07 Oct Clean Energy & The Blurring of Lines
Blurring lines is a good moniker for clean energy today. You’ll see that word referred to when it comes to the changing dynamics of new technology and business models. One way to consider this in regards to clean energy is to examine the players, how they interact with one another, and the overall system in which they reside. The lines are “blurring” because of the political and regulatory environment, new suppliers, delivery methods, and energy sources. Some of these changes are outlined throughout this document.
Federal Energy Regulatory Commission, States – Regulatory Certainty
FERC oversees two key areas of frequent conflict at the intersection of the clean energy transition. Those two key areas are: Bulk electricity (the interstate transmission lines and regional wholesale power markets), and natural gas infrastructure (the siting and building of new pipelines). In electricity, it has no legal mandate to address climate directly, but it does have a mandate to maintain open, competitive markets and facilitation of a cleaner energy mix.
The blurring of the lines exists between FERC and the state commissions. The Federal Power Act sets up a relationship between FERC and the states known as “cooperative federalism”, or accommodating the state’s statutory role, deferring to states in assessing how they want their electric resource mix to evolve. States have taken a variety of routes (i.e., renewable energy portfolio standard) to achieve this and it is hard for FERC to level the playing field as most states adopt different regulatory mechanisms. The difficulties of coordinating interstate electricity policies could mean preemption of a states’ role as chief regulators of the electricity industry. While preemption would eliminate some state-level roadblocks to interstate cooperation, it would sacrifice many of the benefits of local knowledge.
The best example of what is mentioned above, is when FERC passed the minimum price offer rule (MOPR) order in December 2019, despite strong opposition from state and clean energy advocates. The biggest immediate concern for states like New Jersey and Maryland is the order’s impact on offshore wind development — New Jersey is aiming to add 7,500 MW by 2035 and Maryland’s renewable portfolio standard has a 1,200 MW offshore wind carve-out.
Big Players in the Clean Energy System
Amazon, Google, and Facebook were the largest buyers of renewable energy in 2019. The Renewable Energy Buyers Alliance (REBA), a membership association for large-scale energy buyers, reported the top five spots on their clean energy tracker were all taken by technology companies, Facebook landed at No. 1, followed by Google. This is no surprise, as technology companies require energy-intensive data centers to make their operations possible.
City Government and Utilities
Smart cities have disrupted several sectors including energy, transportation, buildings, and core city services. Utilities have developed smart city business, driven by the need to generate new revenue opportunities. Smart city applications such as EV charging infrastructure and services, smart street lighting/buildings, distributed energy resources, and smart city communication networks all offer significant new business opportunities for utilities. The smart city movement though is at risk with the lack of standardization. As Smart City Connect describes:
Other Areas Blurring:
The future is unknown, and the national election could upend everything again. With this new reality comes the need to constantly adjust and change. As my focus is solely on renewable energy, it is an exciting time to be in the middle of massive energy sector transformation, even if the lines are blurry.