SACRAMENTO, CALIF.—Growth Energy, the nation’s largest biofuel trade association, commended the California state legislature and Governor Gavin Newsom today as California finally became the 50th state to allow the sale of E15, a fuel blend made with 15% ethanol that costs less than ordinary fuel and can be used in 96% of all cars on the road today.
After its unanimous approval in both chambers of the California state legislature, Gov. Newsom today signed AB 30 into law. The bill provisionally approves E15 for sale while the California Air Resources Board (CARB) completes its review of the fuel. Once E15 becomes available at California retail locations, drivers in the state can expect to see a more affordable option at the pump—other states have seen an average savings of 10-30 cents less per gallon, with some locations offering E15 for up to a dollar less per gallon.
“The wait is finally over—E15 is now approved for sale in California, and the biggest winners will ultimately be the state’s drivers and their families,” said Growth Energy CEO Emily Skor. “E15 is a more affordable fuel option that the vast majority of drivers can take advantage of without having to buy a new vehicle. Its approval in California will generate more demand for American farmers, boosting the ag economy while allowing California residents to keep more of their hard-earned money.”
“Assembly Members David Alvarez, Cottie Petrie-Norris, Heath Flora, the state’s Problem Solvers Caucus, and Governor Newsom all deserve credit for their leadership and for their hard work seeing this bill through to its enactment,” Skor added. “We commend them for their commitment to Californians, and look forward to connecting retailers to ethanol producers to get this fuel out of drivers’ dreams and into their cars right away.”
Learn more about the benefits of E15 here.
The post Growth Energy Applauds as California Approves E15 appeared first on Growth Energy.
Data centers are creating a grid crunch, so what if they paid to solve it by upgrading our homes? I chat with Rewiring America’s Ari Matusiak and PG&E’s Carla Peterman about a new report proposing that hyperscalers fund household electrification to free up the grid capacity they desperately need. We explore how this reframes households as crucial energy infrastructure and creates a win-win-win for tech companies, utilities, and everyday people.
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(Active transcript)
David Roberts
Greetings and salutations, everyone, this is Volts for October 1, 2025, “Could we get hyperscalers to buy heat pumps for households?” I’m your host, David Roberts. I was at Climate Week in New York City all last week and, as you can probably tell from my slightly scratchy voice, I did a lot of talking. I recorded five podcasts over the course of three days on stage in front of live audiences, and all of them will eventually be uploaded to the feed.
The first, which I am sharing today, was focused on an intriguing new report from Rewiring America called “Homegrown energy: How household upgrades can meet 100% of data center demand growth.”
It’s built around a simple insight: Hyperscalers desperately need to free up capacity and reduce peaks so that they can connect to the grid faster; the quickest place to find spare capacity is in households; therefore, hyperscalers should pay to free up household capacity. They could get a third of the capacity they need by paying to replace electric resistance heating with heat pumps, and the rest by paying for battery storage and solar on suitable homes.
Could this work? To find out, I sat down with Ari Matusiak, head of Rewiring America, and Carla Peterman, who leads PG&E’s sustainability efforts. We discussed how the idea might be implemented, the barriers involved, and the need for a new narrative around electricity prices. Enjoy.
Host
All right, good afternoon, everybody. Thank you very much for coming. Please take your seats.
David Roberts
Hey, everybody. Welcome. I’m supposed to tell you we’re recording this. There’s going to be a little Q&A at the end if we have time, which I think we will. They also wanted me to tell you the reason we’re starting late is 100% me. I went to the wrong building and then tried to take a cab over here. And I don’t know if you guys have noticed, but it’s a little clogged up out there. So I then downloaded the Citi Bike app in the cab, leapt out of the cab, took my life into my hands, rode across Midtown Manhattan to get here.
This is why I had to change backstage. Anyway, we’re here now and it’s good. So just a couple of words of introduction, I want to keep my introductory comments very brief, but just a couple things. One is I don’t normally do this, but I’ve just been reading the news lately and I just want to say if you would like to support journalism without some of your money going to a malign billionaire, Volts is entirely listener-supported, 100% me and you, there’s no billionaires involved, there are no institutions, there’s no businesses. Yeah, please support Volts and things like it, I would say.
As we’ve heard already, there is a lot going on in the world of electricity and there are, I think, things happening that clean energy people maybe are not quite freaked out enough about. It’s hard to know how to calibrate your freaked-outness these days. There are a lot of things to be freaked out about, but basically we have demand rising very quickly thanks to data centers. We have electricity getting more expensive pretty quickly and we have renewables coming on the grid pretty quickly. And this sets the stage for opponents of clean energy to tell a very clear narrative: “Look, they’re trying to shove renewables on the grid. Consequently, prices are going up. Just when we need to be competing with China on AI, they’re trying to slow us down and make it more expensive by jamming a bunch of renewables on the system.”
Very easy narrative to tell, very intuitive. And they, I don’t know if you’ve noticed, they own a lot of media, so they’ll be able to tell that story. They’re already telling it. It’s already out there. Now we know in this room that the reason electricity rates are rising generally has to do with T&D, generally has to do with transmission and distribution.
Not generation, not who the generators are, mostly distribution, but facts and a buck fifty will get you a cup of coffee. It’s not enough to have the facts on your side. We need a story to tell that captures the imagination and that involves people. And that is why I really was glad to see the Homegrown report from Rewiring America. Because this is a narrative that puts ordinary people, gives them agency, gives them something to do, promises them lower cost, and makes them part of this project of growing a healthy electricity sector to compete, et cetera, et cetera, makes them part of, rather than a sort of footnote to, you know, because right now it’s just like China and hyperscalers and just giant entities battling in the heavens, and all we hear is the thunder from the clouds.
And most people, I think, don’t feel connected to that. And this is a way to give them a role. So I wanted to start by throwing it to Ari, and maybe you can just flesh out a little bit what the Homegrown report says the role of households is and what you’re trying to sort of how you’re trying to connect households to the hyperscalers and the data centers and these larger forces.
Ari Matusiak
Well, thanks, Dave, and glad for the Citi Bike app and your persistence.
David Roberts
Yes. Although I will say Manhattanites could do a little more to respect the bike lane. I’ll just throw that out there.
