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California Biofuels vs EV Subsidies examines tradeoffs in decarbonization, greenhouse gas reductions, clean energy deployment, charging infrastructure, energy security, lifecycle emissions, and transportation sector policy to meet climate goals and accelerate sustainable mobility.

Key Points

Policy tradeoffs weighing biofuels and EVs to cut GHGs, boost energy security, and advance clean transportation.

✅ Near-term blending cuts emissions from existing fleets

✅ EVs scale with a cleaner grid and charging buildout

✅ Lifecycle impacts and costs guide optimal subsidy mix

California is at the forefront of the transition to a greener economy, driven by its ambitious goals to reduce greenhouse gas emissions and combat climate change. As part of its strategy, the state is grappling with the question of whether it should subsidize out-of-state biofuels or in-state electric vehicles (EVs) to meet these goals. Both options come with their own sets of benefits and challenges, and the decision carries significant implications for the state’s environmental, economic, and energy landscapes.

The Case for Biofuels

Biofuels have long been promoted as a cleaner alternative to traditional fossil fuels like gasoline and diesel. They are made from organic materials such as agricultural crops, algae, and waste, which means they can potentially reduce carbon emissions in comparison to petroleum-based fuels. In the context of California, biofuels—particularly ethanol and biodiesel—are viewed as a way to decarbonize the transportation sector, which is one of the state’s largest sources of greenhouse gas emissions.

Subsidizing out-of-state biofuels can help California reduce its reliance on imported oil while promoting the development of biofuel industries in other states. This approach may have immediate benefits, as biofuels are widely available and can be blended with conventional fuels to lower carbon emissions right away. It also allows the state to diversify its energy sources, improving energy security by reducing dependency on oil imports.

Moreover, biofuels can be produced in many regions across the United States, including rural areas. By subsidizing out-of-state biofuels, California could foster economic development in these regions, creating jobs and stimulating agricultural innovation. This approach could also support farmers who grow the feedstock for biofuel production, boosting the agricultural economy in the U.S.

However, there are drawbacks. The environmental benefits of biofuels are often debated. Critics argue that the production of biofuels—particularly those made from food crops like corn—can contribute to deforestation, water pollution, and increased food prices. Additionally, biofuels are not a silver bullet in the fight against climate change, as their production and combustion still release greenhouse gases. When considering whether to subsidize biofuels, California must also account for the full lifecycle emissions associated with their production and use.

The Case for Electric Vehicles

In contrast to biofuels, electric vehicles (EVs) offer a more direct pathway to reducing emissions from transportation. EVs are powered by electricity, and when coupled with renewable energy sources like solar or wind power, they can provide a nearly zero-emission solution for personal and commercial transportation. California has already invested heavily in EV infrastructure, including expanding its network of charging stations and exploring how EVs can support grid stability through vehicle-to-grid approaches, and offering incentives for consumers to purchase EVs.

Subsidizing in-state EVs could stimulate job creation and innovation within California's thriving clean-tech industry, with other states such as New Mexico projecting substantial economic gains from transportation electrification, and the state has already become a hub for electric vehicle manufacturers, including Tesla, Rivian, and several battery manufacturers. Supporting the EV industry could further strengthen California’s position as a global leader in green technology, attracting investment and fostering growth in related sectors such as battery manufacturing, renewable energy, and smart grid technology.

Additionally, the environmental benefits of EVs are substantial. As the electric grid becomes cleaner with an increasing share of renewable energy, EVs will become even greener, with lower lifecycle emissions than biofuels. By prioritizing EVs, California could further reduce its carbon footprint while also achieving its long-term climate goals, including reaching carbon neutrality by 2045.

However, there are challenges. EV adoption in California remains a significant undertaking, requiring major investments in infrastructure as they challenge state power grids in the near term, technology, and consumer incentives. The cost of EVs, although decreasing, still remains a barrier for many consumers. Additionally, there are concerns about the environmental impact of lithium mining, which is essential for EV batteries. While renewable energy is expanding, California’s grid is still reliant on fossil fuels to some degree, and in other jurisdictions such as Canada's 2019 electricity mix fossil generation remains significant, meaning that the full emissions benefit of EVs is not realized until the grid is entirely powered by clean energy.

