With the release of CARB’s Draft Scoping Plan, bold steps to secure a cleaner future in California are at the top-of-mind for many state and local leaders. For the perspective of what is to come in the near future, VX News interviewed California Energy Commission Chair David Hochschild to learn about projects and goals that are in the pipeline. This year, Hochschild sees the state making important progress on storage, grid reliability, green hydrogen, lithium, and electrification. He characterizes the Governor’s proposed 2022 budget as comparable to one of California’s landmark energy bills. Of the moment, Chair Hochschild opines that ”the transition is well underway and the public is behind it…We're entering a period of what I would call ‘The Great Implementation’— We've got the goals and are all-in on putting this money to work.”
Chair Hochschild, let’s begin our interview with a provocative question: If EVs and electrification are the future, is the California grid ready?
David Hochschild: We are doing absolutely everything we can to set the grid up for success during these climate driven heat storms we've been facing. The level of investment and activity in preparation is greater than it's ever been.
On the good news front, we are getting a huge amount of a new, clean capacity installed. In the last year, we've installed over 5 gigawatts of clean capacity. There will be another 5 coming on by June. That’s about 9 gigs of new capacity that will come online in 18 months.
This is definitely a big step in the right direction. One piece that’s especially important is energy storage. Up until last year, California had 200 megawatts of battery storage online. Last year, we installed two gigawatts. This next year, we're going to do another two gigawatts.
I would add, a renewed focus on intelligent demand response and being able to manipulate demand for things like EV charging and other uses of energy that have some flexibility will play a very important role.
We are focused on this like a laser. When I say “we”, I’m really talking about the Energy Commission in close collaboration with the Public Utility Commission and the ISO. We're very fortunate to have the head of the ISO, Elliot Mainzer, who arrived last year. He’s the top person in the country, from my perspective, in this position. We've got a team in place, and we're giving everything we've got.
With respect to the CEC’s renewed focus on intelligent demand response, elaborate on why.
The way the traditional model of energy consumption works is very rigid. Somebody turns on a factory, electric demand goes up, and the fossil fuel power plant will cycle up to meet that demand. Now, what's happening is that there's a subset of that demand that the model can flip and essentially increase your electric load to, for example, charge up a fleet of electric vehicles at a time when we have surplus renewables on the grid.
Just on the EV side alone, we have over a million electric vehicles on the road in California. We're adding 900 a day. The momentum in the auto manufacturing sector towards electric has been phenomenal. It's really one of the big success stories of the state. This is also true with energy storage. Tesla alone has 200,000 Powerwall battery installations installed. There is a nimbleness built in with these resources, as well as things like pre-cooling of buildings that you can do.
When we think about the threats to grid reliability, it's important to remember it's only a couple of dozen hours in the year where our backs are up the wall on this. These kinds of targeted, focused efforts, by that I mean incentives to encourage load reduction during these critical peak hours, those are central. There will be some more announcements made in the budget in the coming days, but I assure you, energy reliability, including demand response, is going to be front and center.
With the State committed to the goal of 100% clean energy, address the promise of green hydrogen and other renewable fuels.
We have $100 million in this budget for green hydrogen, which definitely has a role to play in the clean energy future. One of the big debates is, what are the swim lanes for hydrogen versus other things like electrification. The momentum generally has been that electrification is sort of ascendant and the grid has been ascendant. You're seeing rapid growth with vehicle electrification, not just for passenger vehicles, but also medium and heavy-duty trucking. The building sector is also seeing momentum towards electric heat pumps and water heaters.
I see electrification having a very bright future, but you can't electrify everything. Think about some of the industrial applications or shipping. It's those niches where I think hydrogen has a role to play. We have a whole Hydrogen Roadmap process that's underway now that looks at where it makes sense for the state to be investing, and we've had really robust stakeholder engagement on that.
The commitment for the state to get to 100 percent clean energy has never been stronger. I think all of us feel, particularly with the unprecedented wildfires our state is victim to, that climate is an imperative to face boldly and directly. Now, it's a question of how we do that in the most practical way.
Given the State’s recent experience with electrical blackouts resulting from climate events and wildfires, what's California’s backup plan to assure reliability? What investments in resiliency are being made/planned to address system vulnerabilities?
