, hey, this is a way to save people money.
I mean, listen, it's a it's a populist issue, right?
How you know, figuring out affordability is a populist
issue. And you know, if we can say,
hey, this is this is right way to do it, then we we can work
together with them on it for sure.
OK, so if it's 2030 and you know, we now have what, less
than five years to 2030, the next four years, right?
You know, like what, what would you hope the average customers
electricity bill looks like? What's different about how they
deal and interact with the grid then how they currently do?
Well, this I think fundamentally the success is when you know,
people want that EV because they're going to save money.
They want that heat pump not only because it's great for the
environment, but because it's going to save money.
And honestly, really, you know, back to a day when, you know,
people aren't even thinking about their utility bill that
much, it won't be one of the the top issues on their mind because
they'll be both seeing the benefits of all these new
technologies, get the air conditioning with their heat
pub, all the advantages of it, EV, all the maintenance
advantages, all that while also saying, yeah, this is a really
good way to save, to save money. So I mean, I think that's the
vision. I mean, the great thing, you
know, I was really proud to represent our state and our
country at the climate change talks in in Belem in Brazil.
And, you know, I got to talk about how for, you know,
Californians, it's it's, you know, that clean energy's not
just a moral but a economic imperative.
And we've seen the benefits from conservation.
We saw those benefits early on as a state.
And we can be a leader in in these ways as well.
And you know, what's fun about it, As you said, the
technologies are here, a lot of the ideas are here.
It just kind of putting it all together now into place.
I think we know what we need to do.
And I'm just excited. We got some great colleagues.
We're at peak wonkiness here at the in the state Senate.
We've got a lot of really smart people.
My colleague Henry Stern, who I met doing clean tech for Obama
years ago, my colleague been out and you know, across the board,
our Pro Tem has been a wonderful leader on these issues.
So I think we've got the right people.
The other thing we just last thing we just hadn't talked
about, tell me if you want to talk about is fixing that
wildfire liability problems. We said a lot of the things is
stuff we stuck into rates. All of our public interest
programs are care and fair programs where low income
customers get discounts. That's stuck in a rate.
So that's a three $4 billion program.
And so one of the things that that we didn't mention that nine
O 5 does is it creates what we call a power fund and that's
really the vehicle to take those costs out of rates and into the
general fund. Now we have to wait till there's
actually money for the legislature to appropriate it,
but we're going to get that structure set up.
So if open AI goes public and Throbic goes public, if, if the
budgets are really high next year, we can power up that power
fund and we can take those things out of rates.
Otherwise it's a really regressive way to pay for those
programs. They should they benefit the
whole state, the wildfire prevention benefits the whole
state. We should pay that out of the
general fund, not out of rates. And that's, that would be really
helpful as well. So if we're if we could do that
as well as the pieces we're talking about using the existing
grid more effectively, then I really think we can lower rates
substantially while keeping our, you know, really world leading
progress in in clean energy going.
So I'm super excited. I'm very optimistic.
I think the the takeaways you would like to make electricity
bills boring and cheap again, right?
Yeah. I mean, that's it.
We, when people like, don't think about it honestly, then,
then we've won. Well, you know, I mean, you are
going to. Have SpaceX go public this year
so maybe they'll fund it. Yeah.
I mean, we've lost a couple of those taxpayers, but they're
actually 8000. I just heard the other day is
8000 SpaceX employees in in California.
So that'll also be good for our general fund.
You know, we're very income tax dependent states, so we could
have some good budgets ahead. You know, the other thing for me
honestly is that I just, you know, one of the things that I
find fascinating is 2025 was the year that, you know, President
Trump really politicized clean energy, right?
And I think before then it was largely A bipartisan issue,
right? It was really deep politicized.
I mean, you've got a lot of wind power from North Dakota all the
way down to the Texas Panhandle, right?
You've got a lot of solar power in Texas and lots of other
places. Folks are going solar and rural
America now just because, you know, it's a lot cheaper than
what they're of getting other things from.
So a lot of what I'm looking for out of, you know, your bills,
but also all of this momentum around the country is.
