CEC’s Hochschild on Electrification & Resilience of California’s Grid

David Hochschild

As public safety power shutoffs (PSPS) become the new normal in the wildfire-plagued state, California faces increasing pressure to modernize its energy grid to avoid the seasonal disasters. VXNews spoke with David Hochschild, Chair of the California Energy Commission, on the state’s plans for finding safer, greener ways to provide its almost 40 million residents with power. Hochschild shares the Commission’s strategy for improving the current grid system, as well as the ways in which California has, and will continue to be, a global leader in clean energy innovation.

A high priority of Governor Newsom and his commissions—including the California Energy Commission—is obviously how best to respond to the horrendous fires in both Northern and Southern California, and deal with the challenges to the grid infrastructure that sometimes sparks those fires. What, in summary, is the present position of the Energy Commission on the aforementioned? 

The moment we're in as a state really requires us to simultaneously deal with the consequences of climate change and push more ambitiously than ever forward on climate solutions long term. We're doing both of those things.

There is a sort of a sweet spot where those two issues overlap. Things like solar battery microgrids, which provide electricity resilience during blackouts but also help reduce emissions, get facilities off of diesel generators, and help slow greenhouse gas emissions. Those are the kinds of things we're working with. We've funded microgrids on 38 sites across the state, spending about $85 million so far. There are some great stories including the project I dedicate earlier this year on the Fremont fire station, getting them entirely off of diesel to run their firehouse off of solar and batteries. We also funded one for a Native American tribe called the Blue Lake Rancheria tribe up in Humboldt County. We put a $5 million solar-powered micro grid on their tribal lands to keep their first aid clinic open. In fact, there was a fire, and it did cause the grid to go out, but they didn't notice because of the solar microgrid. So there are some great stories along those lines. 

With respect to other Energy Commission activity during this crisis, one of the core responsibilities we have is emergency preparedness. Particularly, monitoring electricity getting served to refineries so that we don't have price hikes from refineries going offline. I have an emergency services advisor, who's been at the emergency operations center working day and night during this last crisis.

Regarding hardening California’s energy grid, what will a more robust, resilient grid—from the perspective of California’s Energy Commission—require? 

It’s many things. I think there's going to be some strategic undergrounding of key distribution of transmissions, more energy storage, better maintenance of the system, tree trimming, more microgrids, and generally being much more intelligent and strategic about managing energy demand. Energy is thought of as just a one way, supply problem, but actually a lot of it is flexible. You can pre-cool buildings for the optimum time on the grid, you can choose exactly at what voltage and time to charge an electric vehicle. We're deploying 200 electric buses, and those vehicles that are parked and not being used in the middle of the day will have a lot solar surplus, so they can make use of that. 

All we want is an electric vehicle happy hour where they're plugged in and charging. All that intelligence—building that into the grid, modernizing it, making use of the Smart Meter network that we have now—and the many little changes, can add up to a big difference. Take for example, the kinds of things that OhmConnect is doing. They got 500,000 customers who are signed up to this residential demand response, and it’s very promising.

The California Energy Commission has been funding and monitoring research for years into electricity resilience. Given the crisis before us, what has been the return on the public’s investments —specifically related to solar, battery and micro grids? 

A lot of the early work done by the Commission has paid off in spades. I think maybe the most notable example is what's happened with solar energy. The Energy Commission funded the very first rooftop solar energy systems with no roof penetrations for commercial applications, and we've seen just incredible progress on innovation and cost reduction in the solar market in California. This year, we hit 1 million solar rooftops in California and we're now seeing solar at a lower price than it's ever been. 

On the utility scale side, we had the very first bid that was under 2 cents a kilowatt hour come into California this past year, and the truth is we're not done with cost reduction. There's still more cost reduction to come both in solar and wind. Batteries are another example. We've funded about 40 energy storage demonstration projects around the state of all different chemistries: lithium, iron chromium, vanadium, and a number of others. 

