Clean Energy Transition - California Climate and Energy Collaborative

Priority Area: Clean Energy and Building Decarbonization

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What is Clean Energy and Building Decarbonization?

The clean energy transition refers to the shift from fossil fuel-based energy systems (coal, oil, natural gas) to renewable and low-carbon energy sources like solar, wind, hydroelectric, geothermal, and energy storage technologies. This transformation involves changes in how we generate, distribute, store, and consume energy across all sectors—electricity, transportation, heating, and industrial processes.

California’s clean energy transition is crucial for meeting both local and state goals. The current energy system emits greenhouse gases and causes other environmental impacts including air, water, and soil pollution. Participants in SLECC engagements prioritized expanding local renewable energy and building decarbonization.

The State has committed to achieving carbon neutrality by 2045 and reducing greenhouse gas emissions by 40% below 1990 levels by 2030, targets that have been similarly set by over 250 local governments. The clean energy transition is fundamental to these targets, as the electricity sector represents a major source of emissions that can be effectively decarbonized through renewable energy deployment. With advances in storage technology and grid modernization, renewable energy increasingly provides reliable power while protecting against price volatility. The transition also supports California’s goal of maintaining economic leadership while reducing emissions. Clean energy industries create local jobs, attract investment into regions, and position the state as a global leader in emerging technologies like battery storage, electric vehicles, and smart grid systems. Clean energy development helps reduce local air pollution, particularly in disadvantaged communities, directly improving community health outcomes and addressing environmental justice concerns. Further, State and local government entities and utilities can achieve direct and long term operational savings by implementing clean and distributed energy resources on their facilities, which supports affordability for both taxpayers and ratepayers.

What future are we working towards?

State and local participants envision an integrated, distributed, and flexible future energy system that offers zero emission, reliable, and affordable power for all and is implemented by a knowledgeable workforce and just transition.

Which State Agencies are working on this issue?

This priority area is relevant to the function of:

California Energy Commission
California Public Utilities Commission
California Air Resources Board
Governor’s Office of Business and Economic Development
California Independent System Operator
California Environmental Protection Agency
California Department of Transportation (Caltrans)
Strategic Growth Council
Governor’s Office of Land Use and Climate Innovation.

What’s already working?

California’s Renewable Portfolio Standard (RPS) requiring 60% renewable electricity by 2030 has driven massive renewable deployment. The state’s cap-and-trade program provides market incentives for emissions reductions, while building codes increasingly mandate solar installations and energy efficiency. Large solar and wind projects have dramatically reduced costs through economies of scale. California now regularly achieves periods where renewables meet 100% of electricity demand during peak production hours. Aggressive storage mandates and declining battery costs have made California a global leader in grid-scale energy storage, helping solve renewable intermittency challenges.

The federal Inflation Reduction Act, before being dismantled, catalyzed significant investment and tax credits to support grid modernization, domestic solar manufacturing, solar access, home energy rebates, etc.

Local-level leadership has advanced progress in the State’s clean energy transition, propelled by a strong sense of urgency and importance in many regions. Initial CPUC investment in local government partnerships two decades ago supported energy and climate capacity at the local level. Since then, enormous progress is being made through community choice aggregation (CCA) programs and municipal utilities that purchase cleaner electricity for utility customers at lower rates, Regional Energy Networks that are transforming the market for efficiency and distributed energy resources, municipal building codes that exceed state standards, innovative solar financing and energy efficiency programs, and municipal solar and efficiency installations. Recent regional technical assistance programs support locally led clean energy progress. Local workforce and job training programs are building the market capacity to continue addressing clean energy in buildings. Local plans are engaging community stakeholders deeply to achieve community benefits alongside aggressive energy targets. Participants highlighted major progress in recent years in the development of wind, solar, and storage. Some regions, like the Inland Empire, emphasize their potential to implement much more, while others, like the Bay Area are more constrained and are looking at infill project opportunities.