Really getting people to feel fully empowered by this
technology, right? Because I I do feel like a lot
of people believe that electric utility bills are a.
Tax, right, A tax. It just comes in the mail.
They have nothing that they can do to control it whatsoever.
And I think. A lot of what we're doing is in
we're empowering you, right We actually.
Are going to give you the. Keys to be able to control your
future, and I think that's going to be an exciting time.
Yeah, I mean, listen, we've seen, you know, there was
certain initial wave of this and I was there for that.
I was a seed investor in O Power basically just, you know, kind
of turn the the mark, the utility bill into marketing
document for energy efficiency compared people to their
neighbors said, hey, here's how much you could save if you're
doing just what your most efficient neighbors were doing.
And that was great and that, you know that for a while that
worked and showed you could lower bills, you know, 2 to 4%
just by just by doing that. And then there's another wave of
devices where we really try to like, say, Hey, we're going to
like empower people to understand, you know, exactly
how much their, you know, stove is, is, is using, you know,
versus this other appliance and this other appliance.
And the reality is it was still too complicated and people just
didn't care enough. But now, and we invested
billions of smart meters, but they just weren't really that
smart ultimately. But now we're seeing that next
wave of things where you could just prioritize things in your
home. And that way you don't have to
spend money on that costly electricity panel upgrade, But
there's no need to do it because you could say, Hey, I don't need
my car charging and my hot water heater going and my, you know,
induction cook top all at the same time, right?
I can prioritize those. So you know, there is AAI think
this wave will be sort of different than that previous
wave. So I think I get the last
question here, but I think I don't have to make it a two-part
question for you. The the first part, though, I
want to I want to click back to to a point that you you talked
about your colleagues. I think one of the things that
frustrates, I think people with politicians is they feel like
their problems aren't being addressed.
And I think Jigger and I have worked so closely in the
legislature with so many of your colleagues, not just the Senate
ones, but Assemblywoman Petrie Norris and Irwin and
Assemblywoman Boehner. And there's just so many people
who get this problem and they are actually trying to fix it.
And in a world where it's easy to be so cynical about
politicians, especially with the things you see coming out of
Washington, DC, like I, I think like it's just it's nice to know
that people are actually trying to make it better.
So I applaud you and all your colleagues for that.
That's not the question. Of course.
The two-part question is, you know, so like what?
And we talked about this a little bit, but if we get this,
you know, next phase of the energy transition, right?
You know, and we, the last phase was getting us to renewables,
reducing emissions. Like like what does the next
phase of success look like? First of all, I want to
acknowledge, you know, even in, in like the, the height of the,
the success, the IRA, you would come hang out in California,
right? And really get to know the
legislatures. And as you said, we've like
amazing people, like really terrific wonky people in the
depth and in the details working to figure all this out.
And you, you've seen that, acknowledge that.
And I appreciate, you know, and I think, you know, nationally
now folks are focusing on state legislators and I have
incredible colleagues in state legislators across state
legislators across the country. And that's really where the
action is, right? We've got the ability to do
this. And so ultimately, you know, we
focus on greenhouse gas reductions, right?
So when I started, we had 405 million metric tons and we got
to get to 0. So that's ultimately my metric.
We're down about 385 right now. And, and you know, you know,
our, our ambitious plan, you know, the, the scoping plan says
we got to get to 75,000,000 metric tons by 2045.
And then we need Cdr, which I've also spent a lot of time on
carbon dioxide removal to get to the rest.
So those are the ultimate metrics, you know, in this
space. But I think getting there, you
know, when the the first part is electrify everything, right?
We've adopted that mantra. We got to electrify everything
and we can't electrify everything if rates are really
high. So that's where we're focused on
lowering the rates, electrify everything while we continue to
build out that clean energy generation, you know, work on
permitting And I, you know, that's where I'm alive with
industry. You know, we have to streamline
permitting and sighting and get stuff done faster.
You know, we did the largest solar and storage project in the
world, the Darden project in under a year with the with the
new opt in, you know, 2O5 permitting process that we have.
So, you know, we, we have to do all those things.
But really let's try everything when we get the renewable and
then focus on some of these hard to decarbonize industries.