A Balancing Act

The debate between subsidizing out-of-state biofuels and in-state electric vehicles is ultimately a question of how best to allocate California’s resources to meet its climate and economic goals. Biofuels may offer a quicker fix for reducing emissions from existing vehicles, but their long-term benefits are more limited compared to the transformative potential of electric vehicles, even as some analysts warn of policy pitfalls that could complicate the transition.

However, biofuels still have a role to play in decarbonizing hard-to-abate sectors like aviation and heavy-duty transportation, where electrification may not be as feasible in the near future. Thus, a mixed strategy that includes both subsidies for EVs and biofuels may be the most effective approach.

Ultimately, California’s decision will likely depend on a combination of factors, including technological advancements, 2021 electricity lessons, and the pace of renewable energy deployment, and the state’s ability to balance short-term needs with long-term environmental goals. The road ahead is not easy, but California's leadership in clean energy will be crucial in shaping the nation’s response to climate change.

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NDC Renewable Energy Ambition drives COP25 calls to align with the Paris Agreement, as IRENA urges 2030 targets toward 7.7 TW, accelerating decarbonization, energy transition, socio-economic benefits, and scalable renewables in Nationally Determined Contributions.

Key Points

Raised 2030 renewable targets in NDCs to meet Paris goals, reaching 7.7 TW efficiently and speeding decarbonization.

✅ Double current NDC renewables to align with 7.7 TW by 2030

✅ Cost effective pathway with jobs, growth, welfare gains

✅ Accelerates decarbonization and energy access per UN goals

We need an oracle to get us out of this debacle. The UN climate group has met for the 25th time. Will anything ever change?

Countries are being urged to significantly raise renewable energy ambition and adopt targets to transform the global energy system in the next round of Nationally Determined Contributions (NDCs), according to a new IRENA report by the International Renewable Energy Agency (IRENA) that will be released at the UN Climate Change Conference (COP25) in Madrid.

The report will show that renewable energy ambition within NDCs would have to more than double by 2030 to put the world in line with the Paris Agreement goals, cost-effectively reaching 7.7 terawatts (TW) of globally installed capacity by then. Today’s renewable energy pledges under the NDCs are falling short of this, targeting only 3.2 TW, even as over 30% of global electricity is already generated from renewables.

The reportNDCs in 2020: Advancing Renewables in the Power Sector and Beyondwill be released at IRENA’s official side event on enhancing NDCs and raising ambition on 11 December 2019.It will state that with over 2.3 TW installed renewable capacity today, following a record year for renewables in 2016, almost half of the additional renewable energy capacity foreseen by current NDCs has already been installed.

The analysis will also highlight that delivering on increased renewable energy ambition can be achieved in a cost-effective way and with considerable socio-economic benefits across the world.

“Increasing renewable energy targets is absolutely necessary,” said IRENA’s Director-General Francesco La Camera. “Much more is possible. There is a decisive opportunity for policy makers to step up climate action, including a fossil fuel lockdown, by raising ambition on renewables, which are the only immediate solution to meet rising energy demand whilst decarbonizing the economy and building resilience.

“IRENA’s analysis shows that a pathway to a decarbonised economy is technologically possible and socially and economically beneficial,” continued Mr. La Camera.

“Renewables are good for growth, good for job creation and deliver significant welfare benefits. With renewables, we can also expand energy access and help eradicate energy poverty by ensuring clean, affordable and sustainable electricity for all in line with the UN Sustainable Development Agenda 2030.

IRENA will promote knowledge exchange, strengthen partnerships and work with all stakeholders to catalyse action on the ground. We are engaging with countries and regions worldwide, from Ireland's green electricity push to other markets, to facilitate renewable energy projects and raise their ambitions”.

