SwatTalk: "Sunrise from the West: California and the Clean Energy Future"
with David Hochschild '93
Recorded on Tuesday, April 18, 2023
Saba Thackurdeen ’12 Hey y'all. Well welcome everyone this Tuesday for a SwatTalk with David Hochschild, class of 1993. Today's SwatTalk is a special Mother Earth month theme SwatTalk, which gives rise to climate, biodiversity, and environmental justice topics. If you're tuning into a SwatTalk for the very first time, I'm glad to share that SwatTalks are a production of the Alumni Council, and tonight's talk owes special thanks to Jason Zangelin and Mike Dennis. The alumni council's intention with the SwatTalks is to create spaces of connection and conversation for, by and featuring Swatties, that seems like a little too much swattie, I'd like to remind you on the alumni council, we literally keep it swattie down to the socks. If my Lucretia mut socks were not in the wash, I'd be wearing them right now. Before we dive in, a few housekeeping rules. Tonight's talk will feature David giving a brief presentation, followed by Q and A, including questions for, sorry, as chair of the California Energy Commission, It's a state agency with over 700 staff and a multi-billion dollar grant budget whose aim is to manage energy policy and planning in the great state of California. Now even as states and local governments are the laboratories of democracy, and David and his work in exemplary of that, it's worth noting that California, for a country by itself would be the fourth largest country in the world, or the fourth largest economy in the world, and David sits at the helm of its decarbonization and electrification plans that leads the country and beyond. So it's a great pleasure to have David here, especially given that it's going into his 30th reunion year with us this evening. David, over to you.
David Hochschild ’93 Well, thanks so much Saba. We can never have too much swattie. So appreciate the opportunity and welcome to everybody. I'm David Hochschild, I graduated in 1993 and just by way of introduction, I remember I felt like a lot of my classmates were highly directed about what they wanted do with their life, a bunch were somewhat directed, bunch were somewhat undirected, and then there's me, I had no earthly idea what I was doing with my life, and I bounced around quite a bit. So I wanna just begin with a little bit of my journey, how I got into clean energy, because after Swarthmore I worked construction I, you know, took some inner city kids on outdoors trips and various other things, but I really was bouncing all over the place. And then my father, who's a journalist and kind of sensing his son was all over the map, invited me to join him on a trip to South Africa in 1994. Nelson Mandela had been released from prison and was campaigning for president. And I said, of course, so I went with my dad to South Africa, this is just at the end of the Apartheid Era and had an extraordinary experience and decided to go back and work there. Mandela, of course, came outta prison in part because of the pressure from divestments, and Swarthmore was, of course, a very active participant in that. And it was an extraordinary time to be there. I was living in a township in the Eastern Cape, the Port Alfred Township of about 30,000 people, this is 1996 when I was there, Mandela was president at this time. And actually my first real exposure to solar power was in this township. One of the first things that the ANC government did when they came to power, they put solar powered postal stations in the townships, all over the countries, so solar and batteries that had lights on, and for the first time there was actually postal service, mail service at the townships, which they had never had under Apartheid. And a little light went off for me about, you know, the possibilities of solar then, and that actually I think had helped me go down this path into clean energy. I really had the most extraordinary experience in my life. I was in this region where they speak Khoisan, with the clicks, which is, that's Mandela's native tongue. And this was a program that he was the head of, which actually was a sort of youth training program. So coach basketball, taught writing and really was, I'm just so grateful for that moment. Went on from there, went to grad school, and then went back to my hometown of San Francisco and decided to get into local politics. Worked for then Mayor Willie Brown, who was a very colorful character, famous story about Willie Brown, he was the only mayor of a major American city who, that I know of, who kept his home phone number listed in the white pages. And one night this woman calls him at three in the morning to complain that her streetlight is out and cant get it fixed, and he does get it fixed, and the next morning he sets his alarm for three in the morning and calls her back and says, it's fixed. So he had a wicked sense of humor, he was very colorful, very lively man And at that time, in 2001, we had much to everybody's surprise, a power crisis, and there were rolling blackouts. And so we had in the middle of the day, for weeks and weeks gone in, the power was going out. We didn't know at the time what the cause was, we now know it was market manipulation from companies like Enron, that were creating artificial shortages. But there's always an opportunity inside crisis, and I think about this a lot, my wife is Chinese and my kids went to Chinese school and I was always interested in this Chinese word for crisis, Wei Ji, which is comprised of two other words put together, danger and opportunity, and there's always opportunity inside a crisis. So we got together a number of us and put a ballot initiative on the ballot to do $100 million for solar panels on public buildings, and this is November, 2001. I teamed up with a good friend of mine from Swarthmore, Adam Browning, class of 92, and we ran this campaign, you know, grassroots ballot initiative in San Francisco and it passed by a vote of 73% in November of 2001. We got solar panels on the roof of the Moscone Convention Center, San Francisco Airport, San Francisco City Hall. And Adam and I, he'd been at the UPA and I was in the mayor's office, we both decided, we were just really excited about leaning into clean energy and into the prospect of helping take solar power from being the, one of the most expensive and smallest sources of energy in the world to help make it the lowest cost and largest source, and it's well on its way to