Ari Matusiak
That’s a whole other project. I don’t know if we have enough time.
David Roberts
These insoluble problems.
Ari Matusiak
That’s a different insoluble problem. I guess the way that I’d start is a frame because, as you said, there are these giant forces that are playing themselves out. And oftentimes it’s when you’re kind of faced against that, you can feel quite powerless. What is it that you can do? And at the core of Rewiring and our founding story was this idea that actually the kitchen table conversation is the most important conversation because there are five or six decisions people make about how they heat the air and water in their homes, how they cook their food, dry their clothes, what kind of cars they drive that comprise 42% of energy-related emissions.
That was sort of the founding premise of the organization based on Saul Griffith’s research back in the day. And that’s really important. But what’s actually connected to that is that those 42% of energy-related emissions are tied to the energy system. And what that means is that the household should be understood as energy infrastructure. And if you start from the perspective of the household as energy infrastructure, then you get to have a totally different orientation to what the solution set could be. Because now if the household is a player in the game, as opposed to a passive recipient of the game, then it can be part of the strategy that you lay out.
And so what the Homegrown Energy Report is really talking about is, in the face of all of this load growth, 128 gigawatts over the next five years, 93 gigawatts of that coming from data centers. For those of you not keeping score at home, that’s a lot. The 128 gigawatts is 16% of current US electricity supply. If that is all the load growth that’s being projected, what role could the household play? Our team did the analysis, and it turns out that if you run the math, households could provide 100% of the load growth—of that 93 gigawatts coming from hyperscalers—households could provide 100% of that if we invested in them.
And this turns into kind of a triple dividend play, because in that sort of thought exercise, which can be made real if we commit to it, the data center gets their capacity so they can run at the speed that they want to run at. The utility gets their needs in terms of having some energy capability and actually an investment in their overall energy plan. And the household gets relief on their bills to the tune of hundreds to thousands of dollars a year. And if you’ve looked at the increase in electricity bills for households over the last several years—30% increase over the last four years—but if you look at the graph for the last several months, it’s basically vertical in terms of how much prices are going up.
And so the premise of the report and really the frame that we want to look at things through is to move from a position of saying, “Wow, that’s a really bad situation for households. I hope somebody figures it out.” To instead saying, “No, the household is actually a core part of our infrastructure, a source of investment and an opportunity to solve multiple problems at once.”
David Roberts
Right. And just to flesh that out a little bit, for those who have not looked at the report, the idea here is that, like, every household has a little bit of spare capacity. They’re not using the full capacity that’s hooked up to their households. And data centers need capacity. And this is not really emphasized in the report, but something I like to emphasize, which I’ve said a dozen times on the pod over the past couple of years, is data centers need a bunch of energy; nuclear plants, real slow; gas plants, that pipeline is booked out through 2030 at the earliest.
The next fastest thing is wind and solar. But even those take some time. And there are land constraints now. So where can you get capacity the fastest? And it’s just sitting there in households right now not being used. And that is, I think, such a key insight. The one thing to take away from this is that hyperscalers and utilities need capacity. There’s a bunch of spare capacity in households. Hyperscalers have made clear they’ll pay pretty much any amount of money for capacity. Households have their bills going up and could use some of that money. So it kind of seems like a match made in heaven here if we can figure out how to do that.
So let me throw this to you then, Carla, because you, you know, PG&E’s got load growth. It’s got all the things, fire coming at it from all sides, you might say. Even more so than most utilities, you might say. So I wonder how you’re thinking about the role of households and what sort of things PG&E has done to date to try to sort of organize and access some of that capacity.
Carla Peterman
Well, thanks for having me here. Great to be in the room with all of you. And joining Ari in this conversation and as often is the case, California can be a little bit different. So let me just lay a couple of facts to help you understand where my perspective is coming from. And first of all, I fully agree that we’ve got to find solutions that are a win-win for many people. We want to meet all of our customers’ needs. Everyone’s still looking for it to be affordable, reliable, and safe. PG&E is uniquely situated because we’re the country’s largest dual-fuel utility.
So we serve gas customers as well as electric customers, which allows us to be quite agnostic about what that fuel mix is. And therefore, it’s a priority for us to be leading in terms of smart solutions around the energy transition. And as was noted, we are seeing electric rates rise around the nation this past year and next year. Our situation at PG&E is a little bit different. Over the last 15 months, our electric rate has gone down three times, most recently in September, and it’ll be going down again in January. Now, that’s been largely driven by the fact that our rates went up faster than others.
In some ways we were the canary in the coal mine about increasing electric rates. But our rates went up because of the wildfire mitigation in particular we were doing and having to respond to climate change. So we were seeing faster the cost of climate adaptation. So we’re talking about these rate increases now. They’re actually not reflecting what many utilities and communities are going to have to go through in terms of climate adaptation in the next several years. So, because of those increasing rates, that really required us to think differently sooner about how do we drive down rates and drive down costs.
The other two things to notice about our system are we were anticipating load growth anyway, but from electrification, not from data centers. So I’ll add a third perspective to what you were saying, David, which is hyperscalers need power, households have capacity. We actually have found that households don’t all have the capacity they need in order to meet their electrification needs. So how do we deliver more energy to households, more energy to industry, and do it in an affordable way? So some of the things that we have been doing have really focused on the household as infrastructure and is how do we increase the capacity for that household.
We find that 30 to 50% of our customers, when they want to add an EV, for example, they don’t have sufficient panel capacity. So we’ve been doing work with providers who can do smart add-ons to existing panels where you can add on to an existing 100-amp panel. And that allows for capacity for the EV without spending thousands of dollars on those service upgrades. The more we can reduce those service upgrades, the lower cost it is for customers. We also, though, know that to your point, there are customers who can participate in providing capacity to the grid.
And so we have a couple of programs focused on doing that. We have some virtual power plant programs that we’ve done in partnership with some of the big solar and energy providers.
David Roberts
The biggest in the country, is it not?
Carla Peterman
Yes, the biggest in the country.
David Roberts
The biggest operating VPP in the country.
