Podcast Summary:

Energy Gang
Episode Title: California’s grid under pressure: affordability, AI, and the future of electricity markets
Host: Ed Crooks (Wood Mackenzie)
Guests:

• Amy Myers Jaffe (Director of Energy, Climate Justice & Sustainability Lab, NYU)
• Elliot Mainzer (CEO & President, California Independent System Operator - CAISO)
  Release Date: December 9, 2025

Overview

This episode dives into the complex pressures facing California’s electricity grid. Topics include grid affordability, market reforms, surging demand from AI/data centers, the evolving role of distributed energy resources, and ambitious plans for large-scale renewable integration. The conversation offers an inside look at how California is contending with rising costs, innovation, and the challenge of delivering reliable, affordable, and clean energy at scale—issues that resonate nationwide.

Key Discussion Points & Insights

What CAISO Does (03:27)

• Elliot Mainzer outlines CAISO’s core roles:
  • Manages high-voltage transmission and the state’s wholesale power market (covers ~80% of CA).
  • Conducts long-term transmission planning, resource interconnection, and maintains grid reliability.
  • Runs the Western Energy Imbalance Market (EIM), spanning 80% of the Western US.

Affordability and Rising Power Prices (04:57)

• Ed Crooks notes California’s consumer electricity prices have nearly doubled in 8 years (32.6¢/kWh).
• Wildfires, grid investment, and policy have driven cost increases.
• Key question: What can CAISO do to control or mitigate upward price pressures?

Elliot Mainzer:

• CAISO focuses on efficient, forward-looking transmission planning—using advanced technologies and non-wire solutions (06:26).
• Streamlining the interconnection queue has reduced bottlenecks and increased new resource onboarding.
• Since 2014, EIM has saved Western US consumers over $7.5B and significantly improved reliability.
• “Taking friction out of the system” is central to CAISO’s efforts (07:57).

"We're also operating a very efficient energy market...our western energy imbalance market...has produced over seven and a half billion dollars of production cost savings." – Elliot Mainzer (06:26)

Reforming the Interconnection Queue (09:02)

• CAISO now prioritizes projects with least grid impact and those aligned with existing/planned transmission and commercial interest.
• Not “first come, first served”—incumbents/load-serving entities get priority, aiming for ready, viable projects.
• Study queue reduced by ~70%; engineers now focus on more relevant projects.
• Aim for balanced process that prevents large-scale gaming.

“…transmission planning should not react to interconnection queues. It needs to lead interconnection queues because transmission takes so long to build.” – Elliot Mainzer (09:23)

Market and Legislative Changes: Regional Approach & AB825 (13:44)

• Governor Newsom and the Legislature recently enacted bills for consumer bill relief and market reforms.
• AB825: Allows CAISO to run a regionally governed Western EIM and a new regional day-ahead market.
• Opens the door to wider market participation across the West, leveraging resource diversity and improving affordability/reliability.
• Strong multi-state support (passed 101-2).

“…having that wide area energy market under that type of equitable governance structure will contribute to significant affordability benefits, not only in California, but in the other Western states.” – Elliot Mainzer (14:42)

Regional Market: Benefits and Governance (15:39)

• The EIM connects CA with the Pacific Northwest, Intermountain West, and Desert Southwest, leveraging regional resources (hydro, solar, gas).
• The market helps balance extreme events, e.g. sending CA’s surplus solar to Phoenix during heat waves or bringing in power from the Northwest during cold snaps.
• Unique governance approach: Each state retains authority over planning, procurement, and rate-setting—no centralized capacity market (preferred vs. PJM model).

“We have a grid that's bigger than the weather here in the West.” – Elliot Mainzer (15:54)

Data Centers, AI, and Load Growth (21:02)

• Significant future demand expected from data centers/AI.
  • CEC projects CAISO data center load to rise by 2.3 GW by 2030, 3.3 GW by 2035.
  • Compared to TX (22 GW) and VA/PJM (~10+ GW), California’s forecast is smaller.
  • High prices may be driving data centers to other markets.

“This is where…the artificial intelligence ecosystem was originated in California. We do have interest from the hyperscaling community…We are already in the business of building out the grid in Silicon Valley…” – Elliot Mainzer (22:45)

Flexibility Potential (25:01)

• CAISO and utilities are working to ensure data center siting and load growth are factored into grid planning.
• Future hopes for demand flexibility from large loads during peak periods—innovation is likely, but regulatory and market mechanisms must still be worked out.