that now. So we decided to start an organization to do that, Vote Solar, which is over 20 years ago. Adam and I co-ran it together, and then he went on to run it himself for almost 20 years, just retired last year from that, and working on barrier busting for clean energy policy, So 100% clean energy standards, net metering, interconnection, rate design, incentives and tax credits, to drive solar and clean energy mainstream, and the organization now has about 50 staff working in 25 states. I went on from there into the solar industry and then ultimately got appointed by Governor Jerry Brown to the California Energy Commission, which is the state's energy policy agency. We have about a 9 billion budget now, we're pushing all sorts of clean energy technologies, energy storage, electric vehicle chargers and so forth. But the main thing we're trying to do, is get the state to 100% clean energy and then electrify almost everything. And so today in California, alternative energy is the wrong word to use to describe renewables, actually, fossil is alternative today. And the governor, Governor Gavin Newsom, also former mayor of San Francisco, signed legislation in September that accelerates our targets, so now we're required to get to 90% clean energy by 2035 and 100% by 2045. About 21 states now have 100% clean energy mandate, and President Biden has now made that the goal for the country, and that's for me, one of the exciting things about working in California, is that because we're such a vibrant economy in the state of 40 million people, we can be sort of a giant incubator for the clean energy industries of the future and the clean energy policies of the future and really socialize and scale these up. So one of the bedrock policies for energy in the United States is efficiency. It's the power that you don't use because you are getting more efficient device and interesting story, so California, which is in blue, they're basically tracked with the rest of the country on energy usage until the mid 1970s, and then legislation with pass that created the Energy Commission, which has the authority to set unilaterally very strict energy efficiency policies, and here's what happened, we create all this industrial and commercial residential energy efficiency savings, and now we're using about 30% less power than the rest of the country, which is I think a really great example of really what the role of government can do and the savings that come from that. We're in a period where I think government often gets vilified, but you know, this kind of thing saves a huge amount of money and pollution. This was actually the first appliance that we regulated, which is a refrigerator, which was the largest user of energy in your home, and up until, they'd never been regulated. And in 1975, the first regulations went into effect, and this was the energy use of refrigerators at the time had been going up and up and the refrigerator industry said, we're gonna go out of business if you regulate us, but we put the efficiency standards into effect and here's what happened, the energy use went way down, but the price of the refrigerators also went way down and the size of the refrigerators went up, and I think this is, you know, sort of a poster child again for what effective public policy can look like that has real benefits on reducing emissions. We've also done a lot of efficiency for appliances that you don't think about. So your television, which we did in 2009, and we basically say to the TV industry, you cannot sell your product into the California market without meeting these strict efficiency standards, and we cut the energy use of televisions in half, saves a billion dollars a year for consumers, and again, because we're such a big state, the TV manufacturers typically do not want to manufacture one product for the California market and one for the rest of the country, so in many cases, they end up upgrading their whole manufacturing lines for all in North America or even all the globe. So a very high leverage thing, and things, you know, you don't think about like plug-in chargers, so you have a cell phone or a shaver, and up until 2012, you know, you'd plug those devices into the wall, and when they're fully charged, they're actually still drawing some power from the outlet because there's a 25 cent shutoff diode that would stop that, that the manufacturer is electing not to install into the product because they don't pay the energy bills, so they have no benefits. So we just say, no, you can't sell the product into the California market without that, and that alone saves $300 million a year. So a lot of this is very, very below the radar, but really important to reducing emissions. So one point I wanna make is that as a country, we are actually terrible at projecting the growth of clean energy. This is the annual energy outlook projection of the growth of solar from the US government, and here's what actually happened. We're really much better at growing clean energy markets than predicting the growth of clean energy markets, and that's something that holds true up until today. Important to note as well that, today most of the power being added to the electric grid in the United States is clean and most of the power that's being retired is dirty, and so, you know, typically coal power is coming offline, wind and solar are coming online, and you know, even for people like President Trump an ardent supporter of coal power, more coal power got retired under President Trump than under President Obama, just because coal's not economic. And so the grid is getting cleaner, and it's really important to note, you know, the future of our climate strategy and the future of our economy is gonna run through wires principally and not pipes. The electric grid is really ascendant as a sort of economic foundation for the country. You know, coupled with all this is, what's happening now with the fossil fuel divestment movement. There's an excess of $40 trillion of assets that have been divested from fossil fuels, from institutional investors all over the world, rapid uptake in the last few years, and part of that is because the fossil fuel sector has actually not delivered the same returns or anywhere close to the rest of the S and P 500, there's been a lot of volatility, and so this is an important movement happening as well. I wanna take you guys on a little tour of clean energy in California, this is one of my favorite Chinese proverbs that people who