California’s electricity demand is projected to rise sharply – by around 15 GW by 2035 and 20 GW by 2040 – driven by the rapid expansion of large data centres, industrial growth, as well as transport and building electrification. Meeting this demand will require installed capacity additions of over 74 GW and 107 GW, respectively. These additions are also critical to achieving the state energy goals established under the Senate Bill (SB) 100, which mandates a renewables share of 50 per cent by 2026, 60 per cent by 2030 and 100 per cent by 2045. To meet the forecast demand and state energy goals cost-effectively, in April 2026, the California Independent System Operator (CAISO) released its draft 2025-26 Transmission Plan, recommending 38 transmission upgrades with an estimated total cost of USD7 billion, phased in over lead times of up to 8-10 years and translating to approximately 0.5 cents per kWh over the life of the projects.

The draft 10-year plan, developed through CAISO’s annual transmission planning process (TPP) in close coordination with the California Public Utilities Commission (CPUC) and the California Energy Commission (CEC), based on a proactive zonal transmission planning model and formalised coordination under a 2022 MoU, aligns transmission development with statewide reliability needs and SB 100 goals. It relies on two primary inputs – the CPUC’s Integrated Resource Plan and the CEC’s electricity demand projections. Building on prior plans and CAISO’s 20-Year Outlook (published every two years since 2022), the latest draft reflects a shift from accessing renewable resources to also supporting rapid load growth, while prioritising affordability and efficient, innovative grid solutions.

The ongoing TPP, which commenced in January 2025 and culminates with the approval of the comprehensive transmission plan by the CAISO Board of Governors, has identified transmission facilities across three transmission categories – reliability, public policy and economic needs:

  • Reliability‑driven solutions (33 projects, USD4.4 billion) address load growth and evolving grid conditions, including the shift toward higher renewable penetration, ensuring compliance with North American Electric Reliability Corporation, Western Electricity Coordinating Council and CAISO transmission planning standards.
  • Policy‑driven solutions (four projects, USD2.2 billion) expand grid capacity to support mandated renewable portfolios, including those developed by the CPUC.
  • Economic-driven solutions reduce congestion costs and transmission line losses. CAISO recommends the 500 kV Gates–Los Banos #3-line series compensation project (USD150 million) to relieve congestion on Path 15 and parts of Path 26, accommodating renewable integration in the San Joaquin Valley and rising demand in the CEC forecast.

In this cycle, following the board approval in May 2026, a competitive solicitation phase will open for new regional projects (above 200 kV), including the eligible 500 kV Trout Canyon-Lugo line (USD1,685 million).

CAISO is aligning its TPP with the Federal Energy Regulatory Commission Order No. 1920 and 1920-A, transitioning from an annual to a biennial framework with expanded long-term and west-wide planning, including consideration of grid enhancing technologies (GETs). The existing annual process will continue through the 2027-28 Transmission Plan in spring 2028, followed by the first biennial plan, known as the Comprehensive Reliability, Policy and Economic Plan (10 and 15 years), in spring 2030. Parallelly, CAISO will launch a new Long‑Term Regional Transmission Planning process (20 years) in 2027, with the first four-year regional transmission plan scheduled for completion in spring 2030.

Integrating new loads

One of the most significant and fastest-growing drivers of transmission needs in the 2025-26 plan is the rapid expansion of new large loads, particularly data centres. As of January 2026, the CEC forecasts data centre load in the CAISO Balancing Authority area to increase by 1.8 GW by 2030 and 4.9 GW by 2040. The greatest concentration of large load interconnection requests is in the Greater Bay Area (GBA), particularly Santa Clara and Alameda counties.

CAISO has launched a dedicated Large Loads Initiative to address the evolving roles and treatment of large loads in the interconnection and transmission planning processes. Beginning with the 2024 Integrated Energy Policy Report (IEPR), the CEC has treated data centre demand as a separate bus-bar level load modifier to improve forecasting accuracy. The projection uses a 67 per cent utilisation factor, reflects project completion probabilities (confidence level) of 70 per cent, 50 per cent and 10 per cent across project groups; and applies linear ramping assumptions across TPP study years. The CEC forecasted data centre load values will be considered in the upcoming TPP cycles.

