The increasing deployment of resource-constrained devices in modern energy infrastructures–such as smart grids, renewable microgrids, and IoT-enabled power systems–demands encryption solutions that balance strong security with low computational overhead. While AES offers robust security, it is energy-intensive on low-end hardware. Conversely, ChaCha20 provides efficient performance on embedded systems but lacks the long-standing cryptographic assurance of AES. This paper introduces a hybrid encryption model, CHaE, which strategically integrates AES and ChaCha20 to leverage the strengths of both algorithms. The proposed hybrid replaces the MixColumns operation in AES with the ChaCha20 stream cipher, enhancing diffusion and nonlinearity while maintaining structural integrity. Implemented and evaluated in Python, CHaE demonstrates superior randomness across all 14 NIST statistical tests, outperforming both standalone AES and ChaCha20 in 11 tests. Additionally, it achieves significantly faster encryption times–up to 8.1 \(\times \) faster than AES and 1.7 \(\times \) faster than ChaCha20 for medium-sized data–while maintaining near-ideal Shannon entropy. These results affirm that CHaE is a highly secure, efficient, and energy-optimized encryption solution suitable for real-time applications in resource-constrained IoT and smart grid environments.