California has long been a pioneer in energy innovation. But even with that history, the power grid faces new challenges with rising demand and the impacts of a changing climate.

The ABC10 weather impact team investigates the state’s past and future of the grid and how California’s energy story is creating new opportunities — but also financial strain





Chapter 1:
How California’s Power Began — and Broke

Cindy and Paul Harman live about an hour from Sacramento in the Sierra Foothills. Their home is filled with memories from raising a family, landscape projects, renovations and finding hobbies as they settle into retirement. But life in the foothills is now coming with more challenges. 

“Everything just seems to get more and more expensive all the time,” said Paul Harman. “And what friends we used to have don’t live here anymore. They have moved. Lots of them have left.”

One of the biggest pressures comes from the cost of power. The Harmans once paid as much as $500 a month for electricity before turning to solar panels. Living in a high fire-risk area also means dealing with regular shutdowns when dangerous weather develops.

“To mitigate that, we put in a Generac generator,” Harman said. “And whenever the power goes off, it goes boom with just no break at all.”

The Harmans’ efforts to stay resilient echo back to the origins of electricity in California. 

In the late 1800s, industrialists sought opportunity during the Gold Rush. Horatio Gates Livermore set up a sawmill along the American River, but when demand for lumber dropped, his family shifted to a new idea — harnessing water to make electricity.

“They’re already running all of this water through here and instead of just running the sawmill, they said there’s this newfangled technology over on the East Coast that we could maybe make electricity and really start to change people’s lives here,” said Zakary Adams of the Folsom Powerhouse.

In 1895, power traveled 22 miles downhill from Folsom to Sacramento, marking the start of a new era. The plant became the first three-phase, 60-cycle facility in the nation — the same type of electricity still used across North America.

James Bushnell is an energy economist at the University of California in Davis. He said, as demand grew, utility companies expanded quickly. 

“There’s a reason why the monopoly board has a square that says the electric company on it,” Bushnell said. “Electricity is sort of always thought of as a monopoly.” 

But the system revealed vulnerabilities. 

By the 1970s, oil shortages, government conservation campaigns and overbuilt power plants collided, leaving utilities with high costs and less customer demand. Consumers shouldered the burden through higher rates.

To cut costs, state and federal policies opened the market to smaller producers. 

“They passed laws that basically said if you develop projects like that, the utility, the monopoly utility at the time, had to buy the power from those small independent power producers,” Bushnell said.

The result was an explosion of alternative energy projects, including the world’s largest wind farm at Altamont Pass. But despite the innovation, prices didn’t come down.

By the mid-1990s, lawmakers pushed Assembly Bill 1890, the nation’s first electricity deregulation plan. It created the California Independent System Operator to manage the grid.

The reforms set the stage for the state’s most severe energy crisis, with rolling blackouts, market manipulation and a breakdown of the system that still shapes California’s power struggles today.





Chapter 2:
How California’s Power Grid Rebuilt Itself

In the early 2000s, blackouts rocked California. More than two dozen of them in total.

“It’s still debated to this day what happened,” said Andy Campbell, the executive director of the Energy Institute at Haas at UC Berkeley. “A lot of things happened, but a key enabler of the energy crisis were actions of the California legislature.”

Campbell works with a dozen energy and environmental economists, researching the energy of the future — which sometimes requires examining the past.

“Laws were passed in the mid-1990s. There was sort of a desire at that time to try to reform the way the energy business was structured,” Campbell said. “There were several large vertically integrated utilities. The same company owned all the power plants, they owned all the transmission lines, they owned all the distribution lines. There was sort of a desire to see if there’s a different way of doing things.”

According to Campbell, a major problem was the state legislature passed laws requiring buyers of electricity to buy all of their electricity on a real-time basis.

“They just had to buy energy at the price that was available at the point in time they bought it,” Campbell said.

This left open the possibility for bad actors to game California’s energy system by causing supply and demand issues. When demand outpaces supply, the grid becomes strained, and without any additional energy to make up the difference, major outages can occur. And in 2000 and 2001, they did.

“Enron was not the only one, but Enron was the biggest one to basically manipulate the market,” Campbell said. “They’d (Enron) basically tell the grid operator, ‘Oh sorry, my power plant is broken. There’s a problem with the power plant, it’s down.’ Prices would spike. Enron had some other power plants. They’re now selling energy at those very high prices.”

During the energy crisis, some of the state’s biggest investor-owned utilities — such as Pacific Gas and Electric — went bankrupt. The state legislature passed several emergency bills, with the primary goal of stabilizing the grid. And in an effort to avoid a similar crisis in the future, California began taking more active roles in planning new power generation and transmission lines.

“Our job is to keep the lights on,” said Elliot Mainzer, speaking from an observation room above the control room floor of the California Independent System Operator, better known as CAISO.