Resource portfolios

On the supply side, CAISO’s 2025-26 Transmission Plan is informed by multiple resource portfolios. The CPUC adopted portfolios for the 2025-26 TPP to guide transmission needs assessment in February 2025. Two portfolios were developed—a base case (most likely scenario aligned with the state’s greenhouse gas target by 2035) and a sensitivity case (uncertainty scenarios with greater volume of long lead-time (LLT) resources). The CPUC recommended using the base case for planning, citing higher uncertainty in emerging resources. Each portfolio lists the total capacity by resource type under Full Capacity Deliverability Status (FCDS) (which counts toward resource adequacy [RA])] and Energy Only (EO) status (modelled for curtailment risk but ineligible for RA]). FCDS signifies that the grid can deliver the generator’s full, expected output to the grid under peak load conditions, while EO status signifies that the generator’s output can be delivered only subject to grid conditions. The portfolios comprise solar, wind (in-state, out-of-state and offshore), battery storage (4-hour and 8-hour), geothermal, long-duration energy storage, biomass/biogas and distributed solar resources and net dependable gas generation capacity not retained. All portfolio resources are modelled in policy-driven assessments based on the study plan and deliverability methodology.

The 2040 Base Portfolio includes 45 GW of solar generation (from regions that include the Westlands area in the Central Valley, Tehachapi, the Kramer area in San Bernardino County, Riverside County, as well as southern Nevada and western Arizona;), over 2 GW of geothermal development (primarily in Imperial Valley and southern Nevada), access for battery storage projects co-located with renewable generation projects and stand-alone storage, over 4.5 GW of offshore wind (OSW) developments (2.9 GW in Morro Bay call area (Central Coast) and 1.6 GW in the Humboldt call area (North Coast)), 8 GW of in-state wind generation (including in Tehachapi), and import of over 10 GW of out of state (OOS) wind generation from Idaho, Wyoming and New Mexico, by enhancing corridors from CAISO border in south-eastern Nevada and from western Arizona into California load centres.

Out-of-state wind

As already seen, the 2025-26 TPP portfolios include substantial OOS wind capacity additions (9 GW by 2035 and 10.7 GW by 2040), of which 1,100  MW is sourced from Idaho, 3,000 MW from Wyoming and 3,499 MW from New  Mexico mapped to the Palo Verde and Mead interfaces by 2035 and an additional 1,707 MW from Wyoming wind associated with Tesla interface by 2040. However, these currently depend primarily on a limited set of identified under-development transmission projects. These include TransWest Express (1,500 MW from Wyoming) (2030) and SunZia (3,099 MW from New Mexico) (late 2026), both approved subscriber transmission projects, along with the SWIP-North (1,100 MW from Idaho, expected online by 2028 following regulatory approvals). Beyond these, no additional confirmed transmission projects are publicly available to support further OOS wind integration at scale. However, CAISO is actively monitoring and engaging with other Western Interconnection projects—such as PacifiCorp’s Gateway and Blueprint South, NV Energy’s Greenlink (expected 2027-28), TransCanyon’s CrossTie, Grid United’s Southline (278 mile [447 km] double-circuit line enabling Desert Southwest renewables), and RioSol (targeted around 2028)—which could expand interregional transfer capability and facilitate additional renewable integration from neighbouring states, particularly New Mexico and Wyoming.

WestTEC Initiative

CAISO is a participating member of the Western Transmission Expansion Coalition (WestTEC), a landmark first-of-its-kind initiative coordinating transmission planning across the entire Western Interconnection. Facilitated by the Western Power Pool and the Western Electricity Coordinating Council, its 10-year Horizon Study (February 2026) identified 3,400 miles (5,472 km) of additional transmission (~USD14 billion), alongside 8,900 miles (14,324 km) already in development (~USD40 billion). The WestTEC study results were consistent with CAISO’s internal planning work, reinforcing alignment on the interregional transmission needs to support integration of California’s share of Western renewable resources.

