Advanced Energy Perspectives

What Would It Take to Get to a 100% Clean Energy Economy? AEE Offers Congress Its Perspective.

Posted by Dylan Reed

Nov 13, 2019 1:46:37 PM

   

JDennis testimony-730

AEE's Jeff Dennis testifying before the House Committee on Energy and Commerce's Subcommittee on Energy

Since Democrats won a majority in the U.S. House of Representatives, the topic of deep decarbonization in the power sector has attracted more attention in our nation’s capital. While this topic has received the most attention through Members of Congress, most notably Rep. Alexandria Ocasio-Cortez, calling for a Green New Deal, many other policymakers across the political spectrum have put forward ideas on moving towards a decarbonized power sector. Most recently, Democrats on the House Energy and Commerce set a goal in July 2019 to reach net-zero carbon emissions by 2050 and have begun a series of hearings to gather feedback from stakeholders. In October, at a hearing entitled “Building a 100 Percent Clean Economy: Solutions for the U.S. Power Sector,” AEE was invited to testify on the role the advanced energy industry has played to date.

At the hearing, AEE General Counsel and Managing Director Jeff Dennis noted our support for the Committee’s efforts to undertake a broad review of the available policy opportunities to reach net-zero greenhouse gas emissions by 2050. AEE’s testimony specifically noted three major trends in the advanced energy industry that contribute toward efforts to decarbonize the power sector.

First, technological innovation has brought us to the point that advanced energy technologies, right now, are the least-cost option for energy supplies, producing consumer savings, improving grid reliability and resilience, and driving economic development and job creation. While some proposals to transition the economy to clean energy resources put the cost at trillions of dollars, our testimony noted that the rapid decline in advanced energy technology costs actually creates an opportunity to reduce carbon emissions while achieving significant savings for consumers. In fact, costs have fallen so sharply that retiring the vast majority of the existing coal fleet and investing in wind and solar would lower electric bills, all while reducing carbon emissions substantially.

When used together, advanced energy can provide reliable, dispatchable, and flexible energy and grid services to consumers. These technologies diversify the electricity generation mix and reduce the reliability risks. Advanced energy is also an engine for economic growth in America. Advanced energy is a $238 billion U.S. industry, supporting 3.5 million American advanced energy jobs in 2018.

Second, states and consumers, particularly corporate buyers, are already taking steps to capture the economic, reliability, and environmental benefits of advanced energy technologies.

Today, state policies, utility planning, and procurement by large corporate consumers are the primary drivers of growth in the advanced energy market and the reductions in carbon emissions from the power sector that result.

While approaches vary, here are some of the measures states are pursuing today:

  • Expanding renewable and clean energy standards
  • Improving utility resource planning to give greater consideration to cleaner options
  • Reforming utility business models and regulatory frameworks
  • Allowing customer choice and competition for retail services
  • Distribution system planning that capitalizes on the potential for distributed energy resources to reduce emissions and improve reliability and resilience

Large corporate customers are also major drivers of the growth of renewable and advanced energy technologies. Since 2008, commercial and industrial customers have signed contracts to procure 22 GW of renewable energy, including a record 7.15 GW in 2019 so far.

Third, federal leadership in wholesale electricity markets provides both a near- and long-term opportunity to lower consumer costs, expand consumer access to advanced energy, and reduce emissions.

As AEE has long advocated, technology-neutral wholesale markets that allow all technologies to compete based solely on price and performance will lead to advanced energy technologies winning in the market. Too often, however, the rules and regulations in competitive wholesale markets either implicitly or explicitly preclude advanced energy technologies from fully participating. Existing rules often do not account for the technical and operational characteristics of advanced energy technologies. Removing these barriers would unleash significant market-based investment in advanced energy technologies.

To illustrate the market and regulatory barriers that advanced energy faces in these markets, AEE released a paper in May, Wholesale Market Barriers to Advanced Energy – and How to Remove Them, detailing 21 case studies that demonstrate how market regulations can hinder participation by advanced energy technologies in wholesale markets, and the steps that can be taken to resolve them

In addition to resolving these and other barriers in the short-term, there is also a long-term need to consider how wholesale electricity markets will need to be designed, and how the bulk electric system will need to be planned and operated, in a future marked by reliance on low- and zero-carbon advanced energy technologies. 

As Congress is considering legislation to drive emission reductions, policies should harness the power of competitive markets to deploy advanced energy technologies. But we recognize these wholesale markets are complex and recently created a series of briefs — relevant to policymakers, regulators, and other interested stakeholders — which provide concise information on  wholesale markets and the policy issues that impact advanced energy technologies.

Committee members showed interest in AEE’s perspective. In his opening remarks, Chairman Frank Pallone noted that a balanced portfolio of advanced energy technologies will be needed to meet the Committee’s carbon goals. While a number of solutions are available, Pallone specifically noted the issue of market barriers:

“We must also look to break down market barriers to clean electricity development.  For example, in some areas of the country, monopoly utilities effectively prevent customers from installing and using rooftop solar.  Over 70 percent of corporate renewable energy purchases occur in areas with competitive electricity markets, which illustrates the challenges that exist to renewable development in markets where one utility has a monopoly. While the power sector has made progress reducing its emissions, we need Federal action to expand and accelerate the transition to a 100 percent clean economy.”

Notably, there was bipartisan support on the topic of competitive markets driving investment in advanced energy. Texas Congressmen Marc Veasey and Bill Flores both highlighted their state’s use of competitive market forces to drive investment in large-scale wind and solar while ensuring that customers are protected. AEE believes this demonstrates congressional interest in protecting and expanding the role of competitive markets to provide advanced energy solutions to consumers.

House Democrats are expected to release a first draft of legislation on decarbonization by the end of the year. This hearing showed that Members are interested in exploring a number of policy options that meets the goal of net-zero emissions by 2050. Key policy considerations will likely include, but are not limited to: what major policy driver will Congress use (e.g. carbon pricing, clean energy standard, cap and trade); how Congress can harness state and consumer leadership on clean energy; how will Congress ensure that more transmission can be built to meet a renewable energy future; and how markets can incentivize greater participation of advanced energy technologies. AEE looks forward to working with Congress on these issues through 2019 and beyond to ensure that the advanced energy industry can continue to provide benefits to the economy, consumers, and grid.

Download AEE Testimony

Topics: Federal Policy Update, Wholesale Markets

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