say it can't be done should get outta the way of the people who are doing it. And really hats off to all the innovators who have been making this clean energy future happen. So let's begin with a little tour of California where all this clean energy is coming from. So this is the world's largest thin film solar floatable tank project, it's called the Desert Sunlight Project, 550 megawatts in size, that's roughly half of the peak demand of a city like San Francisco. You know, one interesting thing about innovation, you know, when this project was being put in, this is at the very southern end of the state, just north of the border with Mexico, there was all this innovation that occurred just during the construction of the project. So all the panels that were put in for this project, at least for the first part of the project, had an aluminum frame. And they figured out halfway through the installation, actually, we don't need that frame, so they eliminated that and there's the cost savings there. The early versions of these installations, they actually did concrete pierce and they subsequently figured out how to just use a metal pier that's just vibrated into the soil, much less energy use and much less cost. And then this project is a fixed tilt project, so the solar does not actually track the sun because the efficiency of the solar panel is not high enough to justify that extra cost. They got the efficiency up to that point, and pretty much after this project, all of the utility scale of solar projects are on trackers, it's called a horizontal single access tracker, and it just tracks the sun as it moves across the sky, you get about 25% more electricity from that, and so, just an example of the type types of innovation that are happening here as we drive the cost of solar down. And today in California, the single lowest cost source of new electricity for utilities is solar power. We're also home to the world's largest geothermal plant, this is the Geysers, up in Napa Lake County, about two hours north of San Francisco, and the world's largest solar roof, this is the Apple headquarters, 17 megawatt solar roof. Just to give you a sense of scale, the hallway when you walk around this donut ring is one mile, and so you could actually fit the entire San Francisco 49ers stadium inside that donut hole. What you see in the middle there, are actually fruit trees. Apple has put pear and plum and apricot trees in the middle for their employees, and it's the largest curved sheets of glass in the world around this building, you'll have major building envy when you go to see that headquarters. This is the world's largest battery storage project, also in California in Moss Landing, and that's been a really important part of our strategy is to add energy storage particularly as you're decarbonizing the electric grid and adding more sources of power, some sources of renewable power like geothermal or hydro generating power 24/7, but wind and solar are more intermittent and therefore energy storage becomes really important. And so we've had a very, very big focus on adding energy storage in California, it's really the fastest growing energy storage in the world. We had only 250 megawatts of utility owned energy storage in 2019, and last month we had 5,000 megawatts, so again, that's about five San Francisco's worth of peak load on the grid and we're gonna go to 50,000 by the end of the decade. This is the world's largest solar thermal tower power plant. So the way this works, this is called the Ivanpah Project, and this is on the far eastern edge of the state near the border with Nevada, and what you're looking at there is basically three 550 foot towers with a boiler on top, surrounded by 173,000 heliostat mirrors. The sun hits the mirrors, and then the mirrors concentrate the light on the boiler and you create steam. So this technology was roughly comparable with solar foldable tanks maybe 15, 12, 15 years ago, well, it happened in solar foldable tanks, the flat plate solar panels have just continued to come down and down, down in cost, and so you're not seeing as many of these type of installations anymore. We have also the world's second largest wind project, the Altlas Wind Energy Center in Kern County. In California when you say Kern County, most people think oil, 'cause it's our number one oil producing county in the state, but wind is actually the second biggest taxpayer in that county. And one interesting thing that's happening with wind is what's called repowers where they're, we've been doing wind for so long, for 30 years that many of the early versions of the turbines are, actually, you can upgrade them. So what they're doing is actually removing some of these towers, so the the older ones you see there on the right, they were put in typically in the eighties or early nineties, they're on a lattice structure and they had, you know, so sometimes birds would perch there and they had very, very fast rotating blades, so it was about 45 rotations per minute. The new turbines are typically 10 to 12 rpm, and so just as an example of what's possible, this project called Vasco here, they've removed 432 of the small turbines and replaced them with just 34 of the new turbines. And the energy production tripled, you know while reducing the avian impacts, so a good example of what's possible to reduce environmental impacts. A lot of progress as well on transportation electrification, including in heavy duty, so this is the Tesla Semi, this is at the Frito-Lay Warehouse in Modesto, this is a vehicle that transports like Pepsi and Cheetos, so all your junk food. 500 mile range, which is, you know, more than enough for most of these routes and can recharge in two hours, so I think they're doing about 30 of these vehicles there in Modesto. And also larger and larger scale chargers, this particular installation by Tesla has 98 stalls, EV charging getting bigger and bigger. I think one of the most significant milestones for the clean energy revolution is transportation electrification. And in the middle of Covid, Governor Newsom signed really a historic executive order, which mandated that 100% of new vehicle sales be electric by 2035 and you know, at the time a lot of people mocked that and said it's not achievable, that it's, you know, a pipe dream. But you know, what's happened since then is that, Europe has now announced that for all 27 members of the European Union, they'll do the exact same thing, 100% zero emission vehicles sales