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As California charges ahead toward its climate change goals of “carbon neutrality” by 2045, many wonder how we are going to get there and what California will look like when the time comes. History has shown that California often sets ambitious goals without ever understanding what it takes to get there or if it is even achievable.
The CARB truck rules immediately come to mind, as does high-speed rail, solving the homelessness problem, and the list goes on. One might think the state’s decision to reconsider shutting down the PG&E Diablo Canyon Nuclear Plant might be a wake-up call that California does not have enough power right now. How about in 2022, when the California Independent System Operator warned residents not to charge their electric cars overnight due to an overwhelmed electric system? No, rest assured this state is never going to let reality get in the way.
To try and truly understand where we are and what the future looks like, the California Energy Commission (CEC) is required every two years to prepare the Integrated Energy Policy Report (IEPR). The IEPR is a biennial energy report that contains an integrated assessment of major energy trends and issues facing California’s electricity, natural gas and transportation fuel sectors. The report provides policy recommendations to conserve resources, protect the environment, ensure reliable, secure and diverse energy supplies, enhance the state’s economy, and protect public health and safety. The CEC recently released its final 2025 IEPR (CEC-100-2026-001, June 26, 2026), and its findings are, in a word, SHOCKING! No pun intended. 2025 Integrated Energy Policy Report, California Energy Commission, CEC-100-2026-001, June 26, 2026.
The 2025 IEPR looked at current energy demand in 2025 and then forecasted what it might look like in 2045 if the state were to continue to work toward meeting its climate change goals. In reviewing the findings, let’s take a quick look at its baseline assumptions. First, it assumes California will continue to grow its population at an average rate of 0.3% each year. The report then considers all the factors that will impact energy demand over the next 20 years.
Data Centers
One of the largest demands will be the rapidly increasing demand for data centers. According to the IEPR, “Data centers are a leading source of growth in electricity demand, and efforts to forecast the magnitude and timing of that growth continue to evolve as more information becomes available. Recent increases in the demand for artificial intelligence (AI) have contributed to a rise in utility energization requests for data centers. Uncertainty remains regarding the number of applications utilities will receive, the number of proposed projects that will ultimately be completed, timelines of projects, the anticipated load for each project, and longer-term market conditions.” The IEPR reports that 5,086 data centers are currently under agreement, an additional 9,587 data centers have submitted applications, and another 8,604 have submitted inquiries for a total of 23,277 facilities, all with high electricity demand.
What will it take to power these data centers? The 2025 IEPR estimates there is currently less than 10,000 gigawatt-hours (GWh) of demand in 2024. But by 2040, the IEPR projects the demand will grow to 40,000 GWh in its mid-case projections and an incredible 57,000 GWh in its high-case projections. To put this in perspective, the PG&E Diablo Canyon nuclear power plant produces 18,000 GWh annually, meaning we will need to build the equivalent of at least three more Diablo Canyon power plants to energize all these new data centers.
Transportation
One of the biggest and most controversial state actions over the past two years has been the drive to electrify the entire transportation system from cars and trucks to forklifts and tugboats. The California Air Resources Board (CARB) estimates that there are more than 1.7 million heavy-duty trucks operating in California. To charge a heavy-duty truck, it takes a 1 MW electric charger. If you add all the medium- and light-duty trucks and cars to this demand, it seems like that would be a staggering number. It is. The 2025 IEPR estimates that on-road transportation currently consumes less than 10,000 GWh in 2025 but will climb to more than 70,000 GWh in its baseline scenario and over 100,000 GWh in its high-case scenario. To meet the high-case scenario, we would need an additional 5½ Diablo Canyon power plants!
So, considering AI data centers, transportation electrification and all the other conversions to electric, what will it take to get to zero carbon impact in 2045? The 2025 IEPR estimates current peak demand is 47,000 MW. In the CEC planning forecast, the CEC assumes a growth rate of 1.7% annually to get to a peak demand of 66,025 MW in 2045. In its local reliability scenario, the CEC assumes a growth rate of 2.2% to get to a peak demand of 71,175 MW by 2045. In once again looking at the Diablo Canyon comparison, it can provide a peak demand of 2,200 MW, meaning we need more than 30 more Diablo Canyon power plants to provide enough power to meet peak demand. From an electric usage standpoint, the IEPR said California consumed 281,000 total GWh in 2024. Based on its forecasting, the IEPR estimates California will consume 417,000 GWh in 2045 in its mid-case scenario and 452,000 GWh in its high-case scenario. To meet this annual level of electricity consumption, we would need the equivalent of 25 more Diablo Canyon power plants.
Statewide Baseline Electricity Consumption: Costs
So far, we have only discussed peak and annual electricity demand. What about the cost of all this? And how will natural gas prices be affected by practically eliminating the need and demand for natural gas? The 2025 IEPR report assumes that with this huge increase in demand for electricity, the price of electricity will remain relatively constant for the next 20 years. Based on the past 20 years, we don’t believe this to be the case, but that is what the CEC and its 2025 IEPR report assume.
Now, natural gas prices are a different issue. While demand is expected to drop precipitously due to regulations prohibiting natural gas combustion, the costs to transport and distribute are expected to rise. Dramatically. According to the 2025 IEPR report, there will be huge increases in natural gas rates due to increasing revenue requirements and decreasing demand as conversion to electric continues.
For Southern California Gas, the IEPR report estimates under the base demand case, total customer rates start at $1.74/therm in 2025 and grow to $5.50/therm in 2050. Under Additional Achievable Fuel Substitution (AAFS) Scenario 2, total customer rates rise from $1.76/therm in 2025 to about $43.17/therm by 2050. For PG&E, the IEPR report predicts under the base demand case, total customer rates rise from $2.52/therm in 2025 to $8.32/therm in 2050. Under AAFS Scenario 2, total customer rates rise from $2.57/therm in 2025 to about $90.19/therm by 2050.
No, California isn’t ready. And it’s not even close.
By Roger A. Isom | President/CEO, Western Agricultural Processors Association
Roger is President/CEO of the California Cotton Ginners and Growers Association and Western Tree Nut Association. He brings over 30 years of regulatory and legislative advocacy experience, specializing in environmental and safety matters. Roger’s responsibilities include the management of both Associations’ staff and day-to-day operations. Roger is also the President of the Ag Energy Consumers Association (AECA), board member and Past President of the Ag One Foundation at California State University Fresno, and manages the Navel Orangeworm Action Committee (NOWAC).