Not all those are going to be successful, but that's kind of the point. You have to make a whole bunch of bets, and hopefully get a few successes. One of the hidden stories with batteries that's exciting is that the cost has been falling precipitously. Lithium ion cost about $1,000 per kilowatt hour in 2010, and now down to about $120. That's an 88 percent reduction in nine years, which is pretty darn good. You see the big implications of that for electric vehicles, the battery pack is about half the cost of an electric car. As that better tech goes down in cost, it makes electric cars more affordable, as well as backup energy storage.

In light of the public safety power shutoffs happening across the state due to catastrophic wildfire risks, in hindsight, is a state strategy of “all” electrification—to the detriment of hydrogen or renewable natural gas—a prudent strategy?

That's a very fair question. I think we're going to make the grid a lot more resilient and robust. One of the things we're seeing is a lack of maintenance, tree trimming, and so forth on the part of PG&E, as well as under investment. That's going to change, and then we're going to be a lot more resilient as energy storage gets deployed more and more. The direction I think the state is going to go is towards a much more robust, resilient, and secure electric grid. With respect to the fuel cell cars, we have 6000 fuel cell vehicles in California, but 655,000 electric vehicles, so the market has really moved that direction because of cost and range. Most importantly, the automakers the tracking investments are moving very heavily in that direction. I want to be clear, we have work to do to improve grid resilience, and that's a lot of what we're going to be focused on. Part of me really thinks we can succeed in making an even more secure grid.

On electrification of mobility, VXNews conducts this interview just before the Veloz Forum in Los Angeles, and days after Tesla reported its earnings and a profit. Speak to the mission of Veloz and the significance of this result from Tesla with respect to the stretch goals California has for the electrification of transportation.

Look, I give Tesla great credit, and not just because they're now building 1000 cars a day on that factory floor—which is the largest manufacturing operation in the entire state— that alone is impressive. Actually even more significant than that, the greatest contribution from Tesla is actually the force that their existence has applied to the rest of the global auto industry. They have shown that it can be done, and that you can make an attractive, appealing, fast, sleek, and electric car that consumers want. And by the way, the maintenance is much less—there are about 90 percent fewer components in electric cars— and public is learning that. It has forced the rest of the auto industry to change. In fact, I drive a Chevy Volt, which I love and have been driving it for about 2.5 years. The fact that Chevy made that car, and that Audi and BMW are doing what they’re doing, I think none of that would have happened on this timescale were it not for Tesla. I give them great credit for that, because they're really forcing the transformation of the entire industry. 

In a recent interview, you noted that Salton Sea lithium is potentially the next gold rush for California. Is that prediction proving to be true or prospectively true?

What’s happening with lithium is its early days right now, but it's incredibly exciting to me, and it's full of potential. There's enough lithium in California to supply 40 percent of the global market. We're seeing lithium demand skyrocket as electric vehicles and energy storage ramp up. There is a very real potential for this vision of Lithium Valley—a Silicon Valley for Southern California. The idea is with the raw material produced in the Salton Sea, and to some extent in the Death Valley area, you can attract back to the intermediate industries like cathode manufacturing to California. I think 2019 may be looked back upon one day as 1841 was with the Gold Rush, because I think lithium is the oil of the clean energy future.

If you just look generally at what's happening, we now have 655,000 electric vehicles on the road in California today, and we're adding about 20,000 more a month. Literally every major automaker in the world has, or is developing, an electric vehicle model, and you're seeing real traction in the market. But this is also true with other devices like to two-wheel scooters, bicycles, etc. 

It's a really exciting time, and I think these industries—along with laptop computers, cell phones, and other devices that rely on lithium ion—are all going to help create economies of scale and bring the cost down.

The last time we spoke, you predicted that air quality would be the number one issue for the state moving forward. Given the impacts on air quality from tailpipe emissions, how significant—in terms of its impact on the marketplace—is GM, Toyota, and other automakers’ decision to support President Trump’s lawsuit revoking California’s authority to set auto emission standards?