What’s keeping us from getting there and how do we overcome these barriers?

To achieve the desired future outlined above, California will need to accelerate climate action across CA. Participants share that several key barriers impede progress and require further attention, as detailed below: Interconnection & Energization Processes, Grid Infrastructure, Investment Decisions, Funding, Siting & Permitting, Supply Chain, Assistance Coordination, Residential Decarbonization & Affordability, Workforce, Data Access, Codes & Standards, Community Microgrid Deployment and Utility Structure. On the left, toggle through these barriers to view details about challenges experienced across the state and solution opportunities at the state and local level.

Filterable Database

Barrier 1: Grid Infrastructure
Insufficient and aging infrastructure (e.g. battery storage, smart grid, transmission) cannot adequately support or optimize growing energy demand (e.g EVs, VPPs, AI, data centers, housing), the rapid transition to renewables, abundant day-time energy, and reliability as climate impacts increase.
Barrier 2: Interconnection and Energization Processes
Transitioning vehicles and buildings to clean electricity is challenging due to electrical capacity constraints, delayed load studies, long interconnection and energization queues, and process inconsistency managed by the utilities.
Barrier 3: Energy Affordability & Rates
California faces rapidly rising electricity rates driven by escalating system costs creating significant affordability challenges for many households and businesses, and undermining the financial feasibility of building energy and electrification upgrades.
Barrier 4: Retrofit Feasibility
Building retrofits including efficiency, electrification, solar and storage upgrades are often difficult for property owners and renters across the state to install at scale due to high upfront costs, old building stock, contractor and market dynamics, and confusing, complex, unreliable, or hard-to-stack incentive and financing programs.
Barrier 5: Codes & Standards
While California has one of the nation’s strongest statewide energy codes, weak enforcement and limited local capacity undermine its impact. Efforts to go further through local reach codes can be highly political and result in legal challenges, and are now constrained by a legislated moratorium.
Barrier 6: Utility Structure
Investor-owned utilities’ concentrated control over energy infrastructure limits public power and community solutions, creating legal and procedural hurdles for municipalization and keeping many projects unnecessarily under utility purview.
Barrier 7: Investment Decisions
Despite state goals related to distributed, localized energy resources, investments, regulatory decisions, and policies often discourage or hamstring clean energy deployment or favor centralized utility infrastructure.
Barrier 8: Workforce
The market of qualified workers necessary to construct and install clean energy projects and retrofits is not large enough, especially outside of major urban centers.
Barrier 9: Siting & Permiting
Siting, planning, and deciding on utility-scale energy infrastructure projects lacks transparency and alignment with societal needs, and faces community resistance in some areas, often those most remote.
Barrier 10: Data Access
California lacks consistent access to data about consumption, energy supply infrastructure, and other information that can inform CAPs, capital projects, and cost affordability impact analyses.
Barrier 11: Community Microgrid Deployment
Community-scale microgrids remain financially and technically difficult to deploy due to restrictive utility rules, undervaluation of battery reserves, and high coordination needs for EV fleets and other DERs. These challenges, compounded by PSPS outages and slow permitting, prevent microgrids from delivering reliable and cost-effective community resilience.
Barrier 12: Supply Chain
Global dependencies and geopolitical risks slows progress towards clean energy goals.

Local Solution Spotlight

The BayREN Business Program (Program) is an energy efficiency program designed to help small businesses in the nine Bay Area counties reduce their energy consumption, improve energy affordability, and lower operating costs through energy efficiency retrofits.

Since June 2023, the Program has completed 279 projects for hard-to-reach (HTR) businesses, which often have less than 25 employees, speak a language other than English, and lease or rent their facilities. Participating businesses saved an average of $3,300 annually on their utility bills because they reduced their energy usage by an average of 7,400 kWh annually. The average incentive provided was $18,000 per project, allowing projects to be no-cost or low-cost for these small businesses.