“I like to sometimes say that we’re sort of a combination of a control tower operator and the NASDAQ,” said Mainzer, the president and CEO of CAISO. “We have the responsibility of overseeing the flow of electricity across the high voltage transmission system in California and making sure that there’s a constant balance of supply and demand. We’re constantly taking bids for supply and demand and balancing the system at the lowest possible cost, both within the state of California and administer a market that covers about 80% of the Western United States.”

CAISO plays a role somewhat like an air traffic controller for a power grid that includes most of Arizona, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington and Wyoming — and of course, all of California.

“All of this requires a lot of coordination, a lot of collaboration, and a lot of synchronization to make sure we accomplish all these functions efficiently,” Mainzer said. “California is sitting on a very healthy, pretty balanced portfolio, and I think part of our challenge in the years ahead is to continue to work with our energy planners to make sure that we have that portfolio that is cleaner and cleaner and cleaner over the years.”

A big player in California’s energy portfolio is Pacific Gas and Electric. PG&E is one of the state’s — and the country’s — largest utility companies. 

“We have really strong partnerships with California ISO,” said Quinn Nakayama, PG&E’s senior director of Grid Innovation, Research, and Development. He was speaking in front of one of his company’s recently upgraded substations in Sutter County.

“We partner very closely together around where are our major load growths are going towards,” Nakayama said. “And then we work together to say, well, which of these assets need to then be built out to accommodate that load?”

And a lot more load is expected. Over the next 20 years, PG&E is forecasting an increase of 70%.

“As all these industries continue to develop and rise, and especially with data centers which have significant amounts of power draw with things like artificial intelligence now becoming a real big thing here in California, we’re having to build out infrastructure,” Nakayama said. “We can’t get away from the build, but where we want to do innovation is in areas where maybe we don’t need to build as much.”

“One great example is that we have a technology called smart wires or smart valves,” Nakayama said.

He shared an example with cars and freeways.

“You have the 80 freeway and the 50 freeway, and these two freeways feed Sacramento to be able to take people from the outer areas into Sacramento,” Nakayama said. “Maybe too many people are driving on the 80 freeway and not enough people are driving on the 50 freeway. And more people are trying to drive on the 80 freeway, and now you’re needing to build out new infrastructure for the 80 to accommodate all these new people.”

“But if I’m able to take those cars and push them to the 50 freeway and not cause problems, then now I can share the load between these freeways and still feed all of Sacramento,” Nakayama said. “To be able to help them grow Sacramento area, while at the same time not having to build another freeway. We’re doing the same thing here in our substations.”

It’s not all just about upgrades. Being smarter about how the grid distributes power is part of it too.

“When the air conditioning is running, maybe I don’t want to charge my car as fast. If we can figure out how to modulate this type of stuff, so it doesn’t all need to suck up as much energy all at the same time, all the time, we might not have to upgrade all of our systems to be able to accommodate that,” Nakayama said.

“If we can do that while not impacting our customers – like, I need to get my car charged at 6 o’clock in the morning – as long as I don’t impact that, maybe we can create an environment where we’ll be willing to work in that energy ecosystem and then I don’t have to do those upgrades, that doesn’t have to appear on your bill and everybody saves money,” Nakayama said. “That’s the beautiful thing about innovation, what we’re looking to try to do.”

California has been innovating in other ways too.

“We’ve done a lot of work to coordinate and anticipate issues, and we’ve really been able to ride through some pretty hot events here in California without having to call on Flex Alerts,” Mainzer said.

Flex Alerts were created and first issued in California during the 2000-2001 energy crisis. They are a measure of last resort, calling on Californians to conserve power to avoid rolling blackouts as demand outpaces supply.

“The number of days of the year that we’re going to call on these are going to be relatively modest, but it makes a big difference if consumers in relatively large numbers take modest steps to flex their demand for a few hours,” Mainzer said. “Particularly that 4 p.m. to 9 p.m. period is the time of day when demand can still be very high, and of course, as the sun starts to set and our solar energy resources start to reduce the amount of power. That can become a strained period on the grid.”

Flex Alerts are instances of true grid shortages, where all available resources are utilized but aren’t enough to meet the demand. California hasn’t had a Flex Alert issued since September 2022, when much of the state saw all-time record heat but no blackouts — thanks in large part to more battery storage.

“Back in 2020, we only had about 200 megawatts of batteries on our grid. In the last 4 or 5 years, we’ve now got almost 13,000 megawatts of batteries on our system. It’s made a huge difference,” Mainzer said.

It also helps to have a power grid that is bigger than the weather, something Mainzer often says. By connecting to other states in the west, CAISO can send power from typically cooler states – like Idaho or Washington – to California during the summer to meet increased demand. And during the winter, California can send excess power up north.