NDCs must become a driving force for an accelerated global energy transformation toward 100% renewable energy globally. The current pledges reflect neither the past decade’s rapid growth nor the ongoing market trends for renewables. Through a higher renewable energy ambition, NDCs could serve to advance multiple climate and development objectives.

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Smart EV Charging orchestrates vehicle-to-grid (V2G), demand response, and fast charging to balance the power grid, integrating renewables, electrolyzers for hydrogen, and megawatt chargers for fleets with advanced control and co-optimization.

Key Points

Smart EV charging coordinates EV load to stabilize the grid, cut peaks, and integrate renewable energy efficiently.

✅ Reduces peak demand via coordinated, flexible load control

✅ Enables V2G services with renewables and battery storage

✅ Supports megawatt fast charging for heavy-duty fleets

As electric vehicle (EV) sales continue to rev up in the United States, the power grid is in parallel contending with the greatest transformation in its 100-year history: the large-scale integration of renewable energy and power electronic devices. The expected expansion of EVs will shift those challenges into high gear, causing cities to face gigawatt-growth in electricity demand, as analyses of EV grid impacts indicate, and higher amounts of variable energy.

Coordinating large numbers of EVs with the power system presents a highly complex challenge. EVs introduce variable electrical loads that are highly dependent on customer behavior. Electrified transportation involves co-optimization with other energy systems, like natural gas and bulk battery storage, including mobile energy storage flexibility for new operational options. It could involve fleets of automated ride-hailing EVs and lead to hybrid-energy truck stops that provide hydrogen and fast-charging to heavy-duty vehicles.

Those changes will all test the limits of grid integration, but the National Renewable Energy Laboratory (NREL) sees opportunity at the intersection of energy systems and transportation. With powerful resources for simulating and evaluating complex systems, several NREL projects are determining the coordination required for fast charging, balancing electrical supply and demand, and efficient use of all energy assets.

Smart and Not-So-Smart Control
To appreciate the value of coordinated EV charging, it is helpful to imagine the opposite scenario.

"Our first question is how much benefit or burden the super simple, uncoordinated approach to electric vehicle charging offers the grid," said Andrew Meintz, the researcher leading NREL's Electric Vehicle Grid Integration team, as well as the RECHARGE project for smart EV charging. "Then we compare that to the 'whiz-bang,' everything-is-connected approach. We want to know the difference in value."

In the "super simple" approach, Meintz explained that battery-powered electric vehicles grow in market share, exemplified by mass-market EVs, without any evolution in vehicle charging coordination. Picture every employee at your workplace driving home at 5 p.m. and charging their vehicle. That is the grid's equivalent of going 0 to 100 mph, and if it does not wreck the system, it is at least very expensive. According to NREL's Electrification Futures Study, a comprehensive analysis of the impacts of widespread electrification across all U.S. economic sectors, in 2050 EVs could contribute to a 33% increase in energy use during peak electrical demand, underscoring state grid challenges that make these intervals costly when energy reserves are procured. In duck curve parlance, EVs will further strain the duck's neck.

The Optimization and Control Lab's Electric Vehicle Grid Integration bays allow researchers to determine how advanced high power chargers can be added safely and effectively to the grid, with the potential to explore how to combine buildings and EV charging. Credit: Dennis Schroeder, NREL
Meintz's "whiz-bang" approach instead imagines EV control strategies that are deliberate and serve to smooth, rather than intensify, the upcoming demand for electricity. It means managing both when and where vehicles charge to create flexible load on the grid.

At NREL, smart strategies to dispatch vehicles for optimal charging are being developed for both the grid edge, where consumers and energy users connect to the grid, as in RECHARGEPDF, and the entire distribution system, as in the GEMINI-XFC projectPDF. Both projects, funded by the U.S. Department of Energy's (DOE's) Vehicle Technologies Office, lean on advanced capabilities at NREL's Energy Systems Integration Facility to simulate future energy systems.

At the grid edge, EVs can be co-optimized with distributed energy resources—small-scale generation or storage technologies—the subject of a partnership with Eaton that brought industry perspectives to bear on coordinated management of EV fleets.