Who Connects Data Centers to the Grid? (26:16)

• Initial interconnection is handled by utilities, with CAISO providing oversight through reliability studies and broader transmission planning.
• Process is collaborative but still evolving, particularly on integrating demand growth forecasts and flexibility options.

Distributed Energy Resources & Virtual Power Plants (31:41)

• Amy Myers Jaffe raises friction between utilities and third parties/consumers wanting to deploy their own batteries/solar.
• Concerns about utilities hampering aggregation (e.g., PG&E skepticism of virtual power plants).
• CAISO sees the bulk system batteries (14,000 MW) as critical for resource adequacy—have functioned as designed, “operators are pleased” (33:24).
• Ongoing efforts to improve grid visibility of distributed resources, apply Order 2222 (FERC), and enable distributed and aggregated resources to participate in wholesale markets.

“Our focus at the CAISO is always to try to stay ahead of the curve. We're trying to anticipate where things are going and we do not want to be a bottleneck to the development of resources.” – Elliot Mainzer (34:28)

• Still plenty to figure out: business models, compensation, cost allocation, resource adequacy contributions from virtual power plants.

Ensuring Reliability and Managing Growth (39:33)

• Scaling up renewables (target: +30 GW solar, +16 GW wind) will make grid operations more complex, but the challenge is “energizing.”
• California’s resource mix includes hydro, gas, geothermal, transmission connectivity—provides foundation for further variable renewables.
• Market integration and wide-area balancing are seen as keys to success.

"These are very, very meaningful challenges....We’re certainly bringing on a lot of new variable generation, but it’s being built on a base with a very healthy hydroelectric portfolio… a healthy transmission grid that we’re continuing to expand." – Elliot Mainzer (41:10)

Notable Reflections and Optimism

• Past concerns about renewable penetration (over 10%) now look quaint; the sector’s made “mind boggling” progress.
• Collaboration across the Western grid, and internationally, is vital.
• Human ingenuity and teamwork are driving solutions.

“In the long run, betting against human ingenuity has never been a winning bet.” – Ed Crooks (45:57)

“I’m ready to bet on us—and the next generation.” – Elliot Mainzer (43:17)

Notable Quotes & Memorable Moments

• “We’ve onboarded 26,000 megawatts of new generation onto our grid in the last five years.”
    – Elliot Mainzer (11:09)
• “Transmission planning should not react to interconnection queues. It needs to lead...”
    – Elliot Mainzer (09:23)
• “We have a grid that's bigger than the weather here in the west.”
    – Elliot Mainzer (15:54)
• “If there’s an opportunity to figure out the ability to bring some flexibility [from AI/data center load] to the equation, they’re going to figure it out.”
    – Elliot Mainzer (25:08)
• “We unequivocally understand the issue…we physically feel it…the potential on super hot days, you know, we know what the low duration curve looks like in California and we're encouraged.”
    – Elliot Mainzer (38:19)
• “These are assets and there will be learnings…I’m ready to bet on us and the next generation.”
    – Elliot Mainzer (43:17)
• “In the long run, betting against human ingenuity has never been a winning bet.”
    – Ed Crooks (45:57)

Timestamps for Major Segments

| Time | Segment/Event | |--------|--------------------------------------| | 03:27 | CAISO’s roles and Western EIM | | 04:57 | California price pressures | | 09:02 | Reforming queue/interconnection | | 13:44 | Affordability legislation & AB825 | | 15:39 | Regional market & resource sharing | | 21:02 | AI/data center power demand growth | | 31:41 | Distributed resources & VPPs | | 39:33 | Transmission, renewables outlook | | 45:57 | Final reflections on ingenuity/collab|

Tone & Language

The episode maintains an informed but approachable tone—balancing technical insight with relatable analogies (e.g. "grid bigger than the weather"). Guests are candid about both progress and obstacles, and there’s a forward-looking optimism throughout.

For Listeners New to the Episode

If you’re interested in how the energy transition is playing out on the ground in America’s most ambitious—and most expensive—state, this episode gives a granular yet comprehensive look into the tradeoffs, tensions, and innovations shaping California’s energy future. Whether you care about markets, policy, or technology, it’s a must-listen.