How Congress Can Help Advanced Energy Modernize the Grid
By Dylan Reed and Charles Hernick
The energy sector is currently undergoing a massive transformation as dynamic technologies change the way customers receive and use electricity. This change has brought economic growth to the United States, with the advanced energy industry burgeoning to $200 billion in annual revenue to support more than 3 million jobs. Dozens of states have already taken notice of the advanced energy opportunity – and taken advantage, whether by comprehensive legislation, as in Michigan, North Carolina, and Virginia, or by reducing barriers to technologies, as Texas, Pennsylvania, and New York have done. Despite the progress being made, some policy hurdles remain for advanced energy. That’s why AEE and CRES Forum teamed up to write a policy paper outlining five ways Congress can modernize the grid.
The federal government should always seek ways to encourage innovation in our economy, setting policy that does not stand in the way of market participants providing better services at a lower cost to customers. To assure an open door to innovation, sometimes new policies are needed, while in other cases policies on the books need to be updated. AEE and CRES have worked on and supported policies that do just that in the energy sector, whether supporting FERC’s actions to remove barriers to participation for energy storage and aggregated distributed energy, encouraging a level playing field in the tax code for all technology types, or opposing proposals by the federal government to keep inefficient, costly power plants online at the public’s expense.
Our new policy paper, Five Ways Congress Can Improve the U.S. Electric Power System, outlines more ways that innovation can continue to take place in the energy sector. This paper intends to serve as a conversation starter for Congress, the energy industry, and others to discuss the next steps of federal policy. The paper purposely offers targeted yet broad legislative concepts to start a dialogue on potential solutions to modernizing the grid through advanced energy deployment.
In brief, here are the five ideas we put forward:
- Streamline Federal Permitting for Advanced Energy Projects
- Encourage Grid Planners to Consider Alternatives to Transmission Investment
- Allow Energy Storage and Energy Efficiency to Compete with Additional Generation
- Allow Large Customers to Choose their Electricity Sources
- Allow Utilities and Consumers to Benefit from Cloud Computing Software
The policy paper goes into more detail on each of these ideas, but as a package they represent an approach to policy that works with, rather than against, the dynamics of technology innovation and market competition that are the hallmarks of the American economy. Technology and the innovations of small businesses, growing jobs and the economy, have always moved faster than government.
We need energy policies that recognize that reality. Electrifying America stands as one of the greatest accomplishments of the 20th century. But modernizing the grid to meet the needs of a 21st century economy means accommodating new resources, new technologies, and new demands from consumers.
Advanced energy technologies and services have developed over the last two decades to replace aging infrastructure at a lower cost to consumers. Resources such as energy storage and energy efficiency can also now compete against traditional investments while promoting a more flexible grid that is reliable and resilient. Likewise, existing or new transmission can be made more effective by expanding the use of advanced grid technologies. At the same time, alternatives to traditional transmission investments can save consumers billions in avoided costs by deploying advanced technologies instead.
Consumers, particularly large energy users, are also driving change in the energy sector. Today, 71 out of the Fortune 100 companies and 43% of Fortune 500 have corporate commitments to sustainability and are demanding renewable energy to power their operations. Globally, companies are making investments at a record-breaking pace, this year as well as last. In the United States, 2.78 GW of renewables came from corporate procurement in 2017, the second-best year for renewable energy deals to date. States are finding ways to offer more renewable energy options to these large customers. The federal government should be encouraging more states to consider allowing these utility and/or third-party procurement options to drive local energy investment and attract companies. Indeed, it is the federal government’s responsibility to assure a competitive environment for global companies to make their investments and solve their energy needs here in the U.S.
Importantly, federal processes should not impede sensible energy investment. Current federal permitting guidelines have slowed the deployment of advanced energy generation technologies, increasing costs. Projects now take an average of 70 months to receive all the permits necessary to move forward with construction. Companies have reported that some projects have been caught in review for over eight years. While no bad actor should be allowed to skirt laws and cause harm to the environment, permitting for good projects should not be take longer than the two terms presidents are allowed to serve our country.
AEE and CRES Forum are committed to promoting a secure, clean, and affordable energy future. America has more energy resources than ever before. When it comes to advanced energy – whether advanced reactors, renewables, advanced transmission, storage, and others – Congress needs to look ahead, not to the past. We hope our five ideas kick off the conversation on how to make an affordable, reliable, resilient energy future a reality.