California’s biggest all-electric utility has a plan to meet the state’s tough 2030 carbon targets

Pedro Pizarro, CEO of SCE parent Edison International, says gaps in EV and electric building policies threaten state clean energy goals.

Edison International CEO Pedro Pizarro (Edison International)
  • Link copied to clipboard

As California’s biggest electric-only utility, Southern California Edison has a clear interest in promoting vehicles and buildings switching from fossil fuels to low-carbon electricity. It also has a clear view of just how far the state has yet to go to reach its goals. 

Subscribe to receive Canary's latest news

Over the past four years, the 5-million-customer utility has issued an increasingly pointed set of reports on the disconnects between current policy pathways and future targets. Its latest Mind the Gap analysis, released last month by parent company Edison International, reiterates findings from a joint state agency report in March that found that the state is not yet on course to reach its 2030 target of a 40 percent reduction in carbon emissions from 1990 levels. 

They said the state was falling behind,” Pedro J. Pizarro, president and CEO of Edison International, said in an interview last week. We picked up on that.” 

The results of its analysis of the policies now in place for reducing emissions from electricity generation, transportation and buildings are unsettling. If the state can’t speed up its historical pace of reduction of 1 percent of emissions per year, it will be 90 million metric tons short of its 2030 target of no more than 260 MMT across its economy, the report states. Even the existing carbon-reduction policies now in place will leave California 30 million metric tons short of that target. 

(Edison International)

To make up that deficit, the state’s course must be adjusted within the next 12 to 18 months” to achieve a fourfold increase in historical reductions, according to the report. That’s a daunting task, and California’s law that sets those goals, 2018’s SB 100, doesn’t provide an option for missing it, Pizarro said. 

We realize you can’t do anything overnight,” he said. But on the other hand, we’re now eight years and three months away from 2030, so you can’t have policy taking five years to be implemented, because by then it’s too late. […] Now that we understand where the economy needs to head and how a big part of that will be clean electricity to electrify a number of sectors, how do we get there?” 

Electricity and the power grid 

Looking across the different sectors, the power sector, the resources side, is 10 percent of that gap,” Pizarro said. But it’s also foundational to achieving decarbonization in the other sectors since electric vehicles and buildings will need increasingly clean electricity to optimize their carbon-cutting potential.

(Edison International)

While the power sector is the closest to being on track to meet California’s 2030 targets, climate change is bringing much more uncertainty to the picture, Pizarro said. California’s rolling blackouts during last summer’s regionwide heat wave, as well as the threats of heat, drought and wildfires impacting its future grid reliability, require a planning process that’s sampling more of those tail events and providing the insurance to deal with them,” he said. 

California regulators and utilities have taken a more aggressive approach to these challenges of late. Earlier this year, the California Public Utilities Commission ordered the state to add 11.5 gigawatts of carbon-free resources to meet the state’s peak grid demand by mid-decade, when its last operating nuclear power plant is set to close. But this recent order comes after years of delayed action from the CPUC’s Integrated Resource Plan process, making reforms to that process the top item on SCE’s proposals for speeding up decarbonization of the electricity sector. 

The long-range investment needs are huge. Research from SCE last year showed the need for $250 billion in clean energy, energy storage and grid investments through 2045. About $175 billion would go toward deploying 80 gigawatts of new utility-scale clean power (primarily solar), 30 gigawatts of rooftop solar and 30 gigawatts of utility-scale energy storage, while the remaining $75 billion would go toward investments in the transmission and distribution grids. 

Transmission projects can take a decade or more to complete, however, and California grid operator CAISO is struggling to manage the flood of new clean energy projects and coordinate the transmission needed to integrate them into the grid. SCE’s policy proposals center on reforms that would cut at least four years out of the time it now takes to complete these projects to meet its targets. 

Meanwhile, statewide electricity demand will grow by about 60 percent, and peak demand by about 40 percent, through 2045, according to SCE’s analysis — a significant shift from what’s been a largely flat per-capita demand over the past decades due to the state’s aggressive energy-efficiency policies. 

As we look at 2030, for Edison we still see load staying fairly flat — lots of electrification happening between now and then, but lots of potential for distributed generation and energy efficiency,” he said. But it’s after you go past 2030 where we see the real big pickup in demand and load. That will call for significant grid investment.” 

