Originally published in Daily Energy Insider by Jaclyn Brandt
Improving the modern electricity system in the United States is the responsibility of many groups, including utilities, lawmakers and local governments. But according to a new study by Advanced Energy Economy (AEE) and CRES (Citizens for Responsible Energy Solutions) Forum, Congress can make five changes that would propel the modernization of the grid forward.
“Advanced energy resources are already modernizing our economy and energy system. Today, the industry stands at $200 billion in annual revenue supporting 3.4 million jobs across the United States,” the researchers said. “As the laboratories of democracy, dozens of states have taken notice of the advanced energy opportunity – and taken advantage.”
States like Michigan, North Carolina, Virginia, Texas, Pennsylvania and New York have all made moves to improve energy innovation and regulation.
The researchers stated that the ideas would benefit various technologies, offer opportunities to embrace innovation, and “make the power grid our economy relies on secure, clean, and affordable.” They believe these steps will not only help modernize the grid, but will also empower states to lower energy costs while fostering investment opportunities and creating jobs.
AEE and CRES have begun collaborating over the last few years because they found themselves working on the same issues and sharing the same interests.
“You get a lot of questions around what can the federal government do to pursue an agenda around advanced and clean energy resources,” said Dylan Reed, head of congressional affairs for Advanced Energy Economy. “This was an opportunity to highlight some of the big issues that we see that advanced energy resources can face and offer up some solutions that we think might be able to drive a conversation at the federal level for increasing investment in advanced energy resources, and all of the benefits that come along with that, whether that be jobs or savings for consumers and just overall good harmonization.”
The five solutions the two groups came up with have different levels of potential and different timelines. According to Charles Hernick, director of policy and advocacy for CRES Forum, “Some of them are more likely to happen soon, and then some of them are probably a little bit further out there. As they go on Capitol Hill, it’s impossible to predict when something is going to move, and that’s part of why we want to have these ideas out there.”
Although the report mainly focuses on what Congress can do, the groups are also keeping track of progress by utilities and individual states.
“We’re seeing utilities make investments in all types of resources. Whether that’s renewable energy or energy storage, efficiency, or advanced transition technologies, there are tons of great examples out there of utilities and other energy actors making these investments,” Reed said. “So I think we should start by really giving them credit for the work that’s been done over the last decade for that modernization. But what we’re talking about is what is the pace of that adoption? Looking at those great investment examples of the past decade, how can we ensure that those investments can continue?”
The groups have seen utilities and states taking the lead on investments, but they want to make sure that states can take advantage of the investments, “so that we can modernize the grid and save money while doing it.”
Hernick said it will be up to the federal government to suggest that states and utilities “do what they can to increase market access both to providers of clean energy sources — that goes from energy storage and energy efficiency side of the house — to on the other end of it creating and encouraging options for buyers of energy to get what they want.”
The first step AEE & CRES Forum propose is for Congress to streamline federal permitting processes for advanced energy projects. Because advanced energy resources such as wind, solar, geothermal, nuclear and fuel cells often require long permit times and processes, streamlining this process could help get those projects completed sooner.
According to the report, advanced energy projects and enabling technologies represent more than one-third of all projects that are delayed in federal environment review, “which can sometimes take almost a decade before completion, with projects receiving necessary approvals from all agencies.”
But, according to Hernick, streamlining federal funding for advanced energy projects, is one area where they have seen some interest in Congress.
“There has been some appetite on Capitol Hill, on the House side, to try to look at how these types of projects can be streamlined,” he explained.
The report requests for Congress to look at speeding up the permit process, which is currently at an average of 70 months, with a goal “to complete all environmental reviews and permitting decisions for major advanced energy projects within two years.”
The second step proposed by the report is to encourage alternatives to transmission investment for grid planners, which in turn could reduce ratepayer costs by allowing fair competition between the different potential solutions. The researchers believe that, by expanding the use of advanced grid technologies — such as advanced power flow control, dynamic line rating, advanced conductors, or topology control — existing or new transmission can be made more effective.
The AEE and CRES are proposing that Congress require FERC to collect data regarding the use of non-transmission alternatives (NTA) and other advanced energy technologies in transmission planning.
“NTAs can save consumers billions in avoided costs by deploying technologies such as energy storage, microgrids, combined heat and power equipment, distributed generation, energy efficiency, demand response, advanced distribution management systems, and smart inverters and transformers,” the report explained.
The third proposal in the report is to allow energy storage and energy efficiency to compete with additional generation, which in turn would level the playing field and encourage least-cost grid solutions. The researchers explain how reliance on large central station power plants offer a lot of risk for ratepayers and utilities.
“This risk and uncertainty can be mitigated by providing full consideration of all energy technologies during grid planning and resource selection — including advanced energy options such as stand-alone storage, renewable energy projects paired with storage, fuel cells, energy efficiency, and demand response,” according to the report. “Today, many grid planning and procurement processes do not allow all technologies to compete fully on price and performance.”
The proposal is for Congress to encourage investments in energy storage and demand-side resources in the planning phase. They do no not request state mandates, but rather open up the conversation so states and utilities can create the standards for the technology that works for them.
“Often, when you’ve made investments, certain cost-effective investments in storage, energy efficiency, and renewables, the cost of electricity is cheaper,” Reed said. “So I think this is one of those where you’re starting to see states compete around that, and states are going to want to take advantage of that, and this is just a way for a lot of areas, the federal government not mandating policies but encouraging the adoption of them, so states and their differences in consumers can take advantage of resources.”
The fourth recommendation is to allow large customers to choose their own energy sources. According to the report, 71 percent of Fortune 100 companies and 43 percent of Fortune 500 companies have set renewable energy or sustainability targets. The report recommends that utilities provide tariffs for renewable energy programs for large customers, so they can source their renewable energy from other sources.
“It doesn’t matter what poll you look at, the clear trend is for individuals and corporations, large and small, to be interested in getting their energy from clean energy sources,” Hernick said. “It’s not just a matter of price and availability of energy anymore, folks to a greater extent want clean energy.”
They are not requesting uniform standards, but rather allowing states and utilities to use varying approaches.
The report also proposes increasing cloud computing software usage among utilities and consumers by improving incentives for both. The report uses New York and Illinois as examples of states encouraging cloud-based software use among utilities.
AEE and CRES Forum are recommending that Congress should implement legislation to encourage states to change their regulatory structures to consider cloud-based software as a utility investment.
“Technology often moves faster than government and policy,” Reed added. “Really, the federal government should be working to not stand in the way of innovation.”