Carla Peterman
So the positives we’ve seen is that those megawatts are showing up and they are providing capacity during some of our more stressed days. Where we need to see VPPs go is the opportunity to deploy that capacity at certain times of the day on a consistent basis. In my dream world you’re providing that capacity at distribution level, transmission level, in addition to providing it at the distribution level and supporting behind the meter needs. And so we’ve laid the groundwork and now we have to see where we can go with it. We’ve also looked at how you can use the capacity of electric vehicles to provide grid services as well.
So we have partnerships with major automakers. One I’ll highlight is with General Motors, you know, “vehicle to everything” we talk about where we provide an incentive for those who have trucks and there’s a discount on the equipment that allows a vehicle to export to the grid. Again, seeing what that situation looks like.
David Roberts
Just a quick follow-up on the VPPs though. Like one of the things you hear, you know, there’s been a lot of buzz and excitement about VPPs. And one of the things I hear kind of from utility people is like, “Whoa, whoa, you’re getting out over your skis here. We need to be confident that they work right, that you can call on them when you need them and they’ll be there.” So I’m just curious, like, having had now more experience with operating VPPs than almost any other utility, are they proving out? Like, have you found is it working as advertised?
Carla Peterman
So say yes, but it’s early on, right? So at the scale we’re talking about, we’re talking about 25 megawatts. When you’re talking about a real crisis on the system, you’re thinking about hundreds of megawatts. And so what we still have to be able to prove out is how you do it at scale and how you ensure that that load is going to—well, that supply will be there for many years to come and then doing it at a cost-effective price. Right. Ultimately, is it going to be less expensive than the grid alternative? And one thing about our system also to note, in our service area, our grid is utilized about 45% of the time.
So we have capacity at different times of the day. So where we’ve been focused on is also how do we shift a load in addition to providing it during those peak times. Again, slightly different than some other utilities around the nation where you are seeing capacity constraints now.
David Roberts
Right. And the final question about the VPP is because this whole conversation is really about customers, about individuals and households. Like one of the interesting things about VPPs to me is just the whole sort of social behavioral aspect. Like how do people think about it, how is it presented to them? So, are you doing any sort of like opinion surveys? Are you hearing from customers? I’m sort of curious what a participant in the VPP thinks about it or do they think about it at all? Is it just like a box they check and then they forget about it?
Carla Peterman
Well, I’m sure somebody’s doing a survey because that would be silly if we didn’t. I don’t know what they’re saying in the surveys, but I’ll say that you’ve touched upon something really important, which is if the customer doesn’t want to do it, it’s not going to work. Which is why we are partnering with companies and groups like Rewiring America that have a really deep community presence, that are trusted partners that can help us with that customer experience. You talk about customer as infrastructure. We actually have to go acquire that infrastructure. It is not sitting there thinking, “Oh, today I bought this house so I could serve the grid.”
As we go into look at our, you know, why are we here, Climate Week, is to reduce greenhouse gases. Where do we need to go that we haven’t gone before? It’s really the scale of electric vehicles, the scale of building electrification. The customer is going to be central in terms of us meeting our goals. And so we’ve got to find many ways for them to not only just participate, but also get value from participation.
David Roberts
Yeah, and I really like, can’t emphasize enough the weird little behavioral things like, you know, we technocrats think, well, if they get a lot of value out of it, they will like it. But that’s like, you know, people don’t behave rationally. So, you know, think back to Opower and its smiley faces, you know, like somebody needs to be thinking about these little things that might seem silly to us, but that trigger just the right frame of mind in a customer. I don’t know that anybody’s done a lot of work on that yet, but I would love to, if somebody wants to do that, I’d love to hear it.
Carla Peterman
I’ll just say one thing, David, with electric vehicles, we know that 80% of customers, when they’re buying a vehicle, consider an EV, 27% actually do the purchase. And what our surveys have shown is that there’s just decision fatigue all along the way. And so what we do know is that even if there’s value at the end, if the experience to get there takes too much time, even the most well-meaning folks will not do it.
David Roberts
Yeah, I mean, when I think about shifting our mindset from decarbonizing via consumer choice to decarbonizing via infrastructure, households as infrastructure, I just think about taking as many of those decisions as possible off the plate of the consumer. That gets dodgy if you do too much stuff that they don’t know what’s going on. You want them to have the information available, but like the fewer buttons they have to push, boxes they have to check, things they have to pull, the better. So Ari, back to you. So this idea, households have capacity, hyperscalers need it, utilities in between can coordinate in the abstract is very intriguing, but let’s go down a level and get maybe slightly technical about it.
How would that work? Is it the utilities that are coordinating this? Like if you’re going to ask hyperscalers to pay for household capacity, somebody has to measure the capacity, ensure that it’s real, value it on a per-unit basis, and then get the money from the hyperscalers. So give us a little bit more concrete sense of how you would structure a program like this. What would it look like?
Ari Matusiak
Oh, it’s not just going to happen.
David Roberts
You had a good idea.
Ari Matusiak
I thought we were done. So I think I want to come back to actually this, the conversation you and Carla were just having about consumer choice. And the way that we have thought about it is we have to move from this hyper-fragmented sort of environment where effectively the household is a price taker and is also in a position of weakness from understanding the information and what to do. My quip about that is I’ve never yet met somebody, maybe somebody in this room is the first, who says that they can’t wait for the new model of the water heater to come out because they’re totally upgrading.
So these are not decisions —
David Roberts
Somebody in this room, somebody got their eye on water-heater models.
Ari Matusiak
But these are not the kinds of decisions people sort of face against every day and think about. And so we have to move from a place of these being emergency crisis purchases to being something that a program that you are basically enrolling in and being a part of. And the power of that, as it connects to this idea of the hyperscaler, is that once you are sort of part of a group of households that are raising your hands, well, that’s also more interesting to the hyperscaler because they’re not going to knock on your door and say, “Have you thought about a heat pump today?”
That’s not how that works. It’s not efficient for them. So the way I kind of think this plays out programmatically is whether it’s directly through the utility or the utility in partnership with third parties, effectively organizing the program of what the upgrade pathways are. We know, for instance, you know, part of the report identified the six and a half million households that have old-school electric heating, resistance heating. This is like a bad gig for the household because it’s really expensive, it’s really inefficient. And if they swapped out to an efficient heat pump, they immediately are taking load off the grid because it’s using a lot less electricity, and they’re saving a bunch of money on their bills.