for by 2035, and companies like General Motors have announced they're going all electric by 2035, and really every major automaker in the world is now building electric vehicles. And it is the power of a large market to be able to do that. And I think another example too where, you know, not to listen to the critics because, you know, there's all always these naysayers, but you know, in the fourth quarter of 2022, we hit 23% of new vehicle sales being electric, that's double what it was a year earlier, and you know, there's a lot of momentum here and I'm happy to share the good news that we're gonna be doing an event this week actually marking California reaching one and a half million electric vehicles, so a lot of momentum there. And of course if you look at the automakers, you know, the valuation of the auto industry is really ordered around who is furthest along in electrification. And so, you know, for years growing up, you know, we all talked about the big three, Ford and GM and what used to be Chevy now is Stellantis, you know, Tesla is far more than all these three combined, it's the most valuable car company in the world and it's electric and growing fast, they're making about 2000 electric vehicles a day at California's Fremont Tesla factory. So one of the things that's also really exciting opportunity here as we look a little bit further upstream, you know, where does the lithium come from? Right now, the lithium in all these electric vehicle batteries comes from principally four countries, Chile and Argentina, where it's produced with these evaporation ponds and China and Australia where it's hard rock money. California has a huge resource of lithium in the form of a geothermal brine, which is at the southern end of the state in the Imperial County. And the governor here pictured about a month ago, visiting this region, which we're calling Lithium Valley, is really lifting up this vision of producing lithium here, and it's a very, very low impact way to produce it because you're just cycling the brine and there's a way to get the lithium out and then the brine is reinjected back into the underground reservoir, so to produce 20,000 tons of lithium, if you do it from South America evaporation ponds, you're impacting 30,000 acres, If you do it from hard rock mining in China and Australia, you're impacting 3000 acres. If you do it from California, the brine resource, you're impacting 30 acres, so really green process, and it's all powered by 100% clean geothermal power because that's what that geothermal brine produces. Another big resource to help create the electricity we're gonna need for all of these electric vehicles, is offshore wind. So this has been a really exciting project we've been working on for now seven years. We just set the state goal at 25 gigawatts, which is enough to power 25 million homes, and in December, in partnership with the Biden administration, the very first offshore wind lease sale occurred. So it's 583 square miles off the central on the North Coast for offshore wind development, which unlike the East Coast, which has a shallow water shelf, the offshore wind that's going California is in deep water. And so the difference is, if you look on the left, those installations in shallow water, the foundation is right in the seabed and it's fixed, the waters off the West Coast of the United States are deep, so what you do is you have a floating structure, which is typically a tripod structure, and then you have three high tension cables that hold it in place, and so that's what we're gonna be doing. And just to give you a sense of like the scale of these things, one rotation of one of these turbines, and then like I said, it's typically 10 to 12 rotations a minute, so one rotation powers two homes for a day. So that's how much juice is coming off of these systems, really, really large scale. And you know, again, what you can do offshore is much larger installations than what's possible on land. When you drive around the United States and you see wind turbines, they're typically, you know, maybe one to two megawatts in size, offshore wind is closer to 15 megawatts in size. Another great installation, this is a factory company called Beam, which I visited last week, which is providing electricity in a way that, you know, you can charge your car, but you don't need to be connected to the grid. So what you're looking at there is a device that basically is designed to fit in a single parking space, a 10,000 pound ballast metal plate connected to an arm which holds up a battery pack and a solar tracker, and so that fills up the battery from the sun and then there's two electric vehicle chargers there, and you don't need to trench, you don't need to permit, you don't need to interconnect, you can just plop this in a parking space and you get power 24 hours a day to charge your car even when there's a grid outage. So all this stuff that we're doing, you know, we've been criticized since, this is gonna be bad for the economy, investing renewables is a mistake. And we've been hearing that for years, okay, just the last decade. But here's what's happened is, we've gone big on clean energy. We were the 10th largest economy in the world and we then we passed Russia, we passed Italy, came number eight, then we you know, ended up passing Brazil and France to become number six, and then we passed the United Kingdom to be number five, and now we're on track this year in 2023, to pass Germany to be the fourth largest economy in the world. And so we're really, you know, I think it's really clear that clean energy has been good for our economy, we've attracted a lot of new investment and a lot of innovation and then been able to export, you know, one of our largest exports of all is electric vehicles. We have 43 facilities manufacturing electric vehicles in California. So Tesla being the biggest, as I mentioned, they're manufacturing about 2000 electric cars a day at the Fremont factory. Tesla employs about 47,000 people in California, and they also have a major battery factory. And as I mentioned, they actually represent about 60% of electric vehicle sales in California although now many other models are coming on. But as I mentioned, we just hit one and a half million zero emission vehicles sold in California. So this is one of my favorite pictures, this is Fifth Avenue, you know, 1900, you look and there's, it's all horse and buggy and one car and then 13 years later, same street, all cars and one horse