Transmission projects

CAISO’s 2025-26 Transmission Plan earmarks 33 transmission projects to reinforce California’s backbone network over the next decade. Several reliability-driven projects address short circuit duty (SCD) exceedances caused by the increasing penetration of renewable resources and the displacement of conventional synchronous generation. The most significant among them is the new 230 kV Greater Bay Area Tesla–Trimble–Metcalf corridor expansion (USD1,424 million), driven by data centre and electrification load growth in the Silicon Valley corridor in GBA.

In the East of Pisgah area, CAISO proposes a new 180-mile (290-km), 500 kV Trout Canyon–Lugo substations, with 70 per cent series compensation to eliminate severe deliverability limitations associated with OOS wind resources entering CAISO from Nevada and Wyoming. The Drum–Higgins reconductoring (USD308 million) is critical for geothermal resource deliverability in the Central Valley.

In addition to the Gates–Los Banos #3-line series compensation project implemented by Western Area Power Administration (WAPA) in the Fresno area, which adds 70 per cent series compensation on the Path 15, CAISO has also identified a longer-term need for a new 500 kV Windhub–Tesla line to further relieve Path 15 and Path 26 congestion. It plans to recommend this project for approval in the 2026-27 planning cycle, as it requires further studies.

GETs

CAISO is boosting the deployment of GETs and utilises it as a planning tool to identify potential alternatives to other capital expenditures. GETs encompass advanced conductors with high-temperature low-sag capabilities, dynamic line ratings that raise thermal limits in real time, power flow controllers to steer power along optimal paths and topology optimisations that reconfigure network connections for maximum efficiency.

CAISO has considered and approved both advanced conductors and flow controllers in previous transmission planning processes. Around 23 projects were identified as GET solutions in the previous planning cycles. Apart from this, the following reliability-driven projects have been identified in the current planning cycle, which will utilise advanced conductors and GETs to achieve the required ratings:

  • 230 kV Mesa–Laguna Bell second-circuit upgrade (USD56 million): The project involves reconductoring 4.9 miles (7.9 km) of the 230 kV Mesa–Laguna Bell line using advanced conductor technology to accommodate additional energy storage resources. It will help cover the near-term Los Angeles (LA) Basin needs that a cancelled project – the 500 kV Del Amo–Mesa–Serrano reinforcement – was intended to address. The latter was cancelled due to a cost escalation from USD1,125 million to USD5 billion.
  • 500 kV Lugo reactive power reinforcement (USD450 million): The project consists of a ±300 MVAr static synchronous compensator (STATCOM) combined with 3×200 MVAr switchable capacitor banks located at or near the 500 kV Lugo substation, providing a total of (+900 to –300) MVAr of steady-state and dynamic reactive power support to the Southern California Edison (SCE) 500 kV bulk system.
  • 115 kV Ames Distribution–Palo Alto Line (Re-scope) (USD52 million): This project was proposed in the 2024–25 Transmission Plan to prevent overloads and add a new connection to the existing Palo Alto substation. However, due to significant increases in the load forecast, the project scope has been revised to utilise advanced conductors to achieve a summer emergency rating of 3,000 A or higher.

Conclusion

CAISO’s 2025-26 plan represents a continued shift toward proactive, policy-driven transmission planning aligned with California’s clean energy transition. It prioritises grid expansion to integrate large volumes of renewable resources and meet new emerging demands, while balancing between reliability, cost efficiency and decarbonisation objectives. The plan identifies key transmission projects for near- to mid-term needs, but indicates gaps in OOS wind integration, highlighting the growing interdependence across the Western Interconnection and the need for coordinated regional transmission development.

Net net, the plan provides a robust and forward-looking framework, but its success will depend on timely project execution, regulatory alignment and continued collaboration among stakeholders and regional partners to ensure that transmission infrastructure keeps pace with California’s evolving energy landscape.