That's why I'm focused on industrial emissions.
It's not, you know, the sexiest thing, but we have to find ways
those are hard to decarbonize industries.
The very first bill I passed in the state legislature, working
with Ken Branson, my own old classmate.
He met with this men industry and spent a lot of time with
them and they said, yeah, we want to do this.
And we set a plan. We said passed a bill to for 40%
reduction by 20-30 emissions and and 100% by 2045.
And at the time is the only piece of the California economy
that had a net zero target on it after our bill was passed.
And so the way I look at it, my team and Erica, Isabel, we we
look and focus on what are the major source of admissions.
Of course, transportation is 50%.
So we spend a lot of time on this podcast talking about it.
But then you know, buildings and the 15%, the grid another 15%,
industrial agriculture 7%. So we have to tackle each piece
of that. And so I bills in all those
areas. Well, the thing that makes me so
inspired by what you're doing, Josh, is that you're anchored in
the science, but you like a good rock concert like anybody else
does. And, and we're in a place right
now where we're making this fun, right?
Like we really are. Like, I just think when you
think about how many entrepreneurs are coming up with
cool stuff, they're raising $100 million rounds.
They're going to go public this year right there.
But they're also changing the face of the electric utility.
Right we were. Dead set against any of this
stuff you know, just two years ago like everybody was just like
Nope, we're going to build new generation, you know, upgrade
transmission, upgrade distribution, right Today you
got the unions that are fully for distributed generation and
recognize that having a two way transactive grid where people
basically build micro grids in their house and help their
neighbors with those micro grids is the.
Future. That's a big.
Change in two years and I've talked to legislators around the
country and they are inspired by your work and they're inspired
by the work that you guys continue to do.
And so thank you. Thank you for all the work that
you're doing and all the work you're continuing to, you know,
push through. Yeah, well, it's fun, you know,
but in the past, I worked as, you know, you know, I was doing
startups and with my professional life and I do
politics, you know, on the side and then, you know, with clean
energy. And we did when we started with
clean tech for Obama, You realize you can combine those
passions, right? We can make the world a better
place and also, you know, create the conditions for this industry
to rise. And that's been super fun.
And, you know, this is a great place to do it.
And I just appreciate that You care about California.
You know you want you know, you know that California has to work
right. I always say like, you know, we.
It does. You can't be that, hey, we tried
hard and did some good stuff and, you know, but ultimately
didn't succeed. But California has to work as a
model. And I appreciate your
commitment, both of yours. And, you know, organizations
like deploy, getting people involved in the process and in
state legislatures, that can have a huge impact.
And you know, it's fun, as you said.
Well, have a fantastic legislative session, my friend.
OK. We'll talk to you guys again.
Sounds good. Energy Empire is supported by
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order has changed. Now what?
Well. That didn't disappoint.
Josh Becker always brings it, and it feels like he's got a
pretty full agenda. California.
Yeah, I mean, someone's got to have a full agenda somewhere,
and I'm glad our friend is the one who's carrying the the
mantle here. One of the things though, that I
found fascinating and we heard about this when we had did our
conference in Sacramento, was that, you know, pH and E is
really laying it out for people, right?
They're saying if you let us build data centers and you do it
by, you know, focusing on gradualization, right, then we
can get bills down by 20% for everybody because we can spread
the cost of wildfires and the cost of the wires that we
already paid for. Across a much.
Larger set of kilowatt hours. And so I thought that was
fascinating. And I'm, you know, like it feels
very esoteric and in the weeds. And so I wonder, you know,
whether you think, you know, we can really get.
The level of mindshare around, you know, pulling that off.
Look, we've met with PG&E multiple Times Now and they've
they've gone out of their way to sort of tell us what they're
doing. And look, I believe them.
I believe that they have a pathway to reduce rates.
Will they actually do it is what remains to be seen.
I believe that they are trying. I think the other thing that
I've told them directly, which I'll tell everyone here, is if
they go to the legislature and to the state and say, hey, we're
already doing this, we're going to try, no one's going to
believe them. So they have a technical problem
and they have a human problem that they have to deal with.