and buggy. And I think it's, you know, just a good reminder visually of how quickly transformation can happen faster than conventional wisdom suggests. We're also doing a lot around rooftop solar. So the energy commission mandated in 2020, that all new homes have to be built with rooftop solar. There's a couple, sort of common sense off-ramps we have for that, if you have, you're participating, for example, in a community solar system, you can do that instead. Or if you have shading or a north facing roof where solar doesn't make sense, you get an exemption. But basically the default is every new home is built with solar. And then in 2023, we required solar on all new buildings, so schools, commercial, industrial, everything has to have rooftop solar. We build about 100,000 new buildings a year in California, and that's adding about one gigawatt of rooftop solar every two years, just that part of our energy code. So really what we're doing is the electrification of almost everything and you know, you see the Ford F-150 Lightning there, electric buses, but also a lot of electric two-wheeled devices, you're seeing those all over California now and across the country. But also all electric new homes. So building a home where you have electric heat pump technology to provide your heat and your cooling and electric conduction cooktops, you actually save about $5,000 from not having to run a gas line inside your home. I just visited last week the port of San Diego, which is the first port in the United States to commit to go 100% electric, and they will be getting the very first electric tugboat in the world in July, and then later this fall, they're gonna be doing electric cranes, electric harbor cranes are getting installed, so really exciting to see that happen. And right now the Caltrain line is electrifying from diesel to electric next year. And of course high speed rail is under construction in California as well, that'll be 100% electric and 100% powered by renewables. So to wrap up, I think a really good way to think about this energy transition that we're on and moving beyond fossil fuels, is to remember the story of smoking in the United States. So both my grandfathers were in World War II and you know, men were given as part of daily ration soldiers in World War II in the US Army, everybody got food, they got chocolate and they got a pack of cigarettes. And you had a generation of American men come home as smokers and it was completely mainstream, doctors did ads for cigarettes. Johnny Carson smoked on the Tonight Show, Fred Flinstone smoked, Marilyn Monroe smoked, President Kennedy smoked, some people say they smoked together, so you get that. And then the science came out, that hey, smoking causes cancer and secondhand smoke causes cancer. And the response from the tobacco industry was very telling, because they went from manufacturing one product, cigarettes to manufacturing two products, they manufactured cigarettes and they manufactured doubt. They put over $100 million into junk science to distort that basic truth, that smoking causes cancer. They came up with all sorts of other bogus explanations for why everyone's getting lung cancer. But what happened next I think is very instructive for the climate fight because ultimately the truth got out and it got accepted that smoking was causing cancer and it led to a cascade of policies, health warnings on cigarette packages, banning advertisement of cigarettes on TV, increasing in cigarette tax, sales to minors banning, you know, smoking on airplanes and bars and restaurants and so forth, and now we're down to 9% and it's really one of the great public health success stories in our country's history. And I think it's very analogous actually to a lot of the mythology that the fossil fuel industry has invested in about climate and what's really driving climate change. So to close out, I wanted to just share that, I think about how I got into this work, you know, it was really a love of nature from when I was young and especially at Swarthmore, you know, being able to walk around these beautiful trees and this arboretum really affected me in a beautiful way and I, trees have a very special place in my heart. I think there's a lot of wisdom and beauty with trees, and I remember the walk on Parish and I'll hopefully be back for my 30th reunion here in a few months. And coming to California, you know, I realized we have an amazing set of trees. We have the oldest tree in the world, the Methusela Tree, which is almost 5,000 years old, and think about a tree that was alive during the time of Cleopatra, Jesus Christ and so forth. We also have the tallest tree in the world in Humboldt County, the Hyperion Tree almost 400 feet tall. And we have the biggest by volume, which is the only one of those I've seen. This is in Sequoia National Park, the General Sherman Tree, and if any of you have not had a chance to go to Sequoia, I highly, highly recommend it. At the foot of this tree, you'll see there are these cones, they're about the size of an egg, it's the the cone that this Sequoia produces and you open it up and there are little seeds there, that are about the size of a grain of rice. And I was very moved by this. I took my girls and my wife and just looking up at this amazing tree and realize that something so big starts so small, was very moving and inspiring to me. And I think that's how we have to think about the change we can create in the world, that little actions add up. So anyways, I will stop there and happy to take questions. Thanks for having me.
Saba Thackurdeen ’12 Thanks so much David for that great chat. And I think inspiring to hear about all the work and all the superlatives associated with the energy policy in California for sure. Just to get us started here, it's really interesting to kind of think about industrial policy, especially in a domain where not only the gold post, but the entire field is shifting rapidly. You gave a bit of a rise to some of the work going on with lithium and you know, of course all of the social environmental, as you mentioned, national security challenges there and just last week one of the inventors of the lithium battery said it was due for disruption, but at the same time it's what we have right now and what we can move forward on, and so how do we really manage industrial policy in a space where things are rapidly changing and where we have to invest significant amount of dollars in order to act now and meet the urgency?
