June 27, 2025 Newsletter: California Supreme Court to Revisit Rooftop Solar, Why I Like "Landman," etc

Also: an announcement that I've accepted a position as senior research fellow at the Institute for Provisional Trust Mechanisms

I had a piece all set to go this week on legislation that has led to multiple crises in California’s energy sector, (i.e., Senate Bills 100 and 350) but I shelved it.

An excerpt:

A scenario in which California decarbonizes at scale, while phasing out fossil fuels and electrifying everything, is not technologically feasible in the near-term, nor is it affordable. Whether Californians actually want this vision is perhaps debatable, but it’s clear that their elected officials have turned the legislature into a distortion chamber where such dreams have become toxic mutagens.

Here’s a lengthy footnote:

In 2023, Stanford’s Center for Carbon Storage published “Pathways to Carbon Neutrality in California,” which modeled the state’s potential transition to net-zero by 2045.

Two important takeaways:

• California can achieve only about half of its emissions reductions using commercially available low-carbon technologies e.g., solar, wind, heat pumps, and electrification.

• There is no silver bullet. The study shows decarbonization demands a suite of expensive solutions (carbon capture and storage, bioenergy, hydrogen, efficiency gains, permitting reforms, and negative-emissions technologies like direct air capture).

In short, the scale of buildout, the cost of innovation, and the necessary bureaucratic reforms make near-term, affordable decarbonization and full electrification technologically improbable and economically burdensome.

The rest of the piece might be a little too rude and heated for my current disposition. In the spirit of Jules Winnfield, I find myself being more selective lately about how I spray my rage around. Maybe I’ll publish the whole thing in a couple of weeks, I dunno.

Meanwhile, here are some other thoughts unrelated to the post.

ROOFTOP SOLAR

For years, I’ve made a lonely, unpopular argument that California’s rooftop solar customers have been unfairly maligned by a so-called "cost-shift" narrative (or Reverse Robin Hood characterization), which I believe is based on false assumptions.

Now, in a rare and significant move, the California Supreme Court seems to agree that the CPUC’s treatment of rooftop solar warrants additional scrutiny.

• Earlier this month, the Court heard oral arguments in a case challenging the CPUC’s controversial “Net Billing” tariff (aka NEM 3.0). The case is now under submission. (Some video is available here).

• The case, brought by the Protect Our Communities Foundation and the Center for Biological Diversity, argues that the CPUC failed to follow state law when it based solar export compensation on the Avoided Cost Calculator, a tool that sharply reduces payouts to solar customers.

• The plaintiffs contend that the Avoided Cost Calculator improperly excludes key benefits (e.g., grid resiliency, avoided methane emissions, transmission savings, and land-use impacts), which are legally required as part of a costs-and-benefits analysis under the Public Utilities Code Section.

Here’s an instant analysis, via the grapevine.

While rooftop solar proponents hope the Court will overturn the CPUC’s NEM 3.0 policy, the more significant issue may be the standard of judicial review.

Typically, when a CPUC decision is appealed, the Court of Appeal defers heavily to the CPUC, and overturning a decision is rare. But the plaintiffs argue that this deference is outdated and violates a 1998 legislative amendment that requires courts to determine whether the CPUC proceeded lawfully.

Their argument has convinced the California Supreme Court to consider whether the lower court applied the wrong standard, which is significant, and could affect how all CPUC decisions are reviewed going forward.

LANDMAN

My wife convinced me to watch Landman, which I initially resisted. But with two episodes left in the first season, I have some thoughts.

I’m enjoying it. I like its drunken, screen-door aphorisms and general incoherence. It’s great low-calorie entertainment.

A few observations…

• In some respects, Billy Bob Thornton is playing Bad Santa again, only this time he’s working for Jon Hamm instead of John Ritter.

• The show can’t decide if it wants to valorize oil and gas work or if it wants to make moralistic statements about peak oil.

• The show is obviously trying to court a “blue-collar” audience but the effort feels more like a contrived sidestep from the dried-up cash flow of prestige-woke content than a genuine cultural instinct.

• Its goofy digs at renewable energy and green capitalism are of course warranted but too boilerplate, too eager to please. (“Honey, there ain’t nothin’ renewable about it!”)

Nevertheless, I sometimes enjoy being seduced by bad TV, and seduced I have been. Relatedly, Landman has made my wife more Tex-curious. Over the years, I’ve tried to pitch her on a relocation to Texas (with exploratory trips to Austin, Johnson City, Houston, and San Antonio) but she’s always been repelled by the heat. However, Landman is selling her on the idea pretty hard. The show’s terrible/great country soundtrack, its Mexican food, its Friday night lights, its pickup trucks — all make Texas look like an inviting refuge from the dystopian West Coast.

THINK TANKS

Several years ago I had a website with a random text generator, and I configured it to produce dozens of fake think-tank names. (I had other generators too, some of which went viral thanks to a once-popular site called Boing Boing.)

