Lessons on America's Power Supply Formula

The utility industry, the federal government and numerous NGOs are on the ground helping our 3.4 million fellow citizens in Puerto Rico. The Salvation Army is on the front lines and collecting much-needed donations. Our concern also extends to the victims and families impacted by the terrible events in Las Vegas. 

In the wake of the hurricane trifecta of Irma, Harvey, and Maria, more Americans than usual may be thinking about power supply. Luckily, so are leading voices in Washington, D.C. and around state capitols. An already healthy debate about what sources our country uses to generate electricity, and the value of reliability, seems likely to kick into a higher gear. 

Last week, Department of Energy (DOE) Secretary Rick Perry made two significant moves drawing attention to the value of a solid, diverse domestic electric generation portfolio. Both come several weeks after DOE released a study documenting the value of an electric power generation portfolio that relies on all available resources to help ensure reliability and predictable costs.

Sec. Perry formally asked the Federal Energy Regulatory Commission to issue rules that help ensure power plants which provide essential energy and ancillary reliability services stay online longer. DOE explained the key driver for this unusual move:

“The resiliency of the nation’s electric grid is threatened by the premature retirements of power plants that can withstand fuel supply disruptions caused by natural or man-made disasters and, in those critical times, continue to provide electric energy, capacity, and essential grid reliability services.” 

Objections to the new proposed FERC rules emerged quickly. Some focused on procedure, citing DOE’s request that FERC develop rules within 60 days. Others called it a return to “command and control” or a “coup on electricity markets.”  (As far as I can tell, nobody has yet trotted out “voodoo economics.”)

DOE also announced a new, conditional loan guarantee package for continued construction of two new units at Plant Vogtle in Georgia. Once complete, the new units at Plant Vogtle will provide “enough reliable electricity to power more than 1.6 million American homes while avoiding nearly 10 million metric tons of carbon dioxide emissions annually,” according to DOE. Renewable energy advocates, including many for generation sources which have long benefited from generous federal and state tax credits, loans, and grants, responded harshly.

To paraphrase Shakespeare, in both cases, “perhaps they do protest too much.” When policy moves prompt such swift and sharp reactions, it’s incumbent on us to ask what lies beneath.

Perhaps opponents to nuclear loan guarantees don’t welcome a closer review of how well nuclear performed in Harvey, or review how much nuclear has reduced carbon emissions. Those who claim DOE’s proposed rules will distort the organized electricity markets may not want to discuss how those markets fail consumers or contemplate the current over-engineered, baroque regulatory structures. Mention the 2014 polar vortex and they’d prefer to fade away like Hamlet’s father’s ghost.

Debate will continue about both DOE policies, across congressional hearings (including three this week in the House), state regulator forums and FERC technical conferences. From where PACE sits, DOE deserves credit for seizing the moment, firing up the national conversation, and boosting the discussion on how the U.S. can ensure a winning power supply formula that evolves as new lessons, whether from man or nature, are learned.



The Impressionist Energy Policy Landscape

The utility industry, the federal government and numerous NGOs are on the ground helping our 3.4 million fellow citizens in Puerto Rico. The Salvation Army is on the front lines and collecting much-needed donations.

As we ease into fall in Washington, D.C., there’s very little talk left of comprehensive energy bills. Yet, small developments and conversations keep going, adding bits of color and light to the energy policy landscape. It’s akin to an Impressionist painting at this time; general outlines are there, but interpretation of the overall scene depends greatly on your vantage point.

PACE reported in August on the Trump Administration’s executive order aimed at speeding up and easing permitting for infrastructure projects. Subsequently, the Department of Interior and two Senators made notable announcements.

Last week, Senators Jim Inhofe (R-OK) and Angus King (I – ME) introduced S. 1844, the Coordinating Inter-Agency Review of Natural Gas Infrastructure Act of 2017.’’ The bill seeks to shore up the Federal Energy Regulatory Commission’s (FERC) role as lead agency for the permit review process required by the National Environmental Policy Act (NEPA). The House passed a similar bill, HR. 2910, in late July. 

Earlier this month, the Department of Interior (DOI) followed on the executive order with a memo setting a 150-page limit on environmental impact statements, with exceptions possible for very complex projects. EIS statements are required under NEPA provisions; the DOI reportedly issues about 80 each year, often weighing in at thousands of pages. The agency also directed staff to complete EIS within one year, a significant change from the usual three to five year timelines.

