State Policy Preview: Investing Federal Funds, Reaching State Clean Energy Goals

Posted by JR Tolbert on Feb 16, 2022 11:30:00 AM

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When it comes to energy policy, all eyes have been on Washington, D.C., over the past year. Meanwhile, with far less attention, the states continue to lead the way in our energy transition. Between figuring out how to put to work funds from last year’s federal infrastructure bill, carrying out their own mandates for clean energy, and prepping for an electric transportation future, states will remain the primary venue for building an advanced energy economy in 2022. Here are some of the trends AEE will be watching – and engaging in – this year.

Making the Most of Federal Investment

While the largest part of the Biden clean energy agenda remains in congressional limbo, the Infrastructure Investment and Jobs Act (IIJA) did include many substantial investments for advanced energy. The legislation provides funding for addressing many of the priority areas that state policy makers have been leading on in recent years. Funding for electrifying school and transit buses and electric vehicle (EV) charging infrastructure has the potential to make a down payment on the public investments needed to electrify transportation. AEE will focus our advocacy at the state level on making sure these dollars get out the door quickly and maximize the opportunities associated with a public charging network and vehicle-to-grid capabilities for school and transit buses. Our updated roadmap for implementation gives states a toolkit for making the most of these infrastructure funds. (See also our free on-demand webinar, “Building an Advanced Energy Economy, State by State,” for more about state implementation of IIJA.)

The infrastructure law also included significant funding for energy efficiency programs in the states. Among the areas where AEE will focus its attention are the $3.5 billion for low-income home weatherization programs and the more than $1 billion in funding for improving the efficiency of buildings. Taken together these investments can have a massive impact on reducing overall energy use and electrifying buildings across the states.

Implementing State Clean Energy Laws

Since the 2018 election cycle, eight states have codified 100% clean energy goals for the power sector. Another nine states have either seen a gubernatorial Executive Order aimed at cleaning the power sector or a legislative target of 100% clean energy goal adopted. This progress has resulted in regulatory activity around the country to implement these programs, with AEE engaging in some of most notable proceedings.

Passage of the Climate and Equitable Jobs Act (CEJA) in Illinois last fall kicked off a number of regulatory proceedings in the state. AEE is focusing on a series of implementation issues which, if successful, can expand new markets for advanced energy technologies. At the outset, we are focusing on two proceedings at the Illinois Commerce Commission that will pave the way for transitioning the state’s utilities from formula rates to performance-based regulation. By focusing on outcomes-based metrics the Commission can accelerate clean energy deployment in a manner that considers the entirety of the goals laid out in CEJA including lower cost, equity, and carbon reductions. We will also track and engage on issues impacting the energy storage market in Illinois. Storage has a key role to play in achieving 100% clean energy and the rules of the road for that market will be set in 2022.

In New York, the Public Service Commission continues to evaluate the role that distributed energy resources will play in achieving the state’s clean energy goals. AEE’s advocacy is focused on improving data access and ensuring that distributed energy resources (DERs) are properly valued and therefore receive fair compensation for the value they provide the electric grid. Our focus is to ensure that actionable information is made available in a timely manner to DER providers.

In Virginia, AEE will continue to focus on implementation of the Virginia Clean Economy Act (VCEA). In 2022 this will involve engagement at the State Corporation Commission (SCC), as well as with state legislators and the new Youngkin Administration. The 2021 election has complicated the path forward, as Gov. Youngkin has expressed skepticism regarding the VCEA targets and has sought to unwind related measures. Recently, Virginia AEE released a fact sheet showing that the VCEA will save the average Virginia family $30 per year in 2030, along with a detailed report quantifying those savings and critiquing an SCC Staff Analysis showing higher costs as “comparing apples to oranges.” (Both are available here.) 2022 is the first year for the mandatory energy efficiency resource standard (EERS) in the VCEA. Proper implementation of the program can establish good precedent to ensure utility compliance and avoiding barriers to compliance.

Charging Up Vehicles and Fleets

Will 2022 be the year of the electric vehicle in the United States? If we judge just based on new models coming to market and the advertising of major auto manufacturers, both digital and on TV (how about those Super Bowl ads!), the answer is yes. An equally important question is whether state policies keep up to maintain momentum. AEE is tracking three areas where the states can take action in 2022 to speed widespread adoption of electric vehicles.

First, with new investments from the federal government, states and localities are poised to electrify their school bus fleets. As noted earlier, IIJA funding for electrification of school buses tops more than $5 billion. AEE is working to get these dollars out the door quickly across the country. In states like California, Colorado, and New York we are pushing for legislation that will allow states to leverage private financing to make those dollars go even further. We have seen bold commitments from Gov. Newsom (CA) and Gov. Hochul (NY) on electrifying school buses, and now is the time to take this generational public investment and leverage private funding to clean up transportation of the nation’s schoolchildren.

Our second focus is to ensure that states are planning for EV charging infrastructure and implementing those plans. In California, this means passing Gov. Newsom’s budget proposal and engaging at the California Public Utilities Commission on proceedings focused on preparing the grid for a highly electrified future. In states like Florida, Illinois, and Virginia this means engaging in regulatory processes that call for transportation infrastructure planning. Planning publicly accessible charging infrastructure can ensure that every driver feels comfortable knowing that when they buy their next car that going electric is the reliable choice.

Finally, AEE sees enormous opportunity for fleet electrification. Whether it is school bus fleets adding flexibility and resiliency to the electric grid, municipal and state fleets providing a tool for better managing energy use and reducing cost to taxpayers, or corporate fleets doing their part to improve air quality, fleet electrification is a win-win for consumers and institutions. States across the country are considering a variety of approaches to fleet electrification via budget investments, amending procurement rules to consider total cost of ownership, and studying the most cost-effective way to electrify. These corporate and government investments can bring down overall costs of electrification and demonstrate the value of vehicle-to-grid integration for a more resilient energy system.

The past four years have seen a remarkable uptake in the policies needed to spur the energy transition in the United States 2022 holds the promise to lock in more gains. At AEE, we are working to make sure that promise becomes a reality.

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Topics: State Policy, Federal Policy, Advanced Transportation