Some examples:

• Acreage of the Mind Institute

• Council on Intercontinental Exchange Crises

• Council on Narrative Adjacency

• Degrees of Consideration Council

• Estate for the Council of the Announced

• Fellowship of American Conglomerates Foundation

• Foundation for Debt Imminence

• Forum for Reclaimable Asset Design

• Globalization Council of the Aggrieved

• Gladiator Scribes Institute

• Heritable Wealth Consignment Foundation

• Institute for Durable Surplus

• New Urbanist Friends of Wealth

• Nepotism Watch Council

• Policy Awareness Forum

• Speculative Realism Institute

• The Alliance for Redefined Freedoms

• The Friendship of Knowledge Society

• The Smart Policy House of Objectives

• The Vector of Democracy Council

• The Where-Wealth-Dwells Institute

It recently dawned on me that it would be entertaining to train ChatGPT to spit some of these out, and it delivered hundreds of them, e.g.,

• Advisory Panel on Policy without Precedent

• Center for the Governance of Marginal Impact

• Commission for the Recitation of Priorities

• Consortium for Managed Liquidity Drift

• Fellowship of Transnational Ledger Ethics

• Foundation for the Elastic Commons

• Institute for Predictable Yield Structures

• Institute for Provisional Trust Mechanisms

• Institute for Yield Without Expectation

• Network for Policy Permanence Modeling

• The Gradient Futures Institute

ChatGPT also generated fake bios for Think Tank brass, e.g., “David Clark,” whose personal interests involve “measured routine and ambient structure” and “Mary Adams,” who “lives in northern Virginia with her family and maintains an ongoing interest in procedural ethics, static modeling environments, and passive architecture.”

ENERGY LINKS

DEFERRED BATTERY RESTART by MOSS LANDING: California’s Elkhorn battery facility, one of the largest grid-scale energy storage projects in the state, came close to resuming operations recently following the big January fire at the neighboring Moss Landing Vista plant.

While Vista’s blaze destroyed its 300-MW lithium-ion system and forced evacuations due to toxic smoke, PG&E’s adjacent Elkhorn facility suffered only minor environmental impacts from drifting ash. Following months of cleanup and safety checks, PG&E initiated a cautious restart but halted it upon discovering a clamp failure and coolant leak in one of its 256 Tesla Megapack units.

A successful restart would have restored 182.5 MW/730 MWh of storage capacity to the Silicon Valley grid prior to summer’s first heat wave.

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ENERGY-as-a-SERVICE: PV Magazine describes how C&I businesses are quietly undergoing a transformation in how they manage their on-site energy. What once began as straightforward solar installations aimed at lowering utility bills has evolved into a more strategic, resilient, and financially sophisticated approach. Rising maintenance costs for aging solar systems are prompting many businesses to sell their solar assets to energy developers, which frees up capital for reinvestment while allowing the companies to retain the benefit of on-site solar via long-term Energy-as-a-Service (EaaS) agreements.

Under EaaS and other third-party ownership models, energy providers manage, operate, and upgrade systems, often transforming basic solar arrays into advanced microgrids with batteries, dispatchable backup, and intelligent controls. Each microgrid is custom-built to match a facility’s load profile and resilience needs.

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HIGH GAS PRICES: The Breakthrough Institute covers how high gas prices in California are the result of multiple layered policies: a boutique gasoline blend, CARBOB, that isolates the state’s market; a Cap-and-Trade system that raises per-gallon costs, and the Low Carbon Fuel Standard (LCFS), which has incentivized refineries to exit or convert to renewable diesel.

Additional problems are declining in-state oil production, port capacity constraints, and a mystery surcharge in the retail market that nobody can explain. Now, with looming shortages and predictions of $8 gas, California must either continue on its inflexible climate path or take urgent steps to stabilize fuel supplies.

These steps might include:

• Relaxing air-quality enforcement;

• Reforming retail regulations;

• Expanding import infrastructure; and/or

• Abandoning CARBOB altogether.

Each of these choices would mark a retreat from long-held goals.

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NORTH AMERICA’s LARGEST HYDROGEN FACILITY: Element Resources plans to invest $1.85 billion to build North America’s largest green hydrogen facility in Lancaster, California. The Lancaster Clean Energy Center (LCEC) will be powered by on-site solar using a fraction of the groundwater that was previously used for agriculture on the site. Construction is scheduled to begin later this year, with the facility operational by mid-2027. Element Resources is also considering a second facility in Boron, California.

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REINING in the NRC: Joshua Antonini discusses Executive Order 14300, which requires a major overhaul of the of the Nuclear Regulatory Commission (NRC), an agency widely viewed as the main obstacle to new nuclear development since its inception in 1975.

The order targets the NRC’s culture, structure, and regulatory framework, mandating that the agency:

• Begin weighing national security and economic benefits alongside safety in its decision-making;

• Streamlining its approval timelines; and

• Laying off staff where needed to improve efficiency.

A central feature of the EO is the imposition of strict licensing deadlines. The order also calls for a reassessment of the long-standing “linear no-threshold” model of radiation exposure, which assumes any amount of radiation is harmful.

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UNDERWATER DESALINATION: California-based OceanWell uses deep-water “pods” tethered to the ocean floor at depths of 1,300 feet, which allow desalination to occur underwater rather than on land. Their tech borrows from infrastructure originally built for offshore oil and gas operations e.g., corrosion-resistant systems, electric actuators, and underwater robotics.

Each production pod, about 40 feet long and 25 feet wide, uses ocean pressure to drive water through membranes, producing fresh water while returning diluted brine to the sea. Because only the fresh water needs to be pumped to shore, the process cuts energy use compared to traditional onshore plants (an estimated 2,250 kilowatt-hours per acre-foot versus the typical 3,500).

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UTILITY RATES: Former Sempra executive Mark Ellis describes how utilities exploit regulatory complexities to extract mega-profits at the public’s expense. He dives into return on equity (ROE), which I’ve touched on here as well. The ROE metric is set by regulators to determine how much profit utilities can earn on their infrastructure investments. Ellis makes the argument that ROEs (typically around 10%), are too high given current economic conditions and utility risk levels. He argues for a number closer to 6%, a difference he estimates costs U.S. households $50 billion annually.