Predictably, some protest at suggestions that energy project reviews speed up, but that seems increasingly incongruous when consumer desires and the pace of technology developments are used to argue that the energy industry should move ahead quickly.

This point was underscored Tuesday, as the House Energy & Commerce Energy Subcommittee continued its thoughtful series of “Powering America” hearings, this time examining advanced energy technologies. These hearings are the best current avatar for legislation. Chairman Greg Walden (R-OR) summed up this week’s inquiry:

“[The U.S. electricity sector is one of the most regulated sectors in the American economy. …This regulatory structure has been crafted for good reason and remains critical in ensuring that all Americans have access to affordable and reliable electricity. However, when it comes to advanced energy technologies, we must make sure that the country’s regulatory structure and policies continue to be updated and modernized so they do not stand as barriers to innovation.”

Notably, it’s National Clean Energy Week, with events in D.C. and elsewhere, and extending into the fall. It’s the brainchild of a larger coalition than you might expect, with nuclear and hydro playing key roles. Across the events, some remarks have been surprising too, including DOI Secretary Zinke opining that federal lands shouldn’t be used for utility-scale solar generation (his rationale – land is then cut off from other uses) and expressing a preference for rooftop solar. 

From where PACE sits, these Fall 2017 developments are adding to a familiar scene rather than creating a brand-new landscape:

  • Many genuine questions remain about the proper marriage of technology and policy.
  • No one person or institution has all the right answers.
  • Clean energy has an increasingly large role to play, but still relies on a relationship with traditional fossil fuels and infrastructure.
  • Changes in process are often more impactful than changes in law.

The energy policy landscape will remain “impressionist” for the foreseeable future; we all have a responsibility to add to and interpret it in good faith. 


Solar Trade Wars: Can Consumers Win?

Last Friday saw the U.S. International Trade Commission (ITC) vote unanimously (4-0) that imports of markedly less expensive Chinese solar panels have harmed domestic solar panel manufacturers. The case, always controversial, now enters a new phase, in which the ITC will assess and recommend potential remedies, including tariffs on imported panels. 

How did we get here? Suniva, headquartered in Georgia, filed for bankruptcy and filed its claim of “serious injury” at the ITC in April 2017. SolarWorld Americas, also bankrupt, joined the petition soon thereafter. The two companies used an obscure provision of U.S. trade law (Section 201 of the Trade Act of 1974) which allows petitioners to request action by the President of the United States. The firms claim that thirty domestic solar manufacturers have gone under as Chinese firms deliberately flooded the market with low-cost panels and point to their own lost facilities and greatly reduced workforces. 

Heated debate continues, ahead of an October 3rd ITC hearing to examine remedies. The ITC has just a few weeks, until November 13, to deliver recommendations to President Trump, who then has until January 12 to decide. According to the ITC’s news release it can recommend “… an increase in a duty, imposition of a quota, imposition of a tariff-rate quota …, trade adjustment assistance, or any combination of such actions.”

After last week’s decision, SEIA maintained that “Suniva’s remedy proposal will double the price of solar, destroy two-thirds of demand, erode billions of dollars in investment and unnecessarily force 88,000 Americans to lose their jobs in 2018.” SEIA also says tariffs, as requested, would endanger well over half of the utility-scale solar projects envisioned in the next five years. In the other corner, the petitioners say that reviving domestic manufacturing will create nearly 115,00 jobs, with a healthy chunk in manufacturing.

With the “Battle of the Studies” well underway, observers rightly may wonder what new facts and figures can come forward in under two months. As more ink barrels are ordered up for analysis and commentary during the remedy phase, some questions deserve more attention:

  • Are foreign manufacturers artificially depressing the cost of solar components? 
  • If so, what contribution over time has there been to the overall decrease in utility-scale solar costs of power?
  • What does “Made in the U.S.” mean for solar components? 
  • What’s the value of encouraging alternative solar generation technologies?
  • What’s the correct way to value U.S. reliance on solar manufacturing that sustains independent expertise and supply chain?

Refreshingly unlike most D.C. debates, there aren’t too many sunrises between today and the relevant agency’s decision. Despite the involvement of major companies and trade association, consumers are the underlying winners or losers in this case. A win for consumers will ensure utility-scale solar continues integrating into the generation mix, but at realistic and sustainable prices for the long run, with transparency about technology sources.