David Hochschild ’93 Well, first of all, I wanna begin just by giving hats off to the Biden administration. I think this has been the most productive first two years of any presidential administration since Roosevelt. And the two big bills that got passed, really three, the Infrastructure Act and the Inflation Reduction Act and the Chips Act, all have major pieces for climate. The most significant being the Inflation Reduction Act, which provides 10 years of tax credits for solar, for wind, for geothermal, for electric vehicles, for energy storage, for electric heat pumps, and you know, that's a runway that we've never had before. If you look at how we subsidize energy, typically, you know, fossil fuels have, you know, the oil depletion allowance started in 1926 and continues to this day for a fully mature industry. We've only had very spare and very intermittent tax credits for renewables. And so finally we have some wind at our backs, thanks to President Biden and Congress for getting that over the finish line, that will really help with our industrial strategy. So I think industrial strategy and climate policy are really inextricably intertwined. I think our lesson from California is that, it's good for business to do this and we don't wanna be in a situation where China becomes the Saudi Arabia for clean energy. We wanna be producing these resources here and scaling up and you know, there's a lot of tax policy now to help make that possible.
Saba Thackurdeen ’12 Nice, so it seems like there's a lot of excitement both domestically and then also within the state, out of curiosity, are there bright spots for you and other places that inspire you with respect to their energy policy?
David Hochschild ’93 Absolutely, I mean I mentioned offshore wind, we're head on a bunch of these things like rooftop solar and electric vehicles, but we're way behind Europe on offshore wind. And you look at, you know, the UK for example, they have 10 gigawatts, our peak globe in California is 50 gigawatts, they already have 10 gigawatts of offshore wind installed today, and they will have 50 installed by 23. So they're gonna get the majority of their electricity from offshore wind and they're moving really fast, and you know, we have a lot to learn from our partners over there. And that's the beautiful thing, by the way, when you travel around the world and I just came back from a climate delegation to Japan, there's all these exchanges, you know, and a place like Japan is way ahead on energy efficiency and electric heat pumps and rail, but way behind on renewables and we can have, you know, constructive you know, sort of exchanges and I think there's, you know, I think a very healthy competition to who can be first in clean energy that we wanna encourage.
Saba Thackurdeen ’12 Yeah, well we have a few questions here on some of the technical aspects of a more efficient US power grid. And so one of the questions here from Michael or Michelle is how important is building the equivalent of the Eisenhower Freeway System for a more efficient US power grid? And I guess that gets maybe even to what Buckminster Fuller had called for back in the day for even a world energy grid. So curious about your thoughts there.
David Hochschild ’93 Well good. First of all, I'm relieved that wasn't one of my classmates, I have a couple of classmates listening in, and I thought they were gonna be asking me why was my dorm room such a mess and so forth. Yeah, so I think we do need a lot more transmission in the United States to help get clean energy resources from one place to another. And you know, that's a major focus of the Biden administration and of us, our work here in California, for example, offshore wind is an amazing resource. It is actually producing a lot more power for more hours of the day than wind that's produced on land, and we would like to be able to export that throughout the Western United States. And so that does require more transmission, that's a great infrastructure opportunity and a great jobs opportunity to build all that out, so that's a big part of what we need to do.
Saba Thackurdeen ’12 And can you speak a little bit about storage as well as, and maybe also various technologies like fuel sector technology?
David Hochschild ’93 Yeah. So energy storage, as I mentioned, is a major focus for us that's been almost entirely lithium chemistry, and it's typically four hour storage capacity, so it can dispatch for four hours, which is actually largely sufficient because just to be clear on grid reliability, it's only like 30 plus hours a year where we're actually concerned about grid reliability, and it tends to be late afternoon, early evenings in August and September when the heat is really high. And we had a sustained heat storm in September that really stressed the grid and storage was a key part of what kept the lights on. But we are also investing in other non lithium chemistries that have, they're called long duration storage, so it's vanadium and iron chromium and zinc air and iron air chemistries that have, you know, the potential to go to 100 hours or more. And so that's an important piece of the puzzle as well.
Saba Thackurdeen ’12 Yeah, well we have a few questions that are bubbling up really on the social dimensions as well in addition to the technical, and I suppose given that decarbonization and electrification is really happening on a massive scale such that, you know, it almost becomes def facto social policy, for instance, touching environmental justice where, you know,
David Hochschild ’93 Yeah
Saba Thackurdeen ’12 pollution and vulnerable communities are concerned employment, given growth and you know, transition and then environmental policy grid large even beyond the energy
David Hochschild ’93 Yeah.
Saba Thackurdeen ’12 As it affects wildlife and biodiversity. Can you talk a little bit about how within your remit and within the, I suppose the state agency that those conversations end up being surfaced?
David Hochschild ’93 Yeah, so equity is really at the heart of the energy strategy and the climate strategy in California. We're making a commitment to really prioritize the communities that have borne the heaviest burden of pollution. So for example, we're doing about a billion dollars this year for building electrification, we're focusing that on low income and disadvantaged communities. When we do demonstration projects for new clean energy technologies, including carbon removal and others, we prioritize low income communities, so about 70% of our demonstration projects are going into low income communities for these clean energy projects, and there's a special focus on tribes. California has 109 federally recognized native of American tribes in our state, we've funded eight tribal microgrids and we have plans to do another 16, so these are solar battery microgrids. Typically tribes in California are the first to lose power and the last to get it back 'cause they're in very remote areas. And so when you have a winds storm or fires, the time that it takes to make those repairs is longer, and we really wanted to address that directly with microgrids, which can be a great solution. We just came back from a bunch of tribal consultations up in the North Coast with the Yurok, and Blue Lake Rancheria and a number of other tribes and you know, these tribes are losing power sometimes, you know, eight to 10 times a year and microgrids can be a big help to them in ensuring grid reliability, so that's a big focus for us.