We can identify those households, we can take the sort of the perspective value of those households and say to the hyperscaler and utility partners, “Look, we get all these households assembled, the value of that is X.” Most of that X then translates into the subsidy to the household. So you’re taking the upfront cost and moving it way down. And then that becomes part of the outreach to get people signed up for that deal. And the power of that is once you move into a model where you are enrolling people in a shared program, it starts to make the economics work all the way through.
For the installer/contractor, having a batch of jobs to think about and schedule around is a lot more efficient than doing it one-off; for the OEM, for the manufacturing partners, having an opportunity to be the manufacturer of record for that batch of jobs is exciting to them. And all of that, by the way, helps with your question on M&V because now you’re standardizing the process and you’re able to more easily measure and verify what is happening because it’s being batched together and done in a systematic way. So the shift, sort of operationally, I think, is toward a programmatic strategy as opposed to a put-your-hands-together-and-hope.
David Roberts
And this is the utility running this, basically coordinating?
Ari Matusiak
Or doing so in partnership with a third party that is sort of acting on their behalf. Because I think ultimately, and that’s going to depend on the utility and how they think about that. But in the end, of course, the reference point has to come back to the utility, because in the instance of these hyperscalers, they are in conversation with utilities about how they’re going to get the sufficient energy and power that they need to run their shops.
David Roberts
Well, what you’ve just described is a way for utilities to get more capacity, which they all need. Could theoretically be a freestanding program. How directly do you envision tying that to hyperscalers? Like, would this just be—the utility frees up some capacity and then turns to the hyperscaler and says, “I can fit more of you now?” Or do you envision something more direct, like the hyperscalers are directly paying for that capacity in some sort of, like, in a way that you can see the line items, sort of like—you know what I mean?
Ari Matusiak
Yeah. I guess what I would say is hyperscalers are paying right now for power. And so to me, the equivalent opportunity is to say, well, there is this capacity that is latent in people’s homes. If we were going to pay a bunch of money over here for new generation, maybe some of that you still have to do. It’s not to say that there isn’t going to be new generation required, but if you were going to pay all of that money over here, and some subset of that could be handled through households, then that payment should go through whatever intermediary structure directly to the households.
And what you’re doing then is you are taking the amount of money—that sort of equipment costs. You’re taking it way down in terms of the upfront cost, because of how much is being paid for this power on the market as it is.
David Roberts
Oh, right, right.
Ari Matusiak
So it’s just sort of like translating what would have been paid somewhere else for incremental generation and saying, “The incremental generation is in all of our homes.”
David Roberts
Right, right, right. Have you talked—because this—now, like, it’s one thing for utilities to be confident that this sort of coordination of household capacity works and is reliable; now, you need also the hyperscalers to be confident in it. Have you talked to a hyperscaler about this? Like, are they—are they intrigued by this? I’ve been wondering, like I said before, like, they need fast power and this is the fastest. I’ve been sort of waiting for them to realize this and all come around. Like, they’re all having weird SMR dreams right now, but eventually they’re all going to arrive here. I’ve been waiting.
Ari Matusiak
That is a weird dream.
David Roberts
Have you talked to hyperscalers about, like, told them, like, “You’re surrounded by spare capacity, just figure out how to exploit it?”
Ari Matusiak
Yeah, we have been talking to the hyperscalers about this and I think they are interested, and one of the reasons why they’re interested is the sort of opportunity for the capacity. But another reason is because of the social license to operate the dynamics. And you can see this if you do a search around data centers and cover sort of like the local coverage of data centers—people are not uniformly excited about them coming to town. And they’re also not uniformly excited about the relationship that gets drawn between the data center coming to town and their bills going up.
And so if actually what can be sort of the story that can be told is the investment is being made directly into the households to lower their bills in order for the data center to come to town, that is a much better deal to sort of negotiate and a headline to have as opposed to the alternative. And so I think there’s a combination of factors here. The question that comes up invariably is, “Okay, but how quickly can you do it?”
David Roberts
It’s interesting in that this is like 0% technical problem and 100% soft cost; this is all soft costs, which are our Achilles’ heel everywhere else.
Ari Matusiak
This is why shifting to kind of a programmatic model is so important. And the thing that you started off by saying—the pathway and timeline to nuclear or the pathway and timeline to new gas—these are not themselves happening overnight. And I do think if you get the levers right, you can accelerate adoption. And we’ve seen this in sort of like a number of cases. So someone was showing me a story about, in Germany, balcony solar. This is like—but it’s an interesting case.
David Roberts
People have been hassling me to do a pod about that for months now. That’s the number one request I get. It’s on the books, everybody.
Ari Matusiak
Okay, thank goodness. But in Germany, there were 40,000 balcony solar units when the Ukraine war started. And in three years that number went to 4 million. And it had a lot to do with people feeling quite concerned about their costs. Now, balcony solar is not a sufficient answer for what we’re talking about here, but it’s a window into sort of the kind of dynamic that causes a migration toward a solution and a scaling of that. We have an example closer to home, which is that in Maine, Efficiency Maine created an amazing program for heat pump adoption because there’s a lot of delivered fuel in Maine, and delivered fuel is very expensive, and people pay a ton of money on their heating bills.
They set a goal for 100,000 heat pump installs, and they cleared it faster than they thought. And so they set another, added another 100,000 on top. And that was a subsidy that they were offering to households to lower the upfront cost. But what it did was it catalyzed that whole market and, in doing so, created a much easier acquisition process because people are all talking to each other about the heat pump that they got.
David Roberts
Well, Carla, let’s talk about data centers a little bit. I mean, one of the things we were talking about backstage is like, if I’m a household in a utility area and a data center wants to come to my utility area, it’s going to take a bunch of power and, like, block out other uses of that power. It might require infrastructure upgrades which will be shared across those households even though they’re not prompting it. You know, it doesn’t create a ton of jobs. It just sits there humming. So, like, what’s in it for me? One of the things I like about this idea is this gives you something concrete to tell households if data centers are coming.