And a lot of. This is going to come down to
who wins the primary, I think within the governor's race,
right? Because some of those
candidates, I think are going to be a lot more aligned, I think
with that vision that PG E is putting forward, which frankly,
I'm aligned with. I mean, I, I mean, I, I'm not
sure that we're going to build 1500 MW data centers in
California that require, you know, 800 MW behind the meter
natural gas. To get built, but it does.
Feel like all of those 3000 megawatts worth of batteries
that are registered into the DSGS, you know, program that you
know, could be used in a virtual power plant could be used to
unlock a bunch of data center capacity.
Yeah. I think, look, a lot of this has
to be PG&E laying out what their intentions are and the other
utilities in California. I think them giving on some
things of understanding that the status quo and how we've sort of
had this model for years is no longer working and there needs
to be a new model which is could be good for everyone.
Part of that is this idea that they'll interconnect folks and
not serve them every minute of every hour of every day and ask
them require them to bring. Their well they don't now.
I mean with all the frequent public safety shut offs, I mean
folks are out of power for several days a year.
Yeah. Well, in this case, it would be
upfront understood with these, you know, larger loads.
But part of it is them agreeing to change the way that they plan
their resources, right? Like what we've been talking
about from the beginning is like they need to be like, hey, look
like we aren't just planning to, you know, meet demand at all
times. We aren't planning to only for
reliability. We're planning for reliability
and efficiency and that's going to totally change the way his
utilities work. And I think what what we've been
open to PG&E about is that you guys need to get on board with
that. And the same goes with Edison
and San Diego Gas and Electric and the other utilities.
And that'll be the first step to actually bringing down costs for
folks. Well, the one thing I think that
is confusing for everybody, which I think we have to keep
reminding everybody about, is that California generation costs
have never been lower. I mean, the fact that we've
built so much solar and wind power has actually reduced the
cost of generation in California.
I mean, you have negative prices a lot, right?
And then we built batteries. And so the duck curve is gone,
right? Like it doesn't look like a duck
anymore. It looks like it's flattening
out, right, with all that battery capacity.
And so this really is a wildfire problem, right, which is climate
related and a wires problem, right?
We got to get a lot more out of the grid that we've already paid
for. Yeah.
And look, we can do the best we can on the wildfire side, but
there's going to be some things that are out of out of our
control and we have to manage it better.
And I think there's a lot of smart people thinking about that
on the wire side. I think that's where we can we
can make a lot of progress, right.
And I think that's where we need to retool the business model,
retool how people plan, retool how, you know, large loads,
interconnect. And I think everyone's got to
join forces here or I think you're going to see all these
people that are upset right now in the state of California want
wholesale change. And, you know, maybe that's the
way we need to go. We'll see.
Well, Arnab, it is always a pleasure to have you on.
You always bring a lot of insights to what we're
discussing here, so thanks for being available.
Thanks for having me. Hello, welcome to Ask Jigger, a
weekly segment on Energy Empire where I answer your energy
questions. Ask Jigger is supported by our
friends at Octopus Energy. If you want to submit a
question, the link is in the show notes.
All right, let's get into it. Our first question is from our
good friend Andy Revkin and he asks when you were running the
energy loan program, there was an abundance in federal assets
for clean energy and efficiency. You wisely told me that the key
need was for a community based energy mavens to connect local
decision makers with federal resources.
What's your advice to local leaders now?
I would say that my advice is the same, right?
I mean, I think when you think about how much energy costs have
gone up and just how many solutions we have that are right
to go, whether it's solar and battery storage or whether it's
electric vehicles, whether it's heat pumps or insulation or you
know, these days there's next generation technologies for
heating, ventilation and air conditioning, right, to really
reduce your costs of managing your HVAC units at your work.
We have a lot of technologies that have paybacks that are less
than four years that just aren't being installed.
And when you ask people, they say, well, we've never heard of
them. We don't know those companies,
right? I mean, and so I talk about a
lot of those companies on my LinkedIn or on my podcasts or on
Twitter. But I think that we've got to
collect that information and we've got to go to City Council
meetings. We've got to go to County
Council meetings and we've got to go to the school board
meetings and say, hey, you know, this stuff is cost effective.