Saba Thackurdeen ’12 Nice, well it seems like equity is, I am really appreciating the way that it's found its way into the conversation. Say for instance, initially when a lot of rebates rolled out for electric cars, et cetera, only for the first purchaser, and now increasingly a conversation where it's passing on to the used market as well as with some of the recent passages of major bills at the federal level. So equity seems like meets the needs then of a lot of folks within the community and goes beyond I suppose, middle and upper class traditional post side of these policies, and so do you find that there ends up being backlash either from, you know, working class folks or otherwise on the technical side as well with these clean energy initiatives?
David Hochschild ’93 Well, I think the incentive programs with their targeted low income are generally well received and it is true that, you know, just like cell phones for example, which initially were very, very expensive before becoming basically ubiquitous, that that's also kind of the trajectory many of these clean energy technologies have started with. And so, rooftop solar used to be initially just for the wealthy, it's now fully mainstream and there's all sorts of, you know, credits and so forth to help make it even more affordable for low income. Electric vehicles as well, one of the things we're seeing is the development of a secondary market, so you can get, you know, a used Nissan LEAF electric car for six or $7,000 now and you know, shorter range again, but that's becoming more and more accessible. It does highlight the point that we need public charging infrastructure really on that piece. And so we're putting, my agency alone is doing about three billion of investment just to build out electric vehicle charging. We're targeting about half of that for low income communities. We need to get to about just over a million chargers by 2035.
Saba Thackurdeen ’12 Well it's one of the questions we have coming up here is on major scientific breakthroughs and in recent months regarding the materials used, you know, lithium was kind of due for an upheaval and some folks wanna know a little bit more about your take on kind of transitioning beyond it.
David Hochschild ’93 I'm sorry I missed that, transitioning on what?
Saba Thackurdeen ’12 Beyond lithium itself as a...
David Hochschild ’93 Yeah, so there is talk of other chemistries, sodium is the one that's gotten some attention lately. I think honestly, there's always gonna be a lot of sound and fury about future chemistries. I think lithium is to batteries, what silicon is to solar. And I come out of the solar industry and there was, you know, a lot of discussion about other chemistries, cadmium telluride and gallium arsenaide and thin film, amorphous, all this stuff, but you know, silicon has been the mainstay, you know, resource to support solar and it's I think 98% of the solar market today. And I think, you know, lithium has great properties including energy density, that really make it very attractive. So I think it is going to be a mainstay technology for a long time and the costs are coming down, the energy density is getting better, you know, welcome competition. We will always be investing in other chemistries, but I think lithium is working well and coming down in price and as we get more scale that'll only continue.
Saba Thackurdeen ’12 And out of curiosity within the remit of the Energy Commission, does it end up also simultaneously investing in research into these technologies or is that handled separately?
David Hochschild ’93 Yeah, we have really, after the Department of Energy's R and D program, the California Energy Commission is the biggest in the country. We do about 150 million a year of research and development, and that's for everything from next generation battery technologies, a company like Sparks that we've funded that are making a cobalt free, nickel free, lithium-ion battery, so you can make a lithium battery entirely with materials from California, to high efficiency windows, LED lighting, better solar and wind technologies, a better demand response technologies, so we fund all sorts of that. And those early grants really matter. I was with the CEO of a of a battery company recently who you know, just got acquired and, you know, got $100 million investment, but he told us the, we might've given him a million or 2 million grant, he said that bridge funding was what saved the company, they were gonna go bankrupt and there's a company called Truberg and Hayward and you know, to hear those stories that really, that's what it's about. I mean, I think that's a really, people ask like, what is the role of government in this? And I think, you know, the early stage stuff where it's higher risk, where the market's not quite ready to support yet, that is where public dollars are needed and then you give it a push and it's, you know, snowball rolling downhill, it'll carry on its own. But that early push is I think a critical role for us to play.
Saba Thackurdeen ’12 Yeah, it reminds me of some of the work of Mariana Mazzucato in the text "The Entrepreneurial State" really shows how states can effectively be involved in entrepreneurship and early stage investment that drive those markets. And it's really interesting to see you too, how y'all invest in research at such a scale that it's only second to DOD, but a lot of those I suppose tools end up revolving and still around the core of market based principles. And I'm just kind of curious, there's a question here that is curious about the effectiveness of carbon pricing and reducing demand as opposed to for fossil fuels? And I'm just kind of curious, how does that end up playing in the electrification?