You can say, “They’re coming and they’re bringing bags of money that they’re going to hand out to you.” As Ari says, a much better pitch. I would love to hear your thoughts. I mean, as a utility, how you think about data centers. They’re giant, inflexible loads. You know, there’s some investment when they’re built. What’s your sort of balance of considerations, and how are you interacting with data centers? What are you asking of them?
Carla Peterman
For us, affordability is top of mind. And so we became more bullish and interested in having a certain amount of data center load in our service area as a part of an affordability strategy. So we took a stand very early on that we want data centers to be beneficial load. So you bring this load online, it can help drive down the fixed cost for all customers.
David Roberts
Flexible. That just means them being flexible.
Carla Peterman
They don’t even need to be flexible.
David Roberts
What is beneficial load then?
Carla Peterman
So we have, as I was mentioning, we’ve seen an increase in our rates. And you called upon this due to some fixed infrastructure costs, specifically the investment in transmission and distribution. So the more kilowatt hours that we can bring onto the grid, given our grid in California is not utilized at its full capacity, we’re able to better utilize the existing infrastructure and spread those costs. So we estimate that for every gigawatt of data center load we’re able to bring on in our service area, that that can drive down rates for all customers 1 to 2%.
David Roberts
That’s assuming it’s off-peak though, right? Like if it’s drawing at the peak, that’s not beneficial, right?
Carla Peterman
Well, it depends, right? I hear what you’re saying. If it requires an additional contribution of generation, to your point, requires adding generation, then you’ve got to consider those costs with the add. But where we are right now in just our service area is that bringing that load on will drive down rates for all customers. So we started with that perspective with data centers. Now, I’ll say you look at utilities across the nation, one thing I hear commonly is “We don’t want to add this data center load on the cost or backs of residential customers.” So then the question is practically, how do you do that, especially if your system is not one where you’ve got additional capacity.
And so the moment that we have right now, and this is what I think Rewiring America is tapping into, utilities around the nation, regulatory commissions are looking at unique tariff structures for data centers requiring, for example, and you see this, no matter the type of state, contracts that are requiring data center providers to pay upfront for system upgrades, to make commitments to be on the system at least 10 years. Because there’s this big concern, if the load doesn’t show up, then we’re not going to see that beneficial aspect. So when I think about what the report is sharing, I think about it probably in a more simplistic fashion: we want to have people adopt electrification technologies in their homes. One of the barriers is cost.
We have data centers who have money. There is a source of money. You can get money from lots of places, but they’re a source of money and they are motivated to get capacity. So, to the extent you can connect those two together—but we are already, for example, we have existing programs for building electrification, but they could use more money. So, you could see strategies where you’re putting money into existing programs. And it’s really a timing issue. I think the challenge will be, and the opportunity is, when it comes down to what do you consider if the focus is on creating actual capacity, capacity that the data center can rely on, different types of building electrification can give you a different sense of confirmation of capacity.
So if it’s energy efficiency, that is something that will show up in the demand forecast and that it becomes very reliable. Right. And we have some experience with that. If you’re focused on the capacity that, for example, adding batteries and solar, well that’s going to depend on how the household uses it. Are they always self-relying on that solar and storage, are they using it as an affordability arbitrage? In which case, if they’re going to have to access the grid at some point, then that capacity is not firm. So I do think the details matter and particularly we have a service area where we have a relatively small portion of inefficient resistance electric heating, most of our heating is gas.
So when you replace that with efficient electric equipment, you’re actually not creating capacity on the grid. So I think what’s most important is to take these types of models and try them out, get local, look at what the system needs are, different solutions are going to work in different places. But again, we are in this rare moment where there could be a matching of both skills and interests. And we’re seeing data centers willing to have those conversations about one-off unique types of tariff structures in their interest, especially speed to power is top of mind for them.
David Roberts
Yeah. Have you developed a special tariff for data centers like PG&E has one?
Carla Peterman
So we have one that’s going through our regulatory review process, and specifically that tariff is focused on having an upfront payment from data centers to be able to pay for interconnection costs and having them sharing in some of the broader socialized costs that our customers face. And we’re looking with a lot of attention to the different tariffs that are coming up around the nation. We are, again, unique where the data center demand in California is not at the level it is in Virginia. And so for us, it’s a part of our driver of our energy demand, and no doubt it is the highest percentage of driver.
But we’re also seeing electric vehicle growth, building electrification be key drivers as well.
David Roberts
Interesting, interesting. One of the appeals of this program is that it is, financially speaking, sort of self-contained. And I wonder, not to drag unpleasant topics into all this, but Trump recently yanked back a bunch of money that was going to you, Carla—also this question will be for you too because I’m sure there are federal programs that you were relying on that were going to send billions of dollars to the state that will now not be doing so. So, Ari, starting with you, I wonder if—is part of the motivation for this trying to figure out things that don’t require new infusions of money?
Basically, like, is this part of what’s informing your thinking about what can we do? Where can we find money if we’re not going to get it, the money we thought we were going to get?
Ari Matusiak
I think what’s informing our thinking is a core premise that I started with and that has defined our strategy all the way through, which is that the household needs to be considered energy infrastructure, and so there are multiple potential payers for that infrastructure. It can be paid through policy signal, which was, of course, at the core of what the Inflation Reduction Act was. It can be paid through market actors who have sort of a speed to power interest. And it can be paid through sort of local, regional political dynamics or policy dynamics that are wending their way through.
And I think from my perspective, what is critically important is that we hold this idea of the household as energy infrastructure at the center of our orientation to how we solve the problem. And as soon as you do that, then you frankly create a different kind of conversation with these various market players or other policy players that I think is more durable. Because part of the dynamic in Washington is the political whipsaw, which is not unique to this moment. It’s just exacerbated by the whipsaw before, which is a political whipsaw about what we do about climate and what commitments we make and how we hold our investments.
We kind of go through this cycle. There’s a term called the solar coaster that everybody in the solar industry knows because it was, “When is the investment tax credit going to go away and is it going to be continued or is it going to go up or down or whatever?” And that was totally a political dynamic based on the expiring window of the ITC. And so, unfortunately, the risk in Washington is that you end up in this whipsawing dynamic, which is not helpful to meeting the moment from a climate perspective, and it’s not helpful to giving market certainty to all the players.