Every system has vulnerabilities. Even the gas system has vulnerabilities, as we saw with Aliso Canyon and San Bruno. The electric system generally has been highly reliable. The blackouts that state went through in 2020 were over in about four hours and affected around 500,000 customers on a Friday night and Saturday night in August and was the first time that happened in 20 years, and it hasn't happened since. There have been targeted, preventive public safety power shut offs, which have to do with wildfires, and those are much more targeted now.
The system as a whole has been reliable. There's a lot of investment going on to ensure that continues. I would argue, ultimately, the movement towards greater carbon-free electricity also improves resilience because you have power being generated on many points in the system. You're not as vulnerable to a single shutdown. As I said, we’re really putting more resources into that effort than ever before.
I would say this is a solvable problem. Nobody should feel forlorn hope that the grid is not reliable. The grid has been reliable, and we are going to make every effort to continue to strengthen that even further.
Even Governor Newsom has expressed some doubts about whether California can truly get from here to there in terms of the State’s climate goals without looking into all alternatives. The CEC, for example, is investing heavily in lithium. Share more about domestic lithium production as well as other energy opportunities being prioritized and invested in by the CEC?
As I said, storage has been a huge priority for us. In this upcoming budget, we are putting $380 million into long duration storage. For people who are not so close to this field, there are some incredibly exciting new chemistries like iron air, vanadium, iron-chromium, and others that offer new benefits for super long duration storage, even where we can charge up in the summer and discharge in the winter.
We're investing in those, as well as continued improvement in lithium-ion batteries. There's a lot more energy density that can be gained and is being gained in lithium ion as well as improved reliability and safety. I think you're seeing progress across the energy storage space In California,
One of the things we're focused on is encouraging manufacturing to happen here in California. We just hosted a battery day with about 60 stakeholders. This is part of the effort we're calling Lithium Valley to really build out a whole lithium ecosystem in California, starting with lithium production in the Salton Sea area. We want to take it all the way to battery manufacturing here in California and scale that up because we have the largest end-use battery storage market in the world.
I just visited the largest battery storage project in the world last week at Moss Landing, which is 400 megawatts, going to be 1400 megawatts in the next couple of years. There's an incredible momentum in this, and I am very hopeful about the possibilities.
One thing that gives me hope is the cost reduction that's happening with batteries. It's gone down almost 90 percent in cost in the last decade. It can go down even further with innovation, automation, and scale. All this is good news for those who are interested to move away from fossil fuels and see if we can sustain reliability.
Elaborate more on the CEC's support of the Lithium Valley Commission.
This is one of the most exciting things happening in California. The Energy Commission has been investing in lithium production and lithium technologies for the last several years. At the direction of the legislature, we started the Lithium Valley Commission, which is a 14-member body representing all the stakeholders in the region around the Salton Sea. It includes Native American tribes, environmental groups, local government, and industry all with the focus on building out this plan to produce lithium at scale in California, which has one of the single best reserves of lithium in the world.
What's interesting is that it is by far the greenest way to produce lithium. Today, over 95 percent of lithium comes from Chile, Argentina, China, and Australia. China and Australia typically use hardrock mining, and Chile and Argentina typically use massive evaporation ponds. These both have an environmental footprint.
What's different in the Salton Sea is that the lithium is in a superheated brine, which is about a mile below the Salton Sea. There's about a dozen geothermal power plants today that cycle this brine already from deep underground. The lithium is only 250 parts per million, so you have a process where the brine goes in a tank. Then, they take the lithium out and it's pumped back into the ground. 99.9 percent of the brine is just getting pumped back underground. It's not like oil and gas, where you're withdrawing massive reserves.
There are four companies doing lithium production in California today. Three of them are there in the Salton Sea. The fourth is in Death Valley. We are very hopeful about the direction this is going. The project which won our competitive grant is a Berkshire Hathaway pilot project that has just been commissioned and is underway.
The next step is to build out the battery ecosystem. There are at least two companies looking at building gigafactories for lithium-ion batteries in the region and a bunch of small companies, as well. We're really excited about what this means for the state and the country.
Pivoting to possible funding by the federal government for siting hydrogen hubs in California, especially near the Port of LA., address the Commission's view of Hydrogen’s place in the State’s energy portfolio?
We are 100 percent behind hydrogen hubs in California and getting federal money to do that. Tyson Eckerle at GO-Biz is the lead for the state there, and there's a number of other stakeholders involved.