At the larger-system level, the GEMINI-XFC project has extended EV optimization scenarios to the city scale—the San Francisco Bay Area, to be specific.

"GEMINI-XFC involves the highest-ever-fidelity modeling of transportation and the grid," said NREL Research Manager of Grid-Connected Energy Systems Bryan Palmintier.

"We're combining future transportation scenarios with a large metro area co-simulationPDF—millions of simulated customers and a realistic distribution system model—to find the best approaches to vehicles helping the grid."

GEMINI-XFC and RECHARGE can foresee future electrification scenarios and then insert controls that reduce grid congestion or offset peak demand, for example. Charging EVs involves a sort of shell game, where loads are continually moved among charging stations to accommodate grid demand.

But for heavy-duty vehicles, the load is harder to hide. Electrified truck fleets will hit the road soon, creating power needs for electric truck fleets that translate to megawatts of localized demand. No amount of rerouting can avoid the requirements of charging heavy-duty vehicles or other instances of extreme fast-charging (XFC). To address this challenge, NREL is working with industry and other national laboratories to study and demonstrate the technological buildout necessary to achieve 1+ MW charging stationsPDF that are capable of fast charging at very high energy levels for medium- and heavy-duty vehicles.

To reach such a scale, NREL is also considering new power conversion hardware based on advanced materials like wide-bandgap semiconductors, as well as new controllers and algorithms that are uniquely suited for fleets of charge-hungry vehicles. The challenge to integrate 1+ MW charging is also pushing NREL research to higher power: Upcoming capabilities will look at many-megawatt systems that tie in the support of other energy sectors.

Renewable In-Roads for Hydrogen

At NREL, the drive toward larger charging demands is being met with larger research capabilities. The announcement of ARIES opens the door to energy systems integration research at a scale 10-times greater than current capabilities: 20 MW, up from 2 MW. Critically, it presents an opportunity to understand how mobility with high energy demands can be co-optimized with other utility-scale assets to benefit grid stability.

"If you've got a grid humming along with a steady load, then a truck requires 500 kW or more of power, it could create a large disruption for the grid," said Keith Wipke, the laboratory program manager for fuel cells and hydrogen technologies at NREL.

Such a high power demand could be partially served by battery storage systems. Or it could be hidden entirely with hydrogen production. Wipke's program, with support from the DOE's Hydrogen and Fuel Cell Technologies Office, has been performing studies into how electrolyzers—devices that use electricity to break water into hydrogen and oxygen—could offset the grid impacts of XFC. These efforts are also closely aligned with DOE's H2@Scale vision for affordable and effective hydrogen use across multiple sectors, including heavy-duty transportation, power generation, and metals manufacturing, among others.

"We're simulating electrolyzers that can match the charging load of heavy-duty battery electric vehicles. When fast charging begins, the electrolyzers are ramped down. When fast charging ends, the electrolyzers are ramped back up," Wipke said. "If done smoothly, the utility doesn't even know it's happening."

NREL Researchers Rishabh Jain, Kazunori Nagasawa, and Jen Kurtz are working on how grid integration of electrolyzers—devices that use electricity to break water into hydrogen and oxygen—could offset the grid impacts of extreme fast-charging. Credit: National Renewable Energy Laboratory
As electrolyzers harness the cheap electrons from off-demand periods, a significant amount of hydrogen can be produced on site. That creates a natural energy pathway from discount electricity into a fuel. It is no wonder, then, that several well-known transportation and fuel companies have recently initiated a multimillion-dollar partnership with NREL to advance heavy-duty hydrogen vehicle technologies.

"The logistics of expanding electric charging infrastructure from 50 kW for a single demonstration battery electric truck to 5,000 kW for a fleet of 100 could present challenges," Wipke said. "Hydrogen scales very nicely; you're basically bringing hydrogen to a fueling station or producing it on site, but either way the hydrogen fueling events are decoupled in time from hydrogen production, providing benefits to the grid."

