USA – CALIFORNIA Trends and Developments Contributed by: Nora Sheriff and Samir Hafez, Buchalter
Act’s tax credits are terminated, the demand for electric vehicles, solar panels, wind turbines and batteries is expected to decrease significantly, with some analysts forecasting wind and solar installations to drop by half by 2035. The price for power may rise over this time period as well. The federal budget bill, with its planned repeal of the tax credits for clean energy generation, will significantly reshape the power grid; it has already caused delays and deferrals. Republicans have indicated that the Senate will take up the bill in early June, and that they intend for the final legislation to be passed in July. On 10 April 2025, four Republican senators repre- senting Alaska, Utah, North Carolina and Kan- sas issued a letter to the Senate majority leader expressing concern over a full-scale repeal of existing energy tax credits. The senators called for the reconciliation process to consider each existing tax credit for its ability to: • spur new domestic manufacturing and invest- ment; • reduce consumer utility bills; and • ensure certainty for businesses that have already made meaningful US investments based on the current credit structure. This sentiment suggests that the Senate may push for a less abrupt and severe phasing out and repeal of energy tax credits, in order to secure the 51 votes needed to pass the bill. The ultimate outcome is not yet known. West-Wide Regional Integration: In Progress But in Flux Despite uncertainties, grid modernisation efforts in and around the state are progressing steadily, as California and its neighbours move towards a more synchronised energy market.
The California Independent System Operator’s (CAISO) Western Energy Imbalance Market (WEIM) continues to grow, with 21 participating balancing areas, representing over 80% of the Western Interconnection’s load, now engaged in sub-hourly co-ordination as of Q1 2025. Build- ing on the WEIM’s success, CAISO is currently planning for the implementation of the Extend- ed Day-Ahead Market (EDAM), scheduled to launch in 2026. According to CAISO, EDAM is designed to deliver additional benefits to those realised in the WEIM through greater reliability co-ordination and resource optimisation. So far, entities in Oregon, Washington, Nevada and other Western states have committed to partici- pating in EDAM, and entities in Idaho, Nevada and Montana have expressed strong interest in participating. Though EDAM has yet to launch, efforts are already under way to form a new Western Regional Organization (RO), intended to provide an independent governance structure to oversee EDAM. The RO’s success is tied to that of California Senate Bill 540, which would revise CAISO’s governance to allow CAISO and Californian electrical corporations to participate in the RO. At the same time, the Southwest Power Pool (SPP) is making inroads into the Western USA with the launch of its Markets+ initiative, a com- peting day-ahead market design expected to launch in 2027. Like EDAM, SPP’s Markets+ is intended to provide comprehensive day-ahead and real-time wholesale market services to enti- ties across the Western Interconnection. As of 12 May 2025, nine entities representing load throughout the Desert Southwest, Pacific North- west and Mountain West regions of the West- ern Interconnect have committed to supporting this effort. Beyond its Markets+ initiative, SPP is also actively working to expand its Regional Transmission Organization (RTO) operations into
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