California now has the second-highest residential electricity prices in the nation, behind only Hawaii. The Energy Information Administration reports that in November 2021, residential electricity prices in California averaged 23.76 cents per kilowatt hour—68 percent higher than the average national residential electricity price (14.12 cents per kilowatt hour). California has been at the forefront of the renewable energy transition, getting about 33 percent of its electricity from renewable energy. Electricity from the grid, however, has gotten so expensive and unreliable that homeowners have turned to off-grid rooftop solar panels and battery back-up for their electricity instead, particularly in rural areas where homeowners may need to pay for a new utility connection. According to installers, a fully off-grid system in California can run from $35,000 to $100,000.
Off-grid systems are particularly attractive to people building new homes because installing a 125- to 300-foot overhead power line to a new home costs about $20,000. In places where lines have to be buried, installation runs about $78,000 for 100 feet. This adds to California’s already high housing costs and prices people out of affordable housing.
The actual number of off-grid homes in California in unknown, but there are dozens in Nevada County, part of the Sierra Nevada range between Sacramento and Lake Tahoe. David Hochschild, chairman of the California Energy Commission said the state’s residents tend to be early adopters of off-grid electric homes. Even a former governor, Jerry Brown, lives in an off-grid home. But, according to Mr. Hochschild, such an approach may not make sense for most people: “We build 100,000 new homes a year in California, and I would guess 99.99 percent of them are connected to the grid.”
California requires new homes to have rooftop solar panels and those homeowners connected to the grid can sell excess electricity back to the grid currently at retail rates, even though it is a wholesale product. However, state policymakers have proposed reducing incentives for generating electricity from solar panels on homes connected to the grid. “Net metering” is where homeowners and businesses can sell back to the utility company any unused power generated from their rooftop solar panels. The sell back, however, uses transmission and distribution lines owned by the utility at no cost to the rooftop solar owner, with that burden being paid by non-solar owners. To remedy the gouging of non-rooftop solar owners, the California Public Utility Commission suggested a new monthly “grid participation charge” that would average an estimated $56 a month for solar customers. The commission’s plan would also cut credits to solar customers for the electricity they do not use and send to the grid under the net metering program by as much as 87 percent.
California was also at the forefront of the transition to electric vehicles with its zero emission vehicle (ZEV) program, where auto manufacturers that did not sell their quota of zero emission vehicles had to purchase credits from automobile manufacturers that did, such as Tesla. Using these credits, Tesla was able to become the best-selling electric vehicle manufacturing company in the world. As a result of ZEV, California has the highest number of electric vehicles in the country at 425,300 electric vehicles registered—about 42 percent of the total (1,019,260). With gasoline prices at $5.74 a gallon in the state, Californians are looking to electric vehicles as a way out of costly commutes. However, with the state’s residential electricity prices the second highest in the nation, the economics may not be much better for homeowners. Further, California has some of the highest fast charge rates in the country. On the Electrify America network that’s compatible with all electric vehicles, fast-charge rates are as high as 43 cents per kilowatt-hour in some states such as California. The price can be reduced to 31 cents by enrolling in a membership with a monthly fee.
Conclusion
California, with some of the highest energy prices in the country, is at the forefront of President Biden’s energy transition to renewable energy and electric vehicle ownership. With 33 percent of its electricity renewable, it has the second highest electricity prices in the country and probably one of the less reliable electricity grids in the nation with fairly frequent blackouts and brownouts. With the highest gasoline average price in the country, California has the highest number of electric vehicles in the nation, which are typically owned by wealthier individuals who can afford to pay their higher costs over gasoline vehicles. Californians are grasping at straws to find a way to make life economical under the state’s pursuit of the same goals as President Biden. Biden, however, should realize that California is not a panacea for the rest of America that does not have similar goals and needs and does not want to be burdened with the high energy prices that his policies are producing, as evidenced by the California experience.