The long driving range and fast refuel times—including a DOE target of achieving 10-minutes refuel for a truck—have already made hydrogen the standout solution for applications in warehouse forklifts. Further, NREL is finding that distributed electrolyzers can simultaneously produce hydrogen and improve voltage conditions, which can add much-needed stability to a grid that is accommodating more energy from variable resources.

Those examples that co-optimize mobility with the grid, using diverse technologies, are encouraging NREL and its partners to pursue a new scale of systems integration. Several forward-thinking projects are reimagining urban mobility as a mix of energy solutions that integrate the relative strengths of transportation technologies, which complement each other to fill important gaps in grid reliability.

The Future of Urban Mobility
What will electrified transportation look like at high penetrations? A few NREL projects offer some perspective. Among the most experimental, NREL is helping the city of Denver develop a smart community, integrated with electrified mobility and featuring automated charging and vehicle dispatch.

On another path to advanced mobility, Los Angeles has embarked on a plan to modernize its electricity system infrastructure, reflecting California EV grid stability goals—aiming for a 100% renewable energy supply by 2045, along with aggressive electrification targets for buildings and vehicles. Through the Los Angeles 100% Renewable Energy Study, the city is currently working with NREL to assess the full-scale impacts of the transition in a detailed analysis that integrates diverse capabilities across the laboratory.

The transition would include the Port of Long Beach, the busiest container port in the United States.

At the port, NREL is applying the same sort of scenario forecasting and controls evaluation as other projects, in order to find the optimal mix of technologies that can be integrated for both grid stability and a reliable quality of service: a mix of hydrogen fuel-cell and battery EVs, battery storage systems, on-site renewable generation, and extreme coordination among everything.

"Hydrogen at ports makes sense for the same reason as trucks: Marine applications have big power and energy demands," Wipke said. "But it's really the synergies between diverse technologies—the existing infrastructure for EVs and the flexibility of bulk battery systems—that will truly make the transition to high renewable energy possible."

Like the Port of Long Beach, transportation hubs across the nation are adapting to a complex environment of new mobility solutions. Airports and public transit stations involve the movement of passengers, goods, and services at a volume exceeding anywhere else. With the transition to digitally connected electric mobility changing how airports plan for the future, NREL projects such as Athena are using the power of high-performance computing to demonstrate how these hubs can maximize the value of passenger and freight mobility per unit of energy, time, and/or cost.

The growth in complexity for transportation hubs has just begun, however. Looking ahead, fleets of ride-sharing EVs, automated vehicles, and automated ride-sharing EV fleets could present the largest effort to manage mobility yet.

A Self-Driving Power Grid
To understand the full impact of future mobility-service providers, NREL developed the HIVE (Highly Integrated Vehicle Ecosystem) simulation framework. HIVE combines factors related to serving mobility needs and grid operations—such as a customer's willingness to carpool or delay travel, and potentially time-variable costs of recharging—and simulates the outcome in an integrated environment.

"Our question is, how do you optimize the management of a fleet whose primary purpose is to provide rides and improve that fleet's dispatch and charging?" said Eric Wood, an NREL vehicle systems engineer.

HIVE was developed as part of NREL's Autonomous Energy Systems research to optimize the control of automated vehicle fleets. That is, optimized routing and dispatch of automated electric vehicles.

The project imagines how price signals could influence dispatch algorithms. Consider one customer booking a commute through a ride-hailing app. Out of the fleet of vehicles nearby—variously charged and continually changing locations—which one should pick up the customer?

Now consider the movements of thousands of passengers in a city and thousands of vehicles providing transportation services. Among the number of agents, the moment-to-moment change in energy supply and demand, and the broad diversity in vendor technologies, "we're playing with a lot of parameters," Wood said.

But cutting through all the complexity, and in the midst of massive simulations, the end goal for vehicle-to-grid integration is consistent:

"The motivation for our work is that there are forecasts for significant load on the grid from the electrification of transportation," Wood said. "We want to ensure that this load is safely and effectively integrated, while meeting the expectations and needs of passengers."