So many things are happening at once. We have put our foot on the accelerator for the electric vehicle future, so that's probably the most significant thing we've done at the Energy Commission since I became chair earlier this year. We significantly changed and updated our Clean Transportation Program Investment Plan. We give $100 million away every year for clean transportation investments, and that has now shifted to aggressively focus on zero emission electric vehicles.

That’s where most of our investment is going, and I think it aligns very nicely with what's happening in the electric grid. Since we're going to 100% clean energy these vehicles get cleaner every year. Every year as the grid cleans up even further, your car gets cleaner. It also helps with renewable integration, because electric vehicles are good for the grid and the ability to have intelligent charging algorithms is a real asset for the grid. It’s one reason why the California IFL supports electric vehicles. 

That’s a positive step, but it's also true that Trump is aggressively pushing to take us backwards. Unfortunately, some auto companies are going along with that. I had a call today with GM to relay—as a Chevy Volt driver—my extreme dismay with their decision, because I think it is a step backwards. I actually don't think it's even strategic for them, and I think it sends the wrong message. 

I’ve got to say—even in light of this—that I feel optimistic. I think that California isa postcard from the future. When you think about all the big stuff that we’ve done and at every juncture, people have called our policies mythology, they’ve questioned them, and they've been skeptical. Take this 100 percent mandate that we did a year ago as an example, and I've been involved in that effort for a long time. It was widely considered mythology, and I'm just being honest, that was the reception that we got from many corners. To be clear, Hawaii was the first state in 2015 that did that, and California was second in 2018. But Hawaii has 1 million people, and we have 40 million people, so when we do something like that it really sends a message.

So what's happened in the intervening year since we signed that into law? One hundred percent mandates have also been adopted in Washington state, Nevada, New Mexico, Wisconsin, Connecticut, Maine, New York, District of Columbia, Puerto Rico, and others. You have nearly 30 percent of the population of the US living in a state that’s committed to go to 100 percent clean energy. And to be clear, we're at 55 percent carbon-free electricity today in California—that is the grid today in California— so we're going to get there.

I think the rest of the country is going to get there too. The thing that makes me optimistic is we have seen so much cost reduction in these core technologies—wind, solar, and storage—that are going to drive that. Murray Energy went bankrupt this week, and they were the titans of the coal industry. The coal portfolio in the United States has dropped in the last decade from 52 percent to 24 percent and falling. So, this idea that Trump is spouting about coal being the future is the mythology. It’s not supported by the trends we're seeing in the market.

I really believe that what is happening here in California is going to happen nationwide and globally. It's pretty clear to me if just step back and look at the industry that we've integrated here. The solar industry, the wind industry, and the electric vehicle industry were born in our state, and the very first energy efficiency codes and standards were born here and spread around the world. That's one of our greatest contributions as a giant incubator for the clean energy industries and policies of the future.

Lastly, in September of this year, LADWP, the nation's largest municipal utility reached a 25 year deal with 8Minute solar energy for 400 megawatts of solar and storage at 3.3 cents per kilowatt hour. Can you unpack for our readers the significance of that price point, and what that means for utility-scale solar and storage?

It’s historic, both in scale and in price. I think that's the direction that the state’s going to go. I just want to pay particular tribute to LADWP, who for a long time were really widely derided by the environmental community for being so heavily reliant on coal—50 percent of their portfolio—for years. This transition is really welcomed on many levels, and it's nice to see that we can get to these cost points. 

That is the fruit of our early investments. The early large-scale projects were a lot more expensive, but you don't get to these price points without the early ones. That's what it takes to get to economies of scale, what drives innovation, what gets the investment in, so this is the fruit of that early work.

“We have put our foot on the accelerator for the electric vehicle future, so that's probably the most significant thing we've done at the Energy Commission since I became chair earlier this year."—David Hochschild