PACE Looks Ahead with Manufacture Alabama

Longtime PACE partner, Manufacture Alabama, recently sat down with new PACE Executive Director Laura Schepis to discuss the state of energy policy and what might lie ahead for manufacturers. The organization will publish the Q&A in its August newsletter.

laura schepisQ: Congratulations on your new position. Can you tell our members a little about your background?

A: I grew up in Georgia and earned undergraduate and law degrees from the University of Georgia. After doing some initial legal work, I got involved in the energy sector and really developed a passion for advocacy. I’ve worked with various groups over the years, including the National Association of Development Organizations, the American Public Gas Association, and the American Public Power Association. One of my most rewarding jobs was serving as Vice President of Political Affairs for the National Rural Electric Cooperatives Association, which is I where I first got to know PACE and the good and important work the organization does.

Q: What excites you most about serving as PACE Executive Director?

A: PACE has always been on the front lines of energy conversations on behalf of energy users of all sizes, including manufacturers. The group advocates in a different way than others in the energy space, mainly because its mission is not tied to a specific type of energy, but to the overall goal of doing what is best for customers and the economy in the long run. The mission is pro-growth and pro-energy and aimed toward reliability and affordability, which offers a great deal of freedom about how we get there. It is exciting to be at the forefront of conversations about how our nation will meet future energy demand and to work hand in hand with energy customers and their energy providers to put the best ideas in front of decision makers. PACE has built a strong and credible brand in this regard and I want to expand that tradition.

Q: How has the landscape changed in the eight and a half years since PACE started?

A: One of the hallmarks of PACE’s work has been a real flexibility and openness when it comes to policy. Eight years ago, we were in cap and trade talks. Today, that idea is virtually dead. Eight years ago, discussion was about energy constraints and possible depletion of some resources. Today, the U.S. leads in nearly every major energy resource. Much has changed, but PACE’s message has remained consistent: we don’t just need all of the above, we need more of the above. That means the traditional major energy sources such as coal, natural gas, nuclear, and hydro, but it also means wind power where it works best and solar power where it makes sense. Some have tried to label PACE as being against certain forms of power, but the record doesn’t reflect that at all. It’s all about what makes sense for customers, whether that is a nuclear plant in my home state of Georgia, a solar project in New Orleans, or wind projects in Oklahoma.

Q: What plans do you have for PACE in the coming months?

A: There is a good deal of momentum in our nation’s capital for an energy bill that moves the U.S. forward in terms of energy policy. I want PACE to be a real part of that conversation and to bring the perspective of partners like Manufacture Alabama to bear on those discussions. I also plan to keep PACE active in our state advocacy, looking for opportunities to weigh in on topics of importance in state legislatures and state regulatory commissions. States are vital laboratories when it comes to energy policy and it is critical that decision makers hear from all sides. Finally, I want to continue the legacy PACE has built with the Alabama Energy Tour and make that happen again in 2018. It is an exciting time to be involved in energy policy and I look forward to working alongside Manufacture Alabama, its members, and its staff in the months ahead.


Nuclear Energy: No Time for U.S. to Fall Behind

Listening to current conventional wisdom, you often hear that we don’t need to build new baseload. The economy isn’t expanding that quickly, energy efficiency will absorb new demand, and some regions are still awash in power, goes the argument. Every state and electricity market is complex, and in some places that argument, or parts of it, may ring true. But in state after state, policymakers and other stakeholders are making lasting decisions today that will impact our energy future for decades. Federal lawmakers are again considering major energy legislation and inquiring about the state of electricity markets.

The Energy Information Administration has projected that between now and 2040 (sounds far away, but today’s toddlers will be graduating from college), total electricity sales will rise 0.7% annually. Sales in the commercial sector are seen as likely to surpass residential sector sales in the early 2020s.

As Americans acquire more devices (I travel with one laptop and two iPhones these days) and electric vehicles, and 2040 gets closer, will we have enough power at the ready? Or will today’s energy policy decisions turn out to be future-limiting? Some advocate for closing down existing plants in favor of building up innovative energy sources. However, if we fail to look ahead and really take stock of what we have and what we’ll need, do we risk mothballing our country’s economy, too?

Nuclear plants seem to have been particularly hard-hit by the current fad for shutting down baseload plants that still have potential for contributing clean electrons at an affordable price. Unfortunately, economic pressures have caused our domestic commercial nuclear industry to pull back on construction of new reactors or retire existing reactors before the end of their useful lives. Activists have demanded closures of other plants. But is shutting down nuclear plants now akin to taking the spare bedroom off your house just because no guests are coming this year?

Nuclear currently provides approximately 20 percent of the power consumed in the U.S. each year, and over half of our emission-free energy. Even as wind and utility-scale solar continue to develop and bring value to energy consumers, the lion’s share of carbon-free power is generated at nuclear power stations. These plants also contribute to grid reliability, and provide thousands of good jobs for skilled workers. The U.S. led the world in creating the nuclear industry, but now other countries are zooming ahead. An estimated 60 reactors are under construction around the world, with only four in the U.S. China is working to double its nuclear fleet, while Rosatom, a Russian state-owned company, has plans to build new reactors in India, Bangladesh, Turkey, Vietnam, Iran, Armenia, Hungary, Jordan and Egypt and many others. Bloomberg estimates 58% growth in global power demand by 2040. While that may outpace domestic power consumption in the same period, it still leads us to wonder: What do these nations know about the economics of nuclear energy that may be eluding U.S. policymakers and pundits?

