CEN: Competition, Not Mandates, Will Secure our Energy Future

Posted by Laura Arnold  /   September 29, 2020  /   Posted in Uncategorized  /   No Comments

Mark Pischea_CENCEN logo

Mark Pischea is the President & CEO of the Conservative Energy Network.

Competition, Not Mandates, Will Secure our Energy Future

Competition, Not Mandates, Will Secure our Energy Future

By Mark Pischea

While our country is in the clutches of a pandemic, recovering from an economic downturn and heading into a presidential election, it might not seem like the time to discuss clean energy. But innovation in the way we generate, sell, and consume energy has a profound impact on our economy, grid security, and even our political boundaries.

Public opinion polling consistently demonstrates overwhelming support for clean energy. There’s no question that clean energy is our future (and increasingly our present). But there is disagreement over how to achieve our future energy economy.

Until a few years ago, policy discussions around renewable energy focused almost exclusively on heavy-handed government mandates and anti-competitive standards, with the goal to make our energy output greener, often at the cost of the economy and ratepayers themselves.

Just look at the California experiment, where state leaders sought to force renewable energy development in the context of an outdated vertically integrated monopoly utility model—and which has led to exorbitant costs for its residents, brown outs and reliability crises, with little progress on emissions reductions.

Now compare that to the Texas model, which has instead focused on organic growth of the renewable energy sector through competitive markets. Texas, a red state once known only as an oil giant, is now one of the leading producers of wind energy in the nation—generating more than most countries.

The Conservative Energy Network (CEN) believes that the best approach to advance our nation’s clean energy economy is to reduce barriers to market access for new technologies and companies who are innovative and responsive to shifting consumer demands.

Voters, even conservatives, agree. According to a November 2019 survey conducted by Public Opinion Strategies for CEN, 70% of voters across the political spectrum prefer an approach that emphasizes markets and private clean energy production rather than “government mandates and quotas.” Further, 79% support a new system for purchasing electricity that allows people to have a choice of where and what kind of electricity to buy.

Texas’ competition-based energy market’s performance is outpacing the nation, and can be seen as an ideal model for the strength of a free-market energy economy. This type of marketplace allows clean energy to be part of the solution, and for market forces to determine the best price and generation type, in contrast to overbearing, special interest driven-mandates that could drive up prices and leave some locations with an energy shortfall.

Clean energy and competition go hand in hand. The emergence and rising prominence of the clean energy sector represents a boon for the country, helping to create jobs and spur a robust competitive generation marketplace that benefits individual ratepayers and businesses, while unleashing the power of innovation to update and modernize our aging grid to make it safer from both internal and external threats.

This is especially relevant given our current economic situation. Prior to the COVID-19 pandemic, the clean energy sector was among the fastest growing industry segments in the United States, employing over 3.4 million Americans from all 50 states across the supply chain—from construction and manufacturing to engineering, research and development, installation, and even environmental science.

The economic benefits of this robust sector are felt not only in industrialized regions and urban centers. Increasingly rural and agricultural America is taking a keen interest in renewables, which are helping to inject local jobs, investment, and tax revenue into struggling communities. Farmers are even installing solar and wind farms on their land, using these technologies as a second “cash crop” to diversify their income when yields are down.

Recent academic research commissioned by CEN state teams in IndianaColorado and Texas has shown that clean energy is a prominent and popular economic driver in rural regions—and it should be part of both an immediate economic recovery plan and long-term sustainability. Eschewing our antiquated monopoly utility system in favor of market-driven competition will take us there.

As more consumers demand clean energy, it’s up to markets to respond. However, without policy solutions that advance real competition, and until our state and federal leaders reach consensus to replace our nation’s outdated and costly monopoly utility system, any progress is fleeting—and ratepayers will be stuck with the fallout.

We’re at a turning point in our country. We will reach an enduring solution to our energy future when policymakers on both sides of the aisle recognize the inevitable benefits of transitioning toward competitive energy markets. Electricity competition will encourage innovation and technology development, keep rates low and stable, maintain service reliability, lower emissions, and allow our economy to thrive.

Ultimately, we strongly believe that it’s on state policy supporting greater competition—rather than monopolies—where bi-partisan solutions will be found.

What Can Distributed Generation Do For the Grid?

Posted by Laura Arnold  /   September 29, 2020  /   Posted in solar, Uncategorized, wind  /   No Comments

Borenstein, Severin

What Can Distributed Generation Do For the Grid?

A thought experiment suggests how much rooftop solar could reduce transmission and distribution costs.

California and other locations are moving to renewable energy at high speed. But even in these forward-leaning areas, there is still an active debate about which renewables and where. Part of that debate centers on the role of distributed generation (DG), which almost exclusively means rooftop solar. (Batteries are storage, not generation, but I will get to them shortly.)

