The California Independent System Operator earmarked $1.3 billion less for transmission development in its 2024-2025 transmission plan than in the previous year’s plan as it focused more on reliability-driven projects and less on policy-driven projects such as those intended to connect offshore wind farms, according a report CAISO prepared for the governor and legislature as part of its preparations for launching a new regional organization to oversee western electricity markets.

“The current plan reflects an increase in the year-over-year rate of peak demand growth from 0.99% to 1.53%, and in particular, a change from 1.22% to 2.14% in the Greater Bay area, which represents an increase in the 2035 peak load forecast of over [2 GW] in the Greater Bay from the previous planning cycle,” CAISO said in its report.

In its 2024-2025 plan, CAISO said, “Additional development will be also required to access the called-for out of state resources and offshore wind. However, the increasing rate of load growth tied to the success of electrification of transportation and building electrification, and data center load growth, is expected to create new challenges, calling for additional strengthening of the grid to provide reliable service to load centers.”

The plan will enable the connection of 30 GW of solar across California, 7 GW of onshore wind, 2 GW of geothermal development, and access for battery energy storage projects “co-located with clean, renewable generation projects across the state, as well as stand-alone energy storage located closer to major load centers in the Los Angeles Basin, greater Bay Area, and San Diego,” said CAISO.

CAISO also wrote that the transmission plan will enable the import of over 9 GW of out-of-state wind generation and over 4.5 GW of offshore wind, “with 2.9 GW in the Central Coast (Morro Bay call area) and 1.6 GW in the North Coast area.”

The Feb. 1 report is the first one issued in compliance with Assembly Bill 825, which was signed by Gov. Gavin Newsom, D-Calif., last September. The bill “envisions transitioning market governance to a new regional organization after January 1, 2028,” CAISO said in a release about the report, and requires the grid operator to submit an annual report no later than Feb. 1 every year addressing issues related to market, tariff and transmission activities. 

The report also detailed CAISO’s plan to comply with Federal Energy Regulatory Commission Order No.1920, issued in May 2024, which required transmission planners to develop 20-year plans, consider grid-enhancing technologies and give states a bigger role in transmission planning and cost allocation. 

CAISO’s compliance is expected to be less complicated than some other grid operators, like the PJM Interconnection. Still, FERC Order 1920 will “require some changes,” the grid operator wrote. These changes include transitioning from the current annual transmission planning process to a “biennial cycle with an interim reliability assessment,” with the first biennial comprehensive transmission plan to be completed in spring 2030.

“The new Long-Term Regional Transmission Planning cycle will be integrated with existing comprehensive reliability, economic, and policy assessment,” CAISO said. “The ISO will continue to engage and align with neighboring planning regions, NorthernGrid and West Connect, on interregional plans.”

CAISO’s report reviews policy initiatives undertaken in 2025, including the development of an approach to “extend participation in the day-ahead market to the Western Energy Imbalance Market” (WEIM) and the consideration of “reforms needed to the ISO’s resource adequacy rules, requirements, and processes to ensure the future reliability and operability of the grid.”

CAISO is expected to launch its Extended Day-Ahead Market (EDAM) later this year with PacifiCorp and PGE participating. AB 825 set the groundwork for a new, independent regional organization to take over management of both the WEIM and EDAM markets from CAISO in response to other states’ concerns about California’s dominance. 

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“Since its launch in 2014, the WEIM has resulted in approximately $8 billion in savings for market participants and their customers while strengthening grid reliability and resilience,” CAISO said. “Because more energy transactions occur in the day-ahead timeframe, EDAM is projected to build on and significantly expand those benefits.”

CAISO’s 2024-2025 plan recommended 28 reliability-driven transmission projects, compared to the 19 recommended by the 2023-2024 plan, and only three policy-driven transmission projects compared to the previous year’s seven. Associated projected spending also fell from $6.1 billion to $4.8 billion.