PACE is concerned that short-term thinking about nuclear generation will lead to our nation losing a valuable power source that provides a range of benefits for consumers, energy workers, the economy and our storehouse of intelligence on advanced nuclear technology.

Fortunately, some policymakers are taking concrete actions in support of nuclear energy. The House of Representatives recently voted to extend production tax credits for nuclear power. The bipartisan bill would allow four reactors currently under construction in Georgia and South Carolina more flexibility to use tax credits that Congress created over a decade ago. Thank your Members of the House of Representatives when you see them over August recess. And, encourage your Senators to take up this important bill in the fall. In other good news, the Department of Energy (DOE) has announced nearly $67 million in funding for new grants for advanced nuclear research, to be distributed among several research programs.

It will take much more advocacy, congressional fortitude, and education about the value of nuclear energy to restore America’s leadership role and ensure that policy decisions support reliable, affordable, clean energy and a vibrant economy in 2020, 2040 and beyond. Today’s toddlers are counting on us. And if all goes well, the economy will need the spare bedroom.


Ringing up the Real Value of Solar

No doubt about it, solar power is a growing part of America’s energy future. Communities, individuals and businesses are finding places to install panels or arrays and learning about the costs and benefits of integrating solar into an overall energy mix.  Moving into the future, solar certainly has a role to play as part of a comprehensive energy approach.

A lot of energy will go into solar discussions this week, as utility regulators gather this week for National Association of Regulatory Utility Commissioners in partly sunny California and state lawmakers convene for the American Legislative Exchange Council in Colorado, where daily temps are over 95 degrees, with clouds in the mid-to-late afternoon. PACE’s timely release two days ago of “Net Metering: Costs, Customers and a Smarter Way Forward” co-authored by Dr. David Gattie provides these and other stakeholders with a history of net metering decisions, current snapshots of state debates, and recommendations for moving ahead.

Our and Dr. Gattie’s paper also delves into an important undercurrent of the solar debate – the Value of Solar (VOS).  Solar advocates have often claimed that electrons generated from residential solar sites are just as valuable, and perhaps more so, than electrons from more traditional, central station sources. However, policymakers and consumers alike should recognize that “solar rooftops generate electricity, but that is all they do … residential solar rooftop systems can never be compared apples-to-apples with what full-service utilities provide.”

So, how ‘bout them apples? Why does the VOS argument fall flat? As PACE’s paper goes on to explain, “When a rooftop solar owner becomes a net metering customer, that customer becomes a supplier of electricity. The electrons generated by the solar rooftop are indistinguishable from electrons generated by a large-scale power plant. The difference is that the net metering customer provides electricity only, while the utility provides much, much more.”

VOS arguments are designed to boost the net metering payment to customers of the residential solar rooftop industry, often well above the avoided cost to the utility. Each element of the VOS acts like a coupon offsetting the cost of systems (that most homeowners have to borrow money to afford) by raising the rate utilities (actually their customers) have to pay for solar rooftop electrons.

What do VOS advocates claim in their coupon box?

  • Avoided Capacity
  • Enhanced Reliability
  • Hedge Against Price Volatility
  • Transmission and Distribution Deferral
  • Avoided Line Losses
  • Environmental and Social Benefits

Unfortunately, most of these coupons don’t ring up on the cash register of reality. The reason isn’t that utilities are full of unfair people who fear competition from a new generation source.  The real reasons: physics and the nascent state of energy storage technologies. Regarding reliability and capacity claims – just because solar installations are physically closer to customers than some central-station generation doesn’t mean the distributed systems somehow support the grid or get power to the customers more reliably and rapidly.

Because solar power is intermittent by nature and there isn’t yet an adequate amount of battery or other storage, other generation sources are “called on to back up solar power, not the other way around.”

The National Energy Renewable Laboratory (NREL) “calculates the value of transmission and distribution deferral from solar power, under the maximum conditions, to be less than two-tenths of a cent per kilowatt-hour.”  While in some cases, a particularly well-designed solar rooftop community might reduce a bit of local congestion, generally the introduction of solar rooftop systems does not in any way alter overall system requirements for transmission and distribution build-outs and maintenance. Again, refer to intermittency and the mandate on utilities to provide everyone power all the time.

In the recent net metering paper, PACE and Dr. Gattie take on several other elements of the VOS movement, explaining why those elements lack basis in reality or research. You can read the paper here and reach your own conclusions. You can also send us any questions or comments to our Twitter or Facebook accounts.

When solar advocates wave Value of Solar slogans, remember what they really are – coupons for individuals that flow to for-profit companies, paid for by everyone else.

While the last thing the world needs is another energy acronym, there’s an argument to be made for Value of Mandated Service (VOMS). Utilities are under federal and state mandates to “ensure that electricity is available to customers all of the time, no matter the changes in demand due to weather or other factors.” Here’s another – Value of All Customers (VOAC). Both new acronyms may come in handy as we all work together to ensure energy fairness.