David Hochschild ’93 I think that's been, you know, a very lively debate over the last 10, 15 years, you know, is how do you best move us towards clean energy? And the decision was made, you know, really by the last Congress and the Biden administration, instead of adding a price to carbon, let's cut the costs of clean energy. So this is really sort of strategy that's laden with carrots, and I think that can be quite effective because essentially you know what you're doing when you provide, like for example, with batteries, right? So you got a 30% tax credit when you install, say a battery storage system, if you're a company or you're a home. And then if it's domestic content, it's 40%, if it's domestic manufacturing it's 50%. That really creates a market and that becomes much more cost effective than dirtier alternatives. So I think, you know, politically, what's happened has really become clear that this was the sort of pathway that could work politically. So that's really the story I think of the last year since the Inflation Reduction Act was adopted.
Saba Thackurdeen ’12 Yeah, it's incredible seeing the amount and the scale of private capital flowing in as a result of those policies. One of the examples that, or one of the ideas in the book that I had mentioned just now, "The Entrepreneurial State," gave an example of, well if the US, in early stage investment at the national level had asked for a 1% stake in any of the companies in which it provide early investment dollars, that revenue would provide for the entire US budget. And so I'm just kind of curious, even as that still relies on the same fundamental carrots that you're talking about, do you think that there is political bandwidth to kind of implement some of these ideas where essentially we have a, not necessarily a universal basic income, but really a universal basic dividend.
David Hochschild ’93 That is a very bold idea and kind of above my pay grade and my current job, But there are definitely some efforts along those lines that Governor Newsom has set up some, some loan programs you can have access to, but there are repayment triggers if you, you know, have a successful exit, so the money goes back to the treasury. It's not so much that it goes to every individual and you have a check going out to individuals, but more than it goes back to the public coffers to make more public investments, but you know, one could envision something like the clean energy version of the Alaska Permanent Fund where they have, you know, every Alaskan gets a check every year for a couple thousand dollars for oil revenues and you could envision something like that for clean energy.
Saba Thackurdeen ’12 Well, as Linda here mentioned, you know, really kind of thankful for the chat and also wanted to echo, I think a lot of your stories about cultural change, it's a really swattie approach to hear that the chair of the energy commission also happened to work with Mandela and led a lot of voter initiatives as well. It's a story we're really glad to hear. They were mentioning actually that they were at Swarthmore about 10 years before you in the class of 82, and at that time students were infuriated by the slow pace of investment from South Africa.
David Hochschild ’93 Yeah.
Saba Thackurdeen ’12 But 10 years later, as you mentioned, and you gave the example with the horses on the electric cars, you know, it was a complete sea change of approach. And so, you know, just recently Swarthmore and much to its credit, launched an impressive initiative to decarbonize by 2035. And out of curiosity, given that that's where we set the carrot now, 10 years down the road, where do you hope we will be?
David Hochschild ’93 Well look, first of all, I will say just as an alumni, I do hope Swarthmore divests from fossil fuels. I will tell you, living in South Africa, it was crystal clear that divestment from the Apartheid government was the political force that drove the end of Apartheid and made it possible for Mandela to end that racist system and to become president. And institutions like Swarthmore were part of that. And I was fortunate at an alumni event a few years back to meet some of the alumni who were involved in that, which, you know, there was occupation in the president's office and big debate, but Swarthmore was on the right side of history there and they did divest and you know, very much in the tradition of our school being, you know, a stop in the underground railroad, I mean there are these moral moments and Swarthmore showed up during the divestment debate for Apartheid with the fossil fuel divestment movement, which as I mentioned is now, you know, really taken off an in excess of $40 trillion of assets being divested. That movement for divestment from campuses actually did begin with Swarthmore students, it didn't happen. Swarthmore has not yet divested from Fossil but I think, you know, the interesting thing about this debate is, you know, fossil fuel represents about 5% of investible assets, so it's not a big fraction of the economy. So you can divest 100% from fossil fuel and still be able to invest in 95% of the economy, which, you know, and it has not performed as well over the last 10, 15 years as the rest of the S and P 500. So I don't actually think it's a sound investment strategy, and I think the, you know, the legwork necessary to divest is actually not that significant 'cause it's really not a very big portion of the economy as it once was, used to be bigger than 10% and now it's half that. So I do hope that's something that the leadership will look at, I think it's time, I think we're in a moment right now where climate is the defining issue of our era. And you know, in my hometown, I live now in Berkeley with my family and I grew up here in the Bay area, we never had wildfire smoke in the Bay area my whole life, I'm 51 and then we've had it three years in a row. And last year we had a day where the wildfire smoke was so thick that it was dark as night in the middle of the day the streetlights went on. And so it's really unprecedented impacts and hurting herb quality and driving, you know, a lot of public health issues. So I don't think anybody can or should be on the sidelines in ways large and small on this, and I hope Swarthmore really looks at that issue again closely.
Saba Thackurdeen ’12 Thanks so much David. And it's not, as you mentioned, not only the moral imperative, but as you mentioned throughout your entire talk, an incredible amount of opportunity there as well to invest in the transformation. And I think really great to know that a swattie is leading light, literally and figuratively over there in California, helping to lead the way, and thanks so much for joining us tonight and sharing a lot more about your work.
David Hochschild ’93 Well thanks for having me Saba. Have a good night everybody.
Saba Thackurdeen ’12 Take care.