The Program uses a pay-for-performance approach where incentives are paid based on actual energy savings measured at the meter. This approach protects ratepayers from paying for non-existent energy savings. It also allows the Program to offer higher incentives to contractors to help offset the extra challenge of acquiring and completing projects for these typically overlooked businesses.

In 2026, the Program is expanding from only serving HTR businesses to also serving small businesses located in disadvantaged or low-income communities. These businesses have typically been overlooked by energy efficiency providers due to their lower-than-average energy savings potential and higher-than-average acquisition costs. Learn more at bayrenbusiness.org.

Description: Sami Hatter, Manager at Oak Hill Market in San Francisco, participated in BayREN Business to upgrade the store’s lighting and refrigeration systems at no cost using incentives, saving about $4,100 annually in energy costs.

A package of 2025 CA legislation aptly refocused on system cost drivers rather than cuts to energy programs. AB 825 was amended to cut energy costs and improve grid reliability by joining a Western regional power market. SB 254 sets up a public financing system to build new transmission lines, and bars utilities from earning profit on the next $6 billion spent on wildfire-safety upgrades. In addition, AB 1167 (the California Ratepayer Protection Act) prohibits investor-owned utilities from charging customers for political lobbying, promotional advertising, and shareholder-related expenses, requires transparency about who pays for utility ads, and mandates financial penalties for violations. Oregon’s HB 3546 creates a classification of service for large energy use facilities (e.g. data centers) with rates proportionate to the costs of service.

City of Colton’s municipal utility maintain stable rates and energy efficiency and weatherization programs that may not maximize state-reported savings, but better serve their low-income, high-need customer base.

RENs have a successful model for bringing energy efficiency programs to hard-to-reach communities and demonstrating the economic value of localized demand reduction.

Local programs like Watts Rising and Habitat for Humanity programs are addressing structural building needs and going beyond basic energy saving upgrades.

CPUC R.87-11-012 established an annual Cost of Capital (CoC) proceeding for IOUs. In December 2025, the CPUC voted to drop the return on equity for Pacific Gas & Electric, Southern California Edison, Southern California Gas Company and San Diego Gas & Electric by 0.3 percentage points each. to just under 10 percent, which are more consistent with national trends. Legislation introduced in both Rhode Island (H 5018) and New York (S5687) proposes to establish a fixed ROE of 4 percent annually for electric and gas utilities.

CEC has funded local programs and projects through recent one-time sources through the IRA DOE HEERHA, HOMES, EECBG programs and the related Local Government Challenge and regionally administered Equitable Building Decarbonization (EBD) program. San Diego County recently voted to invest $500K to expand the EBD program to all unincorporated areas.

The Southern California Tribal Energy and Climate Collaborative is one of six SGC RCC recipients formed to help 25 Tribes access multiple sources of funding. Thanks to a CPUC grant designed to create equitable engagement in regulatory proceedings, SoCalTEC was successful in rallying tribal and local organizations and legislators around extending the CPUC Self Generation Incentive Program rebate deadlines for up to 200 energy storage projects.

Local and regional agencies have been supporting retrofits for decades. The CPUC established Regional Energy Networks (RENs) in 2012 as non-utility administrators to fill gaps in localized, cross sector energy efficiency delivery, funded through ratepayer funds for Energy Efficiency (EE). RENs often work to stack incentives with other sources for IDSM and DER measures to keep costs as low as possible. The South Coast AQMD Go Zero Program dedicated $21 million in mitigation funds to cover zero emission technology conversions, targeting overburdened communities by helping them find and stack incentives.

The US DOE’s Interconnection Innovation e-Xchange partners with national labs, utilities, grid operators, state and local governments and others to share data, develop roadmaps, and facilitate new solutions to improve interconnection procedures. The DOE’s Distributed Energy Resource Interconnection Roadmap also compiles goals and solutions to increase data access, transparency, and security for interconnection, among other process improvements.

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Additional Resources

Please share any additional resources you would like to include by emailing eecoordinator@civicwell.org.