California has set the standard for how not to do renewable energy

If renewable energy is so great, why does California pay so much for its electricity?

That's the question you need to ask — the one that exposes America's most inconvenient energy truth. Californians pay 35 cents per kilowatt-hour for electricity, whereas Iowans, despite generating nearly twice as great a share of renewable energy, enjoy 14 cents.

This paradox reveals that California's energy crisis stems not from clean power itself, but from catastrophic policy choices, regulatory capture, and the brutal economics of being first.

The numbers demolish conventional wisdom. Eight states generate more renewable electricity than California's 38 percent, and all of those eight maintain rates below the national average of 17.47 cents. Iowa leads with 65 percent renewables at less than half California's cost. South Dakota achieves 62 percent renewable generation and its ratepayers pay just 14.34 cents. Washington State, with 78 percent renewable power from legacy hydroelectric dams, is able to keep rates at 13.67 cents.

What explains this paradox? Start with California's early-adopter penalty. When the state mandated renewable adoption in the 2000s, solar panels cost ten times their current prices. The state essentially bought the energy equivalent of a $4,000 flat-screen television that now sells for $400.

Power purchase agreements signed between 2007-2010 have locked ratepayers into decades of above-market prices — stranded costs that states building renewables today simply avoid. Solar infrastructure costs have plummeted 82 percent since 2010, but California remains shackled to yesterday's prices.

Policy design compounds the damage. California mandated specific technologies through solar carve-outs and rooftop requirements rather than letting markets find the cheapest clean electrons. Whereas Iowa's wind turbines achieve 40 to 45 percent capacity factors, California doubled down on solar panels operating at 20 to 25 percent efficiency, requiring 13.4 gigawatts of batteries to keep the lights on after sunset.

The state's three investor-owned utilities — PG&E, SCE, and SDG&E — have increased rates 70 to 85 percent since 2019. Yes, $27 billion in wildfire mitigation costs hurt too, but that's only part of the story. These utilities earn guaranteed returns of 8 to 12 percent on capital investments, creating perverse incentives to gold-plate the grid. Meanwhile, Iowa's rural electric cooperatives operate without profit margins, passing savings directly to members.

Sacramento's regulatory maze makes matters worse. The California Public Utilities Commission oversees investor-owned utilities while 25 Community Choice Aggregators operate under different rules. This creates a balkanized system where costs shift between customer classes. Rooftop solar owners — predominantly wealthy homeowners — avoid paying for grid maintenance, while apartment dwellers subsidize their green virtue. A California Legislative Analyst report found that this cost shift adds $200-400 annually to non-solar customers' bills.

The political establishment in California chose the most expensive path to clean energy. Rather than learn from Texas's market-based approach — which built more renewable capacity at lower cost — California legislators layered mandate upon mandate. They require utilities to procure specific technologies, meet accelerating deadlines, and satisfy multiple stakeholder interests. Each requirement added cost without adding value.

Leadership failures extend beyond policy design. When rates exploded, politicians blamed utilities while ignoring their role in creating the regulatory framework. Governor Newsom's administration approved utility rate increases while simultaneously mandating electrification of heating and transportation — forcing consumers to buy more of an increasingly expensive product.

The tragedy is that California's experience discredits renewable energy when the real culprit is implementation.

Nevada generates nearly identical renewable percentages but keeps rates at 13.32 cents by focusing on utility-scale solar farms rather than expensive rooftop installations.

Oklahoma balances 42 percent wind generation with natural gas backup, achieving 12.94-cent rates through market competition rather than mandates.

California's crisis offers three critical lessons for federal policymakers. First, timing matters enormously. Early adopters pay innovation premiums while late adopters reap the benefits. Utility-scale solar now costs 56 percent less than fossil alternatives, but California remains locked into contracts signed when solar was seven times as expensive as coal.

Second, technology-neutral policies beat policies that pick winners. States succeeding with renewables let economics determine the mix — wind in Iowa, hydro in Washington, utility solar in Nevada. California's solar mandate ignored its wind resources and forced expensive storage solutions.

Third, market structure matters more than the renewable percentage. Public power and cooperative utilities consistently deliver lower rates than investor-owned utilities, regardless of generation mix. Federal policy should address utility profit incentives, not just generation sources.

California projects demand of 76 percent more electricity by 2045. Yet current rates already discourage electrification. The state is thus demonstrating exactly how not to implement clean energy policy. The renewable energy paradox isn't about technology; it's about politics, timing, and who profits from the transition.

President Trump and Congress should take note: Renewable energy's time has arrived. We now have renewable energy and energy storage options, in the same way our televisions are even better today and cost a fraction of what they did a decade ago.

Dr. Mark McNees is the Director of Social and Sustainable Enterprises at Florida State University’s Jim Moran College of Entrepreneurship and author of “The CEO’s Mindset Reset.”