The benefits and costs of DG continue to be debated, a topic I have written about here a number of times. (If you are suffering from insomnia, try my blogs from 201320152015 again2016, and 2016 again.) Per kilowatt-hour (kWh), rooftop solar costs more than power generated from large-scale solar farms, but advocates argue there are advantages that such a simple comparison misses. Among the first they mention is the savings in transmission and distribution costs that result from generating electricity at the location where it is used, a topic that Lucas dug into in June 2018.  Lucas discussed some research that looks at specific circuits of a specific utility and studies what the savings might be. That research found that the grid benefits were substantial in a few locations, but were quite small for the grid overall.

Today I want to take a macro approach, looking at just how much the savings could be for the entire grid.

To begin with, building a grid is very expensive. The US has spent trillions of dollars on its own grid. But those are sunk costs; nothing we do now will recover any of that money.   So, those costs are not relevant when asking whether to build additional distributed versus grid-scale renewables going forward. Similarly, the country has sunk billions into rooftop solar that’s already installed, including some very expensive projects during the technology’s nascent stage, which is also irrelevant for policy going forward.  The critical question now is: how much of the expenditures that the country is likely to make on the grid in the future could be avoided by installing more distributed solar in the future?

One guide that I have heard referenced by two different leaders in the rooftop solar industry is the estimate that the US will have to spend $1.1 trillion over the next 25 years to maintain, expand, and modernize its grid. The source is this 2015 DOE report (page 3). That’s a daunting number, but 25 years is also a long time, and a lot of electricity. (National expenditures on many things are impressive over 25 years: if current trends hold, it looks like the US will spend about $0.9 trillion on cheese in the next 25 years.)

Let’s assume that the $1.1 trillion number, adjusted for inflation, applies today for the next 25 years. Next, let’s ask how much of that grid investment could be avoided if we were to install enough additional rooftop solar over the next couple decades to provide 10% of the kWh that otherwise would have been produced by grid generation. A very generous estimate is 10%. That would mean that moving a given additional proportion of total generation to rooftops would reduce the needed grid investment going forward by the same proportion. There are two fundamental reasons the savings would likely be much smaller:

  1. The grid exhibits significant economies of scale. If every customer were to consume twice as much electricity, it would not require twice as much investment in the grid. Conversely, if every customer were to consume half as much – or if half of all customers were to drastically cut their consumption from the grid – it would not cut in half the level of investment we need going forward.
  2. Nearly all customers with rooftop solar, even if they generate as much as they consume, still use the grid extensively, and every second of the day. A residential system without batteries (still the vast majority of new systems) will export a large share of the power it generates into the grid when the solar panels are generating more than their consumption, and the household will import substantial quantities from the grid when they are consuming more than their panels are producing. That will be a smaller factor for solar with batteries, but it won’t go away. Once the batteries are charged, customers will again be exporting into the grid. And on long stretches of cloudy/rainy/smoky days, they will be depending on imports from the grid. In fact, while a solar customer with some batteries will surely do less electricity exchange with the grid, it is not at all clear that they would want to make do with any less service capacity on their wire.

So, an assumption that replacing X% of customer energy demand from the grid with distributed solar generation would reduce the need for grid investment by X% greatly overstates the true savings. But let’s go with it anyway for a minute.  If that were true, how big would the savings be? The answer is 1.2 cents per grid-generated kWh that is displaced by rooftop solar.1 (Calculation details in that footnote.)

In other words, if rooftop solar PV otherwise had the same attributes as grid scale solar PV, but allowed grid investment to be reduced proportionally to its production, that would enhance its value by about 1.2¢/kWh. In reality, the number would be much smaller for the two reasons explained, almost certainly well under one cent per kWh.

To put this calculation in context, 2019 non-partisan estimates put the midpoint unsubsidized levelized cost for residential rooftop solar at 20¢/kWh, for commercial/industrial rooftop solar at 11¢/kWh, and for grid-scale solar at 4¢/kWh. That’s a big gap. Savings on transmission and distribution isn’t going to fill more than a tiny fraction of it.

Of course, savings on transmission and distribution aren’t the only consideration in comparing rooftop to grid-scale renewables. One that has grown in importance and attention since I last discussed the topic is resiliency, at least when the system includes batteries. Still, it is worth pointing out that, just as with a gasoline generator, the benefits of that resiliency flow primarily to the customer with the solar, which is not a compelling argument for preference in public policy.

None of this is to say that rooftop solar can’t ever be a winner for society. In some areas, grid scale renewables are not feasible due to a lack of land availability (an advantage of rooftop real estate) or barriers to building transmission or distribution. As a result, in specific locations, distributed generation can be more cost-effective. But we aren’t building rooftop solar in the specific locations with those constraints! We are building them anywhere that any home or business owner benefits privately, even if grid scale renewables would be much more cost-effective for society.

Anyone who is paying attention understands that the planet is warming and we need to stop burning fossil fuels. But to do that in a politically sustainable and equitable way, we also need to find alternatives that are cost-effective for society as a whole. We got into this mess through individual choices that don’t account for the impact on others in society. I believe that we can only get out of it with solutions that do account for those impacts.

