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California’s Energy Crisis Explained

There is a large debate about California’s decision to move towards a “greener future.” When the governor of California told the world that California’s goal was to reach zero net energy by the year 2030, the world had mixed opinions. It was a pioneering goal, one that had been unseen in the history of the United States. Critics claim the goal is outlandish and unfeasible. They say trying to move away from the large, oil dependent grid is expensive and wasteful. Well let’s dissect that.

Firstly, California had the fifth largest economy in the world, up until the Coronavirus hit. Let’s take a look at some of the reasons why. The California Energy Commission was founded in 1974 to help to protect the environment, shortly after the Santa Barbara oil spill. They set the laws and regulations for energy efficiency regarding buildings, cars, and so on. The changes California has made so far have saved California billions of dollars annually. These changes towards efficiency save the state money because they prevent time and energy from being wasted. So yes, one way to look at it is that it will be costly to create a whole new system. But when you actually look at the numbers holistically, it is easy to see that these expenses are actually investments. Overtime these investments are not only paying for themselves, they are eventually generating income and free energy.

Secondly, in this debate we should compare the cost of the old system versus the new. Some look at the rolling blackouts in California and say, “See! Moving towards green energy is not working. California is experiencing rolling blackouts!” This is a skew on reality. Yes, California does experience rolling blackouts. PG & E has consistently cut off the electricity in California to prevent wildfires. The second reason is because their system cannot handle the energy load in peak seasons. Let’s remember California is the desert! So, the reason California is moving towards green energy now is to solve that problem. If people can create smaller grid systems and generate their own energy through solar panels or other sources, they can still have energy when the large grid cannot provide. It’s not going to fix the problems overnight, and there will be gradual steps towards complete energy independence.

When calculating costs for making this change, we also have to look at the costs and consequences from not changing. When businesses have their energy cut off, think about how much money is lost. That needs to be taken into account. Also, think about how much money it costs to maintain a 100 year old grid system that is falling apart. One article says it would cost trillions of dollars. PG&E has consistently declined to upkeep proper management because it’s so costly. When you look at it this way, you can clearly see the decision is between using money to upkeep the old system or to create a new system. And this new green system is not as costly as you might think. In the next section let’s take a look at associated costs and return on investment.

Green Incentives for Green Change

Some question why the government feels so comfortable giving cash incentives to California residents who make energy efficiency upgrades to their homes. Incentives typically involve tax credits or special loan terms. Well, one reason the government or private parties can afford to offer these benefits, it due to energy savings. For example, a home that installed the solar panels will see a dramatic reduction on their energy bills. This reduction is guesstimated before installation and used to determine the loan terms. That way there is little to no upfront costs. A similar process is used for homes that qualify for “green mortgages.” Theoretically, installing a green energy system should not change your monthly bills by much. Furthermore, once the system is paid off all energy savings are translated to direct savings. Another benefit that gives the state a better budget to work with is return on investment. Over time these investments are adding property and land value. Offering a tax credit is nothing compared to the money the state will make off of increased property value. Increased property value means more property tax for them. At the same time this is good for homeowners, who can afford it because they are seeing increased savings. It’s truly a win, win! 

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