The electricity industry is navigating a perfect storm of macroeconomic, regulatory and environmental roadblocks as developers attempt to get new infrastructure built.
It makes you wonder if our regulators seem intent on delaying building much-needed infrastructure such as transmission expansion, data centers and generating capacity of all kinds.
While it certainly feels like regulators are deliberately obstructing important infrastructure improvements, the reality seems to be less about malice and more about a massive collision of competing, uncoordinated mandates.
Bottom line: There are basically three different branches of government pulling developers in completely opposite directions simultaneously.
The Energy Mandate (Build Faster!): Agencies like the California Public Utilities Commission (CPUC) and the California Energy Commission (CEC) are looking at the grid and screaming for new capacity. They are issuing massive 11.5 GW and 6 GW procurement orders because they know the state is running out of power. Virtually all LSEs in California are functionally “short” on their original 2026 Long Lead-Time (LLT) mandates, but they are not being penalized because the CPUC moved the goalposts and created an “Alternative Compliance” pathway allowing them to buy temporary bridge resources (like generic short-duration batteries). The CPUC wisely pushed the requirement to 2028 (via D.23-02-040) and subsequently allowed load
serving entities (LSEs) to file for further extensions all the way to 2031 (via D.24-02-047).
The CEC has issued a new demand increase forecast of 42% (low-end estimate) to 62% (high-end estimate) by 2045 mainly due to data centers and EV charging. This, in turn, prompted the CPUC on February 26, 2026; to formally approve a brand- new Integrated Resource Planning (IRP) decision demanding that LSEs procure an additional 6,000 MW of clean capacity by 2032 (specifically targeting 2,000 MW by 2030).
The Environmental Mandate (wait, not there yet!): Meanwhile, agencies like California Department of Fish and Wildlife (CDFW) and the federal Bureau of Land Management (BLM) have a completely different directive: protect the land and the wildlife and delay renewables! For instance, to them, a 1,000-acre solar farm in Kern or Imperial Counties isn’t a grid savior; it’s
a threat to the Western Burrowing Owl (even though there are more owls than people). In late 2024, CDFW announced the Burrowing Owl may be an endangered species and will make the final decision in summer 2026. In the meantime, one must plan as if the owls are an endangered species. Consequently, and in parallel and for entirely different reasons, in early 2025, the federal BLM stopped working on permitting anything that is renewable.
The Trade Mandate (“Buy American” even if its twice as expensive): On top of it all, the federal government (Commerce and Treasury Departments) are using tariffs to force the industry to rebuild a domestic supply chain from scratch. They want you to Buy American, even if American factories currently have a three-year backlog for a 230 kV breaker and four to five-year wait on reciprocal engines and, to a lesser extent, delays in available solar and battery storage parts.
According to Wood Mackenzie and NREL , the price for Chinese-made BESS cells has dropped by 20% while the processing costs for cells that are assembled or manufactured in the U.S. have risen by 8% and 15%, respectively. Essentially, our cost to build battery storage has increased 12%. According to Wood Mackenzie and NREL , the price for Chinese-made BESS cells has dropped by 20% while the processing costs for cells that are assembled or manufactured in the U.S. have risen by 8% and 15%, respectively. Essentially, our cost to
build battery storage has increased 12%. Add another challenge: The California Independent System Operator (CAISO) interconnection queue is notoriously backlogged. Critical network transmission upgrades are taking years longer than the CPUC originally modeled mainly due to
BLM and National Park Service restrictions (?), pipeline conflicts (?), and environmental mitigation and equipment availability. For instance, the following projects are encountering major delays coming online:
a) Lugo-Victorville 500kV Line (SCE/LADWP):
b) SCE Tehachapi & Eldorado-Lugo-Mohave
Upgrades:
c) SCE: Tehachapi Centralized Remedial Action
Scheme (CRAS)
d) PG&E Substation Conversions (Midway /
Vaca-Dixon):
e) PG&E: Gates 230-kV Reactors Bus E-F
f) SCE: Tehachapi Centralized Remedial Action
Scheme (CRAS
Despite all of this, in 2025 we had 5,713 MW of new capacity energized including 4,260 MW of pure battery storage. Remarkably, this new capacity escaped the 2025 bureaucracy and regulatory insanity! Additionally, the state has hit the brakes on Diablo Canyon’s retirement (SB 846). Both units at Diablo are now set to retire by 2030. There have also been delays in the retirements of Southern California power plants AES Alamitos and Huntington Beach (1,368 MW combined), which are now not shutting down until 2026 or later. In conclusion, we are fortunate that older workhorses on the coast are not going away but improvements to the grid’s
infrastructure cannot continue to rely on postponed plant retirements. There are too many costly economic and regulatory balls in the air. We need a coordinated regulatory approach so that the future needs of the grid are planned well ahead of when reliability becomes paramount.