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Electricity from solar panels, dams, and wind turbines. Environmentally-friendly renewable energy concept. by
ASHLEY ARAX & NEIL MATOUKA posted 12.02.2024
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EmailOPINION – As California looks to continue its bold leadership in climate action and clean energy development, we need new solutions that enable the state to meet its ambitious clean energy goals while keeping rates affordable for Californians.Recent forecasts show that delivering on California’s goal of 100% zero-carbon electricity by 2045 will require quadrupling clean energy capacity alongside an enormous expansion in new transmission to reach regions around the state where the renewable energy is being made, such as the windy North Coast and the sunny Central Valley, to major cities.But financing new transmission lines through the state’s investor-owned utilities – as it is done today – has drawbacks. Consumer electricity rates for many Californians have risen by 50% in the last three years, and building much more transmission with traditional financing is likely to push rates even higher. New research from the UC Berkeley Center for Law, Energy & the Environment commissioned by Net-Zero California (NZC) and the Clean Air Task Force (CATF) explores an alternative financing model: public-private partnerships that could deliver critical infrastructure while potentially saving ratepayers up to $3 billion per year, or around $123 billion over 40 years.Public-private partnerships offer the best of both worlds of various financing models: access to low-cost public debt while retaining and leveraging the expertise and operational efficiencies of the private sector to speed up development timelines.A public entity using low-cost public debt by issuing a bond typically provides access to the lowest-cost interest rates due to the high credit rating of governments compared to traditional private sector borrowing. Additionally, public bonds and loans are in many cases tax-exempt, resulting in overall lower costs.This model doesn’t just save money; it also helps overcome delays common with traditional financing. A competitive selection of developers ensures that projects are awarded to the most capable and cost-effective providers, speeding up the development timeline for transmission projects essential to California’s clean energy future.Put simply, adopting a financing model that leverages both public ownership and private-sector expertise offers the best path forward, blending financial responsibility with operational efficiency. Existing state agencies already have some of the authority needed to implement a public-private model, but more work is required to determine the best approach.Policymakers are already taking note of the opportunities offered by these alternative financing and development models.Signed into law in September, Assembly Bill 3264 by Assemblymember Cottie Petrie-Norris directs California’s energy and