Despite my anxiety about national politics, I’m still mostly tweeting energy news/research/blogs @BorensteinS

Keep up with Energy Institute blogs, research, and events on Twitter @energyathaas

Suggested citation: Borenstein, Severin. “What Can Distributed Generation Do For the Grid?” Energy Institute Blog, UC Berkeley, September 28, 2020, https://energyathaas.wordpress.com/2020/09/28/what-can-distributed-generation-do-for-the-grid/

1 I assume that there is no growth in demand over 25 years (which biases upward the savings per kWh), so I divide the $1.1 trillion investment by the 2015 consumption of 3.900 trillion kWh times 25, which yields $0.0113/kWh in 2015 dollars.  Inflating that figure to 2020 dollars using the all-urban CPI gives $0.0123/kWh.

Flashpoint: Climate action win-win for future of Indiana, GOP and planet

Posted by Laura Arnold  /   September 21, 2020  /   Posted in Uncategorized  /   No Comments

Drake Abramson

Flashpoint: Climate action win-win for future of Indiana, GOP and planet

Drake Abramson | Chair, Indiana Federation of College Republicans

Across the country, young Republican leaders like myself recognize that failing to take action to curb carbon emission could hurt both the future of the planet and the Republican Party. We’ve spoken out that being a Republican shouldn’t mean having to choose between being a conservative and supporting climate-smart policies — and we’re not alone in this belief. A poll released in July by Citizens for Responsible Energy Solutions and American Conservation Coalition found 67 percent of millennial Republican voters believe the party should do more on climate change.

Thankfully, Sen. Mike Braun won’t need any convincing and is already leading the charge on an issue that’s a win-win for Republicans and the planet.

Just last year, the newly elected senator teamed up with Delaware Sen. Chris Coons to form the first bipartisan Climate Solutions Caucus. Recognizing that for too long, Washington has been paralyzed by partisanship, Sen. Braun formed this caucus to enable productive, bipartisan conversations about protecting our environment, securing America’s energy future and protecting American manufacturing jobs.

That’s why it was not surprising — but nevertheless, heartening — to see him continue to build on this legacy by recently introducing the Growing Climate Change Solution Act, a bill to make it easier for farmers, ranchers and foresters to sell credits on the voluntary carbon credit market that they can earn by reducing greenhouse gas emissions or sequestering carbon on their land.

It’s been estimated that a typical production farm could sequester about a ton of carbon dioxide per acre and current conditions on the voluntary market support about $15 per ton of carbon dioxide sequestered or avoided. It is solutions like these that will help support a thriving agricultural sector while reducing carbon emissions and mitigating the impact of climate change.

Sen. Braun should be applauded for his efforts and now, more than ever, his commitment to climate action is needed in the face of the public health crisis. Indiana’s clean energy economy has experienced significant setbacks over the past several months as business closures and layoffs related to the COVID-19 pandemic have taken their toll. Despite some gains in June, in Indiana, more than 12,000 clean energy workers have lost their jobs since March, mirroring a national trend that has seen our country’s clean energy workforce of 3.3 million workers reduced by more than half a million, a 15% decline since the onset of the pandemic.

America’s clean energy workers make up 40% of the energy workforce in our country. As Congress considers new strategies for rebuilding a post-pandemic economy, we can’t afford to leave Indiana’s clean energy workers out of the conversation. Sen. Braun recognizes that climate action is a win-win for the future of Indiana, the Republican Party and our planet — hopefully his colleagues in the Senate will join him.

 

 

Join Rep. Bacon and Sen. Stoops for Solar Policy Talk Fri., Sept 25

Posted by Laura Arnold  /   September 21, 2020  /   Posted in 2021 Indiana General Assembly, Indiana Utility Regulatory Commission (IURC), Net Metering, solar, Uncategorized, Vectren  /   No Comments

bacon

Rep. Ron Bacon (R-Chandler) is solar homeowner and Vectren net metering customer.

Stoops

Sen. Mark Stoops (D-Bloomington) is a member of the 21st Century Energy Development Task Force.

Indiana Energy Policy Q&A Webinar

with Rep. Ron Bacon (R-Chandler) 

and Sen. Mark Stoops (D-Bloomington)

FRIDAY, SEPTEMBER 25, 2020 AT 12 PM – 1 PM EDT On-line

Hosted by Solar United Neighbors and Indiana Distributed Energy Alliance

Join Solar United Neighbors, IndianaDG, and two veteran Indiana legislators to discuss the state of solar in Indiana. We'll learn about Vectren’s case to end net metering, the 21st Century Energy Policy Development Task Force that will submit a report with energy policy recommendations to the General Assembly in December, and how you can make your voice heard.
Rep. Ron Bacon (R-Chandler) and Sen. Mark Stoops (D-Bloomington) will join us for a live Q&A, so get your questions ready!

Click here to register!:

https://us02web.zoom.us/.../reg.../WN_cRn8oVSIRmeGIWli9lChqg

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