But there’s a secular trend now of load growth that was not in place when we started Rewiring America in 2020. That secular trend is not going away. And that secular trend creates an opening for solving the problem in a more durable way that, frankly, lasts beyond sort of a policy signal, because it’s what is right from kind of a market activation perspective. So that’s kind of how we’re approaching it and how we think about it.
David Roberts
Let me ask you to expand on that, because I meant to ask you about this before, but part of what you would like from this program is not just the immediate effects of the program, but, as you say, sort of standing up this—you kind of want this to run on its own once you get it up and going. Right. I mean, that’s part of the goal here.
Ari Matusiak
Yeah, there’s the sort of like the classic flywheel effect dynamic. Right. Once something gets going, it goes faster. And there are examples of this around the world. But the reality is that there is a mental shift that is really what we’re arguing for, where the household has forever been seen kind of as the passive consumer and therefore kind of in this, like, “Oh, we don’t talk about that.” We’re over here creating solutions on the supply side or thinking about other pathways. And I think the work that is happening at PG&E and that’s happening around the country is suggesting, “No, we have an opportunity to shift that, shift the household to being sort of a solution.”
And again, when that happens, that becomes a durable locus of investment that can crowd in capital from a variety of different actors because it’s always there. And the more it’s proven out, the more households are going to be around raising their hands, saying, “You know what, actually, I heard about that program and I would like to participate.” And so it gets us out of this, like, kind of scarcity loop where it’s like, “Oh, did we get the grand finale funding this year or did it get appropriated in the legislature? Oh, it didn’t. Oh, that’s so sad. Now we can’t do that anymore.” That’s not how you think about infrastructure.
David Roberts
No kidding. Carla, same question to you. Like, I wonder if PG&E has sort of formally started thinking about how we can be less exposed to this whipsaw, like how—you know what I mean? And just like, how much money are you losing? How big of an impact is all this having on you?
Carla Peterman
So, first of all, I think Ari really explained it well. And for us, our North Star is how do we decarbonize at the lowest societal cost while maintaining all the other things you’re supposed to with the energy system: safe, reliable, etc. So we have been articulating for several years that the cost of delivering for our customers what they need is more than our customers can afford. So we need to be pulling in different types of funding sources. And so we have, as a utility, been very focused on accessing federal funding as well. And we know that the reduction in some federal funds is hitting some of the partners that we work with.
And then also just outside of energy hitting the households that we work with, for their dollars are being stretched for a variety of reasons, which is why it’s ever the more important to make sure that our solutions work ultimately at scale without subsidy. Right. So again, you hit upon it, David. We said there’s a lot of soft cost we’re seeing. There was a quick mention about distributors and installers; they’re not yet on board at the level they should be. I mean, why every time someone replaces their gas water heater, are they not going to the most efficient electric appliance?
We’ve got to just get into that market. Our CEO talks about it as “anyways money.” You’re going to spend the money anyway: why not spend it in a way that then provides these additional benefits? So, I would say the variation we have seen in federal policy is all the more motivation about why the business case and the economic case just need to make sense standalone.
David Roberts
Yeah, yeah. And this is slightly off topic, but I’m just curious about it. So I’m going to ask you, is there any talk in California in PG&E, between PG&E and the administration, about moving some of the costs of—you know, there’s lots of policy costs imposed on PG&E. You know, California has all sorts of great policy goals, and a lot of those get put on the utility, therefore put on ratepayers, which is the most regressive possible way to fund anything. Is there any talk about lifting some of those programs, some of those costs out of the utility sphere and just paying for them out of tax revenue, which is a much more progressive source of—
Carla Peterman
So it’s a great question. I mean, we have this information on our website publicly that about a third of our customer bill is driven by policy and so versus what it costs to deliver the electrons or the therms to the system. And so it’s something that we and others have advocated before. There are certain costs that are in the bill that really are a social safety net and appropriate for being paid for by taxpayer money. I say, for example, we subsidize food for Californians not on the groceries bill but through statewide programs. But yet we use the electricity bill as a way to pay for these programs.
There have been conversations around that. In fact, there was some legislation that was passed this year that initially included taking some of the public purpose programs and even things like vegetation management, which—
David Roberts
Like fire prevention, everybody benefits from.
Carla Peterman
Right, exactly. You know, a significant amount of our bill is driven by fire prevention, of putting that to be paid for by taxpayers. I will say that part of the legislation ultimately was not successful and I’ll call it for a couple reasons which brings us full circle. One, those who depend on those programs have said, “You cannot rely on taxpayer funding.” There are cycles that taxpayer funding goes through. Sometimes we are in a surplus. California currently happens to be in a deficit. So the perspective is, “Well, you can rely that if it is in the electricity bill that that funding will be constantly available.”
I will tell you folks, we are hitting the limit of that capacity. Right. And so I think it is incumbent on us to be able to show how other solutions can work, like how business model solutions can work, or you’re less reliant on taxpayer funding because that just becomes less that folks can count on over the years.
David Roberts
Yeah, I mean, to say full circle, like, I just think we should all get absolutely comfortable with treating these hyperscalers like cash cows. They need us. They need the grid. They have money coming out of their wazoos. They’re wasting billions of dollars on stupid crap all the time. We should be hoovering some of that money out of them and using it for social purposes. And I don’t think we should have any apology about it. One more minute before I want to throw it to questions, but maybe—Ari, project your mind out five or ten years. What would success look like if this caught on? If the flywheel got spinning, what could we see in five or ten years?
Ari Matusiak
Well, I think first, from a posture perspective, the “what do we do first” mentality would start with the household. So where’s $1 going? Household. Where’s $5 going? Household. Where’s $50 going? Household. And then is there—what else is there? Okay, well, we can do that, too. But I think that’s sort of like a recommitment to the social compact that centers people and families and their communities as the locus of investment. That’s one sort of orientation point. But the second thing is five to ten years, if the flywheel is going to—I mentioned the 6.5 million households that have electric resistance heating: they’d all have heat pumps, all the inefficient air conditioning systems; heat pumps.