Transportation and charging 

A sizable portion of that new load growth will come from electrifying vehicles. Transportation accounts for about half of California’s greenhouse gas emissions, and it is also responsible for most of its air pollution, making it a major target for a quick shift to clean electricity. 

But that need for speed isn’t matched by current policies, which could leave the state roughly one-third short of its transportation decarbonization goals by 2030, according to SCE’s analysis.

(Edison International)

Multiple policy changes are needed to close this gap, Pizarro said. First, our analysis suggests that the state will need to have something like 8 million electric vehicles on the road by 2030. You have various state-sponsored analyses that also have something around that 8 million mark. Yet the official state target today is 5 million,” under a 2018 executive order from then-Gov. Jerry Brown. 

That needs to be updated because that feeds into all kinds of processes at the state level,” he said. Those include how state agencies like the California Air Resources Board and the California Energy Commission set the rebates and incentives needed to cover the difference in upfront cost between EVs and fossil-fueled models today, particularly for low-income customers to step into their first purchase.”

The second piece is charging,” he said. You need the deployment of chargers to keep pace [with] and maybe [even get] a little ahead of the vehicles themselves. And the need is huge.” 

Last year, the CPUC approved SCE’s ChargeReady and ChargeReady Transport programs, opening the door for more than $800 million in incentives and investments to deploy nearly 40,000 EV chargers over the next five years. It’s the single biggest utility charging program in the country — but it still adds up to less than one-third of the chargers needed in Southern California by 2025, Pizarro said. 

About $2.2 billion in EV charging funding from utility programs and state agencies is now embedded in state policy. But SCE’s analysis indicates that still leaves a $10 billion gap to build the 1.16 million publicly available EV chargers the California Energy Commission estimates will be needed by 2030 to support the nearly 8 million EVs that will need to be on the road by then.

(Edison International)

State policy also isn’t yet lined up to build the grid infrastructure to handle this massive new grid load, the report states. For example, while the California Energy Commission’s public charging assessments are based on a target of nearly 8 million EVs by 2030, its Integrated Energy Resource Plan process, which informs the load forecasts that are the basis for the CPUC’s and utilities’ grid plans, is still using estimates of between 3.3 million to 4.4 million EVs by 2030

Building electrification

Building electrification — switching natural-gas heaters and other appliances to electricity — makes up a smaller portion of the total emissions reduction needed to hit California’s 2030 goals. But compared to the generation and transportation sectors, building electrification needs a full kick-start,” Pizarro said. 

California is an epicenter of a broad-ranging policy effort to limit natural-gas use in new buildings. These include the more than 50 city and county governments that have instituted bans or restrictions on gas hookups in new construction and newly instituted statewide efficiency standards that will make all-electric homes the far more cost-effective choice for builders starting in 2023

But policies aimed at converting existing buildings from natural gas to electric heating and appliances haven’t yet picked up steam to the extent needed to hit California’s overall goals. The CEC reported last month that the state is still far from reaching a 40 percent cut in building-related emissions by 2030 that is called for in state law. 

SCE’s analysis indicates that current policies will convert only 10 percent of residential and 5 percent of commercial buildings to all-electric by 2030, compared to the 45 percent needed to play their role in overall reductions — a lag that will account for nearly one-quarter of the total shortfall in emissions-reduction progress the utility projects by decade’s end.

(Edison International)

While Pizarro commends the CEC’s new building codes, he says there’s more work that needs to be done.” SCE would stand to benefit from policies that shift support from natural gas to electric appliances, but gas industry groups and utility Southern California Gas have been fighting such changes, citing the risk that they could drive up consumer energy costs. 

Pizarro pointed out that electric appliances are more efficient and healthier choices. Heat pumps can double as air conditioners, and electric ranges and boilers lack the emissions that make indoor air less healthy. 

At the same time, some all-electric appliances are still more expensive today in terms of upfront cost, and they often require upgrades to building circuit panels to manage the extra electrical load. That’s why SCE agrees with multiple electrification proponents that upfront incentives are a critical tool. That’s particularly true for lower-income customers to make that electric choice the next time their water heater breaks or their range breaks,” he said.

Jeff St. John is the editor-in-chief of Canary Media. He covers the technology, economic and regulatory issues influencing the global transition to low-carbon energy. He served as managing editor and senior grid edge editor of Greentech Media.