My belief is that there's a set amount of money in the infrastructure package for hydrogen, but that money will go farther here. I think it will be greener here. I'm very mindful of the fact that 95 percent of hydrogen in the market today is from fossil fuels. It doesn't provide an environmental advantage until it is green. The focus on that is really strong in California, stronger than most other states. There are some real hurdles to work through, but we have incredible talent in the state. We will be deploying this $100 million in the budget for green hydrogen with that vision in mind.
There seems to be mixed signals coming out of Washington about how we get to our climate goals with the review by the US Commerce Department about the tariffs on solar panels. What does that decision signal to you?
That is a completely self-inflicted wound by the Commerce Department. It has definitely created what I call a solar traffic jam. Basically, while the investigation is ongoing and until they reach a preliminary determination, it's slowing solar projects because of this possible fee that could be assessed. Also it slows solar storage because the storage does not receive the ITC tax credit without the solar.
We are pressing for a swift resolution to this. The governor wrote a letter to the administration about this and has met with industry stakeholders. The industry is working incredibly hard to get it resolved, and I think it will be. It's just unfortunate that it's happening because we're trying to get these projects online as soon as possible.
What's the promise of the university sector focusing intensely on sustainability by creating new schools and focusing their resources?
Obviously, the news of John Doerr contributing over a billion dollars for this new climate school at Stanford is fantastic. When you look across the innovation landscape in California, it is amazing how much of the talent that's leading our clean energy economy was educated here in California. I came out of the solar industry and worked in Silicon Valley. At the company I worked at, Solaria, all the best engineers and scientists were all educated in California. It is fascinating to see all this talent come through California educational institutions and get inspired to get into the field with the skills they need to be successful. There's a very direct link between investment in these schools and the success of the innovation economy.
I welcome John Doerrs historic gift, and I hope there are more to follow from other schools, like the CSUs. A lot of times, they don't get the love and attention that they deserve, but there's incredible talent in the student body and the faculty. I’d love to see more gifts to institutions like that, because they have a huge role to play.
Address what California is learning from investments and deployments of clean technologies by other countries?
I just came back from Iceland, where myself, Caroline Choi from Edison, and number of others visited the Orca project, which is the largest direct air carbon capture project in the world. This is a technology category that we're going to be funding. I’m very interested to support it and bring this to California.
The best way to characterize it is the reverse of fracking. You are sucking CO2 gas out of the air and then using a process with geothermal heat that mineralizes it into rock, so it is permanently inert. Their cost is about $600 a ton. They think they can get it down to $200 a ton. We have a bunch of innovation happening in California in this technology category. Companies like Mosaic Materials and others are doing this work. This industry has a lot of promise and has to be a part of our climate solutions portfolio. At this point, even if we become a 100 percent zero-emission state, it’s not enough. We have to look at new technologies and methods to take some of that excess CO2 out of the atmosphere.
Another area where we have a lot to learn from other countries, particularly Australia and Israel, is around water. We're in a drought now that could get a lot more severe. While we're ahead of the rest of the country on our water efficiency standards, we're behind Israel and Australia on greywater systems, water recycling, and water efficiency. In Melbourne, Australia, something like half the homes now have rooftop rainwater collection systems.
We're ahead on a lot in California, but we always want to be learning. I love to learn from people and countries that are ahead of us.
One area where I think we're having some really good luck as well is on offshore wind. I was able to visit Europe and look at what they've done in Denmark, Portugal, and the UK. The UK has 10 gigs of offshore wind installed. They’re going to reach 40 gigs for a place that only has a 60-gig load. Here in California, we're going to be setting the planning goal very shortly for offshore wind. In October, the first lease sale for offshore wind will happen for both the Central Coast and North Coast. We've had the chance to learn a lot from our European colleagues who also are ahead of us on this. Hopefully, we'll have a better process as a result of that engagement.
Lastly, turning to the increasingly obvious need to move the dial on our responses to Climate Change, how would you characterize what’s being invested in and rolled out in 2022 in California?
2022 is the year of the Tiger. It is the year to go big and bold and that's what we're doing. I would characterize the budget that the Governor is introducing as like one of the landmark energy bills we had; it's that significant. In a normal year, we would spend about $250 million dollars on transportation electrification, for example. We're going to spend $10 billion between last year and this year’s budget.
The transition is well underway and the public is behind it. We're entering a period of what I would call “The Great Implementation.” We've got the goals and are all-in on putting this money to work.
What would be really helpful is if Congress would extend the tax credits for clean energy, energy storage, electric vehicles, and renewables. I have all my fingers crossed for that. California would be the single biggest beneficiary of that, but I think it'd be good for the whole country.