“We have a grid that’s bigger than the weather,” Mainzer said. “We have huge amount of transmission that connects up to the hydro resources in the Pacific Northwest. We’ve got transmission resources that go out into the Desert Southwest all the way out into the Intermountain West. We’re also engaged in the construction of some big new transmission lines that will further open up into New Mexico, up into Wyoming, and all the way across Nevada up into Idaho that will give California additional access to clean energy resources, create some additional opportunities for us to export surplus and will strengthen the foundation of our regional energy market.”

All of this is just part of meeting California’s clean energy goal.

“We are continually looking for new technologies and new energy procurements to get us to a net zero energy system by 2045,” Nakayama said.





Chapter 3:
Can California Build to a Carbon-Free Future?

California’s goal of reaching 100% carbon-free energy by 2045 depends on a delicate balance — generating enough clean, reliable power to meet a rapidly growing demand while keeping costs affordable for residents and businesses.

High in the Sierra Nevada, a network of lakes and reservoirs powers communities far below. The Sacramento Municipal Utility District (SMUD) operates 12 reservoirs and nine powerhouses that not only provide recreation and wildlife habitat but also supply hydropower to the Sacramento area.

“Hydropower is a tried and true method going back to the 1800s — spinning a wheel with water,” said Darold Perry of SMUD. “It provides about 20% of our energy needs in an average year. It can go higher in wetter years, and it allows us to provide reliable, affordable energy.”

The district’s hydroelectric system, built in the 1950s and 1960s, has evolved from providing steady “baseline” power to delivering more energy during peak afternoon and evening hours when demand and prices rise.

“Our hydrogeneration portfolio is critical for SMUD’s 2030 zero-carbon initiative,” said Dan Strickland, adding that the plan is among the most aggressive in the country. “We want to keep our rates as low as possible for all Sacramento ratepayers.”

California’s broader clean-energy goals mirror that ambition. SMUD aims to go 100% renewable by 2030, while the state’s target is a carbon-free grid by 2045.

Much of that push is powered by the sun. Nearly 2 million homes in California now generate solar electricity, helping make it cheaper and more abundant. This year, solar energy became the state’s largest source of power, surpassing natural gas and supplying more than one-third of California’s total energy.

The growth of solar has created a new challenge known as the “duck curve.” During daylight hours, energy demand dips as solar production peaks, then it surges again in the late afternoon as the sun sets and air conditioners and appliances switch on.

One solution is large-scale battery storage, which has expanded rapidly in recent years. 

“In the last four years, we’ve brought on over 20,000 megawatts of new generation,” said Elliot Mainzer with the California Independent System Operator. “The goal in running an electricity grid is to make sure you can provide enough electricity 24/7 — that requires a combination of different attributes.”

To meet those needs, California is fast-tracking massive new solar and storage projects. The Darden Clean Energy Project in Fresno County will use more than 3 million solar panels and batteries to power 850,000 homes. The Cornucopia Hybrid Project is expected to supply energy for up to 300,000 homes.

Innovation continues at the local level, too. The Turlock Irrigation District received a $20 million state grant to install solar panels over irrigation canals, an experiment designed to both generate power and reduce water evaporation.

“We’re the oldest irrigation district but trying new things is in our DNA,” said TID spokesperson Josh Weimer. “We say yes to projects. We look at different solutions for the challenges ahead of us.

If successful, the canal project could eventually expand to sections of the California Aqueduct. 

“It’s a potential solution, because we’re going to need all options on the table to reach a 100% carbon-free grid by 2045,” Weimer said.

Wind power is another major piece of the state’s clean-energy equation. California’s wind industry began in the 1980s in the Altamont Pass, but stronger and steadier winds blow offshore along the coast. Proposed offshore projects near Humboldt and Morro Bay have drawn pushback from fishermen and coastal residents worried about environmental and economic impacts.

“We don’t know what the cumulative impacts will be — not just on fisheries but on the entire marine ecosystem,” said Mike Conroy of West Coast Fisheries Consultants. “If we’re going to do this, let’s do it right.”

Despite the challenges, energy experts say California continues to break ground on renewable milestones. 

“Last year alone, California’s grid ran on 100% clean energy for the equivalent of 51 full days,” said Alex Jackson with the American Clean Power Association. “If trends hold, that number could rise to 80 days this year.”

Stanford researchers project the state could operate on 100% renewable energy around the clock by 2033.

Just last month, California compiled data from 2023 and found that 67% of its energy came from renewable sources, breaking the record for the third straight year.

Current challenges from federal funding of renewable projects may temporarily slow or stop some projects in the near future, but many existing projects are currently in the planning or construction phases. Renewable energy sources in many cases provide the cheapest and fastest source of new energy even without subsidies from government grants.