How about we figure out how to deploy it at this moment of an
energy crisis? The next question is from Joe
Murray. And he's a student at Duke
University, and he was talking about being at a Goldman
recruiting event this past fall and asking a managing director
what he thinks about virtual power plants and how it'll
influence valuations for utilities.
Look, I think that at the end of the day, the virtual power plant
grid utilization stuff that I'm working on, other people working
on is not going to reduce utility stock prices.
I think what it'll do is to get them to stop overspending on
infrastructure that is underutilized.
And so today, we're faced with 9% rate increases for as far as
the eye can see. Whereas if they deploy virtual
power plants, if they deploy grid enhancing technologies,
advanced conductors, lots of stuff that's lower cost, then
you could imagine using the grid that we've already paid for more
efficiently and keeping rates flat, right?
And then if you then add data center load growth, then you
might actually be able to reduce the utility bills by 10%, right?
So I think that this is not a bad thing for utilities as much
as it's a culture change. And they're used to doing things
the old, most expensive way. And we got to get them to do
things in a way that's smarter for their ratepayers and their
governors, frankly, many of whom are running for election right
now. The next one is from Rod Adams.
He asks, please explain why nuclear energy supporters should
love cheap battery storage. And the answer is because it's
not about nuclear and it's not about solar and it's not about
wind. It's not about natural gas or
coal or hydro. It's about the grid.
The grid is the greatest engineering accomplishment of
the 20th century, not any of those one technologies.
And battery storage actually allows you to manage the grid
better. So we have the largest commodity
supply chain in the world that doesn't feature storage in the
electric utility system. What do you think about our food
system? Or We're all learning about
storage with the Straits of Hormuz challenge in fuels or
whether we talk about other commodity supply chains, we
feature storage. But in the grid, we don't really
feature storage except for some, you know, like pumped hydro.
And so now I think we're adding storage.
And the storage helps nuclear, it helps solar, it helps wind,
it helps natural gas, it helps everything run better.
And higher grid utilization is how we get to lower electricity
bills for everybody. Our last question is from Karma
Dispensary from the energy subreddit on Reddit.
And he says or she says, I live in Northern California and the
utilities feel less reliable every year after buying a place.
We're in the process of getting enough solar and batteries to be
entirely self-sufficient. I know there are many benefits
to distributed grids. I can't shake the impression
that if everyone makes this decision, grids will be much
worse off. Fewer users to spread capital
investments over. Is mass disconnect something you
think about much and if it is a significant threat to the grid?
Look, I think mass affection is a.
Significant threat to the grid. As is not metering 2 point O as
you get to 10% of all the homes in California having solar on
them. But now we have NEM 3 point O.
NEM 3 point O features a much higher fixed cost and it also
features that you don't really get paid much to export power
back into the grid. So you're really running your
home more like a micro grid where you basically take it off
grid, right? That's awesome because remember
we are going to have to electrify everything.
So right now the United States, our primary energy is roughly
25% electricity, 75% non electricity.
China is at 35% electricity, 65% non electricity.
So we should be able to meet what China has done if we went
from 25% electricity to 35% electricity, right?
That means a lot more electric vehicles.
It means a lot more heat pumps, it means maybe induction stoves.
All of that is increased demand on the circuit that your home is
on. And the question becomes how do
we get the utility to use the battery that you're going to
install as part of the grid? And that's a lot of the work
that we've been doing in. California through a nonprofit I
support Condeploy Action. But it's also a lot of the
arguments that we're having across the country.
So when you think about data center load growth, when you
think about all these other things, figuring out how to do
virtual power plants with your battery is how we actually get
to electrify more of the grid, more of our primary energy while
reducing electricity costs for everybody.
So. Everybody should be.
Thanking you for putting solar and battery storage in and when
the utility finally offers you a virtual power plant, you should
opt in and get the discount that they.
Offer you for doing that that's it for this week's ask Jigar
thanks to our great friends at octopus energy for supporting
this segment if you've. Got a question you want me to
answer? Send it in.
The link is in the show notes. As usual, we want to thank our
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