The Port of Long Beach uses a mix of hydrogen fuel-cell and battery EVs, battery storage systems, on-site renewable generation, and extreme coordination among everything. Credit: National Renewable Energy Laboratory
True Replacement without Caveats

Electric vehicles are not necessarily helpful to the grid, but they can be. As EVs become established in the transportation sector, NREL is studying how to even out any bumps that electrified mobility could cause on the grid and advance any benefits to commuters or industry.

"It all comes down to load flexibility," Meintz said. "We're trying to decide how to optimally dispatch vehicle charging to meet quality-of-service considerations, while also minimizing charging costs."

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Renewable Energy Tax Incentive Extensions urged by US trade groups to offset COVID-19 supply chain delays, tax equity shortages, and financing risks, enabling direct pay, PTC and ITC qualification, and standalone energy storage credits.

Key Points

Policy measures that extend and monetize clean energy credits to counter COVID-19 disruptions and financing shortfalls.

✅ Extend start construction and safe harbor deadlines

✅ Enable direct pay to offset reduced tax equity

✅ Add a standalone energy storage credit

Renewable energy and other trade bodies in the US are calling on Capitol Hill to extend provision of tax incentives to help the sector “surmount the impacts” of the COVID-19 crisis facing clean energy.

In a signed joint letter, the American Council on Renewable Energy (ACORE), American Wind Energy Association (AWEA), Energy Storage Association (ESA), National Hydropower Association (NHA), Renewable Energy Buyers Alliance (REBA), and the Solar Energy Industries Association (SEIA) stated: “With over $50bn in annual investment over each of the past five years, the clean energy sector is one of the nation’s most important economic drivers. But that growth is placed at risk by a range of COVID-19 related impacts”.

These include “supply chain disruptions that have the potential to delay utility solar construction timetables and undermine the ability of wind, solar and hydropower developers to qualify for time-sensitive tax credits, and a sudden reduction in the availability of tax equity, which is crucial to monetising tax credits and financing clean energy projects of all types.”
The letter goes onto state: “Like all sectors of our economy the renewable and clean grid industry – including developers, manufacturers, construction workers, electric utilities, investors and major corporate consumers of renewable power – needs stability.

“The current uncertainty about the ability to qualify for and monetise tax incentives will have real and substantial negative impacts to the entire economy.

On behalf of the thousands of companies that participate in America’s renewable and clean energy economy, the coalition of organisations is requesting the US Government, echoing Senate calls to support clean energy, take three “critical” steps to address pandemic-related disruptions.

The first is an extension of start construction and safe harbour deadlines to ensure that renewable projects can qualify for renewable tax credits amid the Solar ITC extension debate and despite delays associated with supply chain disruptions.

The second is the implementation of provisions that will allow renewable tax credits to be available for direct pay to facilitate their monetisation, supporting U.S. solar and wind growth in the face of reduced availability of tax equity.

Thirdly, the signatories have requested the enactment of a direct pay tax credit for standalone energy storage to foster renewable growth as the industry sets sights on market majority and help secure a more resilient grid.

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Ontario Starlink Contract Cancellation underscores rising tariffs, trade tensions, and retaliation, as SpaceX's Elon Musk loses a rural broadband deal; Ontario pivots to procurement bans, energy resilience, and nuclear power to boost grid independence.

Key Points

Ontario ended a C$100M Starlink deal over U.S. tariffs, prompting a shift to rural broadband alternatives.

✅ Triggered by U.S. tariffs; Ontario adopts retaliatory procurement bans.

✅ Ends plan to connect 15,000 rural homes and businesses with broadband.

✅ Signals push for energy resilience, nuclear power, and grid independence.

In a decisive move, Ontario Premier Doug Ford announced the cancellation of a C$100 million contract with Elon Musk's Starlink, a subsidiary of SpaceX, in direct response to U.S. President Donald Trump's imposition of tariffs on Canadian imports. This action underscores the escalating trade tensions between Canada and the United States, a theme highlighted during Ford's Washington meeting on energy tariffs earlier this month, and highlights Ontario's efforts to safeguard its economic interests.