The battery storage and an opportunity for a scalable pathway for rooftop solar that works in the handshake with utilities would become kind of normalized so that the screaming deal dynamic is a thing that people are sitting around their kitchen tables talking about not being able to wait for, as opposed to, like, doubting or not knowing about. And, by the way, I think that’s a possible pathway for us because of the convergence of these forces, and it’s one we should be leaning into and not afraid of.
David Roberts
All right, thank you two for that. And are there any questions about this scheme?
First Audience Question
Thank you all so much. I have a question about how to make this process efficient. We are a little bit on a short time span that we have to do all of this work. And do you have any thoughts about how to make the household energy infrastructure in a way that doesn’t just create a ton of bureaucracy and extra steps?
David Roberts
How to keep soft costs low? What a great question.
Carla Peterman
So, yeah, I’m happy to start. So I think first and foremost, is talk to the household about what they actually want. I mean, we have piloted different demand response aggregation programs for many years, and the economics of that actual creating capacity just aren’t the selling point for customers. It’s a nice idea, but ultimately they’re not buying the equipment in order to be an energy provider. And so I do think that, first and foremost, improving that customer experience. When we talk to our customers, this is what I do know. In terms of our surveys, they’re not even aware of what building electrification actually is.
So we’re already jumping to, “Oh, you can provide capacity.” And it’s like, “What? What’s wrong?” So we have, for example, we have an induction cookstove loaner program for two weeks. You can just borrow it and see if it actually cooks your food the way you thought.
David Roberts
Oh, I love that.
Carla Peterman
Right. So we first and foremost have to get back to that immediate customer experience. So that’s why I would say as a precursor or must happen at the same time that we’re talking about how do they participate in the grid. What are your thoughts?
Ari Matusiak
I agree. And I also just wouldn’t sort of underestimate the power of compounding social trust and proof. Right. Like that there is a dynamic that takes place when people see their friends doing something and, you know, sort of know that the induction cooktop actually can make your food and keep it warm and all the rest, that becomes catching. And I think that’s a big part of what we have to lean into as well.
David Roberts
And I’ll just say, I mean, this is a great question, a great general question. You know, everybody’s following the sort of dialogue about abundance and all this stuff, that one of the critiques these days is that blue governance basically is—has become very bureaucratic. Everything bagel. Everybody’s trying to add their bits to every program. It ends up being slow. It ends up not working. To make Saul’s point for the gazillionth time, like, rooftop solar in Australia costs almost nothing. And it’s like three to five times the cost here. And almost all of that, that’s entirely soft cost, almost all customer acquisition and very basic stuff, that the wealthiest, most advanced society in history ought to be able to solve these kinds of problems.
So the question of how—I mean, it would be nice to go into something like this with that top of mind rather than once again trying to revise or fix things or respond to complaints. Just the general subject of governing more effectively, I think, is super, super important.
Second Audience Question
Hey, first of all, thanks for the report and everything. I work for Congresswoman Doris Matsui of California, and we have been trying to push legislation on virtual power plants, and nobody knows what they are. No other Republican office certainly has any clue about any of this. Some of these solutions are designed deliberately to sort of avoid the political process. But I’m just curious your thoughts on kind of like bridging the divide between industry knowledge and sort of like the lack of knowledge in the political system about some of these solutions.
Carla Peterman
I can’t say that we have yet cracked the nut on people understanding what we are talking about. I think, I think it goes back, Ari, you were touching upon this, which is creating the right sense of urgency that something needs to be solved and taking something like a VPP program and just extracting it to the highest level, which is, “You care about people, people say too expensive, this makes it cheaper.” And then there becomes a trust factor. I will say I think one of the things that I’ve observed over time is there’s a lot of implementation details.
And how do you trust the utility in partnership with providers to deliver on the overall outcome? I’ve seen policy over time get very much into the operations, and when you get policy dictating operational details, then that becomes challenging, and then that trust deficit—we own our role in that trust deficit. And it gets even to how different industries have kind of squabbled over some of the weedy details, and we’ve lost the fact that we actually are super aligned. Utilities are aligned with wanting to decarbonize. I know we are. We know the companies that we work with that we get into EM&V debates about their lines.
We’re missing the overall objective. So, I think that these last eight or nine months have shown that when there is a political will, there is a way. And I think as industry, we’ve got to come forward with some more simplified solutions.
Ari Matusiak
But.
Carla Peterman
But I think you’ve touched upon something which is interesting, which is things we’re talking about are not as easy to understand as “Build a power plant, produce energy.” But how do we make it sound that simple?
David Roberts
Yeah. Perhaps a complimentary Volts subscription for your constituents. That is a good question. And I often get that question too about the households. They don’t know what any of this means either. And I more and more like am trying to take this infrastructure thing seriously. And if you take it seriously, then they don’t need to know, right? You know, they just don’t need to know. You need to figure out ways to do this stuff at scale, and that can’t possibly be by educating and then persuading each of these households one at a time. So there’s that too.
The one other thing I would say about the education thing is I feel like we need—we get lost in these details because we don’t have big background narratives that are catchy, that are sticky, that people can reference against. And one of those, I think, which I think has real power, is the abundance thing, which is the best we can do with fossil fuels is continue growing slowly while we befoul our nest and ruin the earth for all future generations. If you want to desalinate oceans or to go to Mars or to just grow California’s population and GDP by 2x or 3x, if you want human flourishing on a big scale, you can’t do that with fossil fuels. You just can’t.
Like, we have to figure out how to harness and share the sun’s energy if we want a bright future. And all of these are steps to that. And I just feel like that shouldn’t be like a legislative aide’s job to tell that story. Like we should all be—you know what I mean? Like we should all be—there should be media about it. There should be popular media. Like we need some big catchy narratives in the background. And I feel like we have costs on our side. We have the future on our side. Like all the facts are on our side, and they just have a bunch of big bloated incumbents.
So, like, it feels like it ought to be winnable anyway. Distracted. You had a question?
Third Audience Question
Thanks for a great conversation. I had sort of a related question—I’m going to just pose it a little bit differently and see if we can, like, tweak that a little bit. I think, Ari, what you’re talking about is a really profound shift in our relationship with our utility. We mostly today have an energy relationship with our utility. I think about how much am I going to get paid or how much am I going to pay on my bill, or by how much can I reduce it?