The now-terminated agreement, established in November, aimed to provide high-speed internet access to 15,000 homes and businesses in Ontario's remote areas. Premier Ford's decision to "rip up" the contract signifies a broader strategy to distance the province from U.S.-based companies amid the current trade dispute. He emphasized, "Ontario won't do business with people hell-bent on destroying our economy."

This move is part of a series of retaliatory measures by Canadian provinces, including Ford's threat to cut electricity exports to the U.S., following President Trump's announcement of a 25% tariff on nearly all Canadian imports, excluding oil, which faces a 10% surcharge. These tariffs, set to take effect imminently, have prompted concerns about potential economic downturns in Canada. In response, Prime Minister Justin Trudeau declared that Canada would impose 25% tariffs on C$155 billion worth of U.S. goods, aiming to exert pressure on the U.S. administration to reconsider its stance.

Premier Ford's actions reflect a broader sentiment of economic nationalism, as he also announced a ban on American companies from provincial contracts until the U.S. tariffs are lifted. He highlighted that Ontario's government and its agencies allocate $30 billion annually on procurement, and reiterated his earlier vow to fire the Hydro One CEO and board as part of broader reforms aimed at efficiency.

The cancellation of the Starlink contract raises concerns about the future of internet connectivity in Ontario's rural regions. The original deal with Starlink was seen as a significant step toward bridging the digital divide, offering high-speed internet to underserved communities. With the contract's termination, the province faces the challenge of identifying alternative solutions to fulfill this critical need.

Beyond the immediate implications of the Starlink contract cancellation, Ontario is confronting broader challenges in ensuring the resilience and independence of its energy infrastructure. The province's reliance on external entities for critical services, such as internet connectivity and energy, has come under scrutiny, as Canada's electricity exports are at risk amid ongoing trade tensions and policy uncertainty.

Premier Ford has expressed a commitment to expanding Ontario's capacity to generate nuclear power as a means to bolster energy self-sufficiency. While this strategy aims to reduce dependence on external energy sources, it presents its own set of challenges that critics argue require cleaning up Ontario's hydro mess before new commitments proceed. Developing nuclear infrastructure requires substantial investment, rigorous safety protocols, and long-term planning. Moreover, the integration of nuclear power into the province's energy mix necessitates careful consideration of environmental impacts and public acceptance.

The concept of "Trump-proofing" Ontario's electricity grid involves creating a robust and self-reliant energy system capable of withstanding external political and economic pressures. Achieving this goal entails diversifying energy sources, including building on Ontario's electricity deal with Quebec to strengthen interties, investing in renewable energy technologies, and enhancing grid infrastructure to ensure stability and resilience.

However, the path to energy independence is fraught with complexities. Balancing the immediate need for reliable energy with long-term sustainability goals requires nuanced policy decisions, including Ontario's Supreme Court challenge to the global adjustment fee and related regulatory reviews to clarify cost impacts. Additionally, fostering collaboration between government entities, private sector stakeholders, and the public is essential to navigate the multifaceted challenges associated with overhauling the province's energy framework.

Ontario's recent actions, including the cancellation of the Starlink contract, underscore the province's proactive stance in safeguarding its economic and infrastructural interests amid evolving geopolitical dynamics. While such measures reflect a commitment to self-reliance, they also highlight the intricate challenges inherent in reducing dependence on external entities. As Ontario charts its course toward a more autonomous future, strategic planning, investment in sustainable technologies, and collaborative policymaking will be pivotal in achieving long-term resilience and prosperity.

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Berkshire Hathaway Energy Wind Power drives cheap electricity rates in Iowa via utility-scale wind turbines, integrated transmission, battery storage, and grid management, delivering renewable energy, stable pricing, and long-term rate freezes through 2028.

Key Points

A vertically integrated wind utility lowering Iowa rates via owned generation, transmission, and advanced grid control.