And Carla, I think PG&E has thought, and Patti has talked a lot about this customer relationship in the energy transition. But capacity is a very different relationship than energy. Capacity is a very different concept than energy. And I wonder, as we move to maybe customer capacity as something that gets transacted, how does that change how PG&E might interact with its customers? What sort of expectations would it have vis-à-vis its customers? And who’s responsible for the delivery of that capacity? Is it Rewiring America? Is it Google or the contractor or the customer? Ultimately, at the end of the day, who’s going to have to bear the burden of showing up when you expect it to, otherwise we get a brownout?
Just be curious to hear a little bit how you might be thinking about that challenge.
Carla Peterman
Sure. So my short answer is yes. So what we think about as the role of the utility, it is as like the ultimate optimizer. We don’t need to be the ones who are necessarily procuring that capacity. And that’s not been, to date, how it’s been. I mean, we do, for example, for our generation and supply. Most of that is done through public purchase agreements with developers. And so there’s a lot of things that we as a utility are having to optimize for. So I would say we don’t have a particular view that we need to be directly in that mix.
What becomes complicated—as you said, it’s not just your utility, it’s also what your grid operator is. And so if you’re in a wholesale market, that brings in a whole different set of things with independent system operators that have to be managed. So I go back to first and foremost, what does it mean for the household to participate in capacity? It means they have equipment in their house that allows them to do so. So I think until we can actually get—be a different story if people had this equipment, they had EVs, they had electric appliances, but they were choosing not to participate in a program.
We haven’t even gotten past the first step where they actually get the equipment. So when we think about our relationship with the customer, it is around that point. And particularly, as I mentioned, what we have found is sometimes the delays that happen are because they need service upgrades. They’re trying to get things from their utility. So we’ve really invested in guides, in personal relationship managers where people can reach out and talk to someone and understand what’s happening. I would like the opportunity to connect this equipment to be faster than any other experience you have with the utility.
So that’s what we are focused on. And then the next question becomes, then how do you get that customer ready to participate in the market? However, I think if they trust us, then adding on this won’t actually be a leap. It’s the fact that they haven’t bought into the infrastructure itself that is the immediate challenge.
Fourth Audience Question
Kai Salger, Rewiring America, to your point on abundance, David. I’m building a jet boat right now. An electric jet boat. It’s like a jet ski, but for two people—
David Roberts
As one does.
Fourth Audience Question
As one does. 50 kilowatt-hour battery, it’s going to have a 16 kilowatt capacity to support the grid. And I’m trading it on the wholesale market and earning about 1600 bucks a year. So that was a statement about abundance. But to turn it into a question, how do I connect that under NEM3?
David Roberts
Oh, God. We got two minutes left. And you just dropped NEM on the—I’m going to take the better part of valor here and not try to discuss the NEM program. The way to get paid for capacity, right now there’s this enormous fight over rooftop solar and how people get paid for capacity. And that’s a very vicious fight. And I think, like—well, do you have anything to say on how that’s going to be restructured and whether it’s going to be broadened for other kinds of capacity and whether, you know what I mean, like how you’re thinking about that problem? Whatever you can say in 30 seconds.
Carla Peterman
I’ll say on the broader point, how we charge for electricity is going to matter if we want people to electrify. And the more we can be transparent about what you are paying for or being compensated for, the better. So one of the things that is being rolled out in California, investor-owned utilities, although it’s existed for publicly owned utilities for a while, over the next several months, are fixed charges. And fixed charges are really meant to be just more transparent about what is the cost of infrastructure versus what is the cost of the kilowatt-hour.
And so I do think we’ve got to make sure that our rate design is consistent with our objectives. Are we encouraging electrification? And in that rate design, are we making sure that all customers are adequately paying for what they use and do and are compensated for what they use and do?
David Roberts
Okay, I’m gonna take moderator’s privilege and get the last question here because this brings it up and it’s interesting. I was listening to an interview with the head of a company who is doing VPPs. It’s the biggest one, I can’t remember it now. But one of the points he made was that they are growing and succeeding in regulated territories, basically vertically integrated utilities, and are having a lot of trouble in wholesale markets getting things going. And the explanation was basically because, like, you can just go talk to a vertically integrated utility, you talk to them, they make a decision, and then they do it.
So I wonder, on this program specifically, this sort of connecting capacity with hyperscalers, are you far enough down the road that you started talking to utilities? And I wonder if that mirrors your experience or your expectations, like which kind of territory this might catch on and take off in.
Ari Matusiak
I do think you need a very strong utility partner to make these programs really scale. And there are a variety of types of that, right? There are the large-scale players like PG&E who are contemplating really complex questions about managing a transition over time because, as Carla said, they’re the largest dual fuel utility in the country. That’s a very different question than what a municipal electric-only or a co-op sort of utility has to face. So the flavor of the kind of the solution and the way in which it gets rolled out depends on the partners in the place.
But I think the sort of like the core thing holds, which is you need strong partners who are aligned toward the goal and are operating from the specific perspective of their market and their needs and their customers. Because ultimately it has to work locally. You can’t say, “Oh, hey PG&E, we have this awesome idea for all of the huge number of electric resistance-heated homes that you have in your territory.” And Carla says, “Yeah, we just don’t have that many of those actually,” because that’s not a great answer for them. But there are other solutions for variations on that theme.
And so I think as long as we have that sort of orientation to the local makeup, to the market makeup, and then you say connected to that, we have to have great partners who want to get it done as opposed to handwave around it. Then you can find your path to sort of that solution and that scale.
David Roberts
Got it. All right, thank you everyone. Thanks Ari. Thanks Carla. I really appreciate it. This is a very fascinating idea. I hope it takes off, I hope people think about it, talk about it. Thanks, everybody.
Thank you for listening to Volts. It takes a village to make this podcast work. Shout out, especially, to my super producer, Kyle McDonald, who makes me and my guests sound smart every week. And it is all supported entirely by listeners like you. So, if you value conversations like this, please consider joining our community of paid subscribers at volts.wtf. Or, leaving a nice review, or telling a friend about Volts. Or all three. Thanks so much, and I’ll see you next time.
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