✅ Owned wind assets meet Iowa residential demand

✅ Integrated transmission lowers costs and losses

✅ Rate freeze through 2028 sustains cheap power

In his latest letter to Berkshire Hathaway shareholders, Warren Buffett used the 20th anniversary of Berkshire Hathaway Energy to tout its cheap electricity bills for customers.

When Berkshire purchased the majority share of BHE in 2000, the cost of electricity for its residential customers in Iowa was 8.8 cents per kilowatt-hour (kWh) on average. Since then, these electricity rates have risen at a paltry <1% per year, with a freeze on rate hikes through 2028. As anyone who pays an electricity bill knows, that is an incredible deal.  

As Buffett himself notes with alacrity, “Last year, the rates [BHE’s competitor in Iowa] charged its residential customers were 61% higher than BHE’s. Recently, that utility received a rate increase that will widen the gap to 70%.”

The Winning Strategy

So, what’s Buffett’s secret to cheap electricity? Wind power.

“The extraordinary differential between our rates and theirs is largely the result of our huge accomplishments in converting wind into electricity,” Buffett explains. 

Wind turbines in Iowa that BHE owns and operates are expected to generate about 25.2 million megawatt-hours (MWh) of electricity for its customers, as projects like Building Energy operations begin to contribute. By Buffett’s estimations, that will be enough to power all of its residential customers’ electricity needs in Iowa.  

The company has plans to increase its renewable energy generation in other regions as well. This year, BHE Canada is expected to start construction on a 117.6MW wind farm in Alberta, Canada with its partner, Renewable Energy Systems, that will provide electricity to 79,000 homes in Canada’s oil country.

Observers note that Alberta is a powerhouse for both green energy and fossil fuels, underscoring the region's unique transition.

But I would argue that the secret to BHE’s success perhaps goes deeper than transitioning to sources of renewable energy. There are plenty of other utility companies that have adopted wind and solar power as an energy source. In the U.S., where renewable electricity surpassed coal in 2022, at least 50% of electricity customers have the option to buy renewable electricity from their power supplier, according to the Department of Energy. And some states, such as New York, have gone so far as to allow customers to pick from providers who generate their electricity.

What differentiates BHE from a lot of the competition in the utility space is that it owns the means to generate, store, transmit and supply renewable power to its customers across the U.S., U.K. and Canada, with lessons from the U.K. about wind power informing policy.

In its financial filings for 2019, the company reported that it owns 33,600MW of generation capacity and has 33,400 miles of transmission lines, as well as a 50% interest in Electric Transmission Texas (ETT) that has approximately 1,200 miles of transmission lines. This scale and integration enables BHE to be efficient in the distribution and sale of electricity, including selling renewable energy across regions.

BHE is certainly not alone in building renewable-energy fueled electricity dominions. Its largest competitor, NextEra, built 15GW of wind capacity and has started to expand its utility-scale solar installations. Duke Energy owns and operates 2,900 MW of renewable energy, including wind and solar. Exelon operates 40 wind turbine sites across the U.S. that generate 1,500 MW.

Integrated Utilities Power Ahead

It’s easy to see why utility companies see wind as a competitive source of electricity compared to fossil fuels. As I explained in my previous post, Trump’s Wrong About Wind, the cost of building and generating wind energy have fallen significantly over the past decade. Meanwhile, improvements in battery storage and power management through new technological advancements have made it more reliable (Warren Buffett bet on that one too).

But what is also striking is that integrated power and transmission enables these utility companies to make those decisions; both in terms of sourcing power from renewable energy, as well as the pricing of the final product. Until wind and solar power are widespread, these utility companies are going to have an edge of the more fragmented ends of the industry who can’t make these purchasing or pricing decisions independently. 

Warren Buffett very rarely misses a beat. He’s not the Oracle of Omaha for nothing. Berkshire Hathaway’s ownership of BHE has been immensely profitable for its shareholders. In the year ended December 31, 2019, BHE and its subsidiaries reported net income attributable to BHE shareholders of $2.95 billion.

There’s no question that renewable energy will transform the utility industry over the next decade. That change will be led by the likes of BHE, who have the power to invest, control and manage their own energy generation assets.

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