Rethinking Policy to Deliver a Clean Energy Future

By Hal Harvey and Sonia Aggarwal, Energy Innovation

  • View the summary recommendations from America’s Power Plan.
  • Download the executive summary [PDF].
  • Download the full Overview [PDF].
  • Download a summary handout of the project [PDF].
  • View the version printed in Elsevier’s Electricity Journal.

The Situation

Our nation’s electricity system is undergoing a rapid transformation. Market forces — driven by demand for cleaner, more efficient energy and technological innovation — are redefining America’s power sector.

Consumers and businesses are demanding a new relationship with energy. They want to control the energy they consume – make it cleaner, more efficient, certain, and affordable. Innovative companies are finding new ways to meet this demand. Now you can buy smart thermostats at Lowe’s, solar panels at Home Depot, and LED lightbulbs on Amazon, to name a few.

In the last five years, the cost of solar energy has plummeted 80 percent, while wind energy costs have sunk by 30 percent. Last year, 49 percent of all new power plant investment in the U.S. was for renewables, three times that of new natural gas power plants. And while fracking has transformed the natural gas and power industries, experts warn that gas prices will continue to be volatile, and are likely to rise as demand increases.

As the demand for clean energy accelerates, it is hitting a wall of regulations designed for traditional fossil fuel plants. Our current legal, economic and regulatory structures, in some cases in place for more than a century, are actively thwarting innovation. Imagine trying to introduce the iPhone in the era of rotary phones and Ma Bell — this gives an idea of the pressure in the system. Energy markets, utilities, grids and regulatory structures need an upgrade.

Under the current regulatory system, these market trends constitute a considerable threat to traditional utility business models.  The current system penalizes utilities for every kilowatt-hour not used, and for every generator put on the customer side of the meter.  According to the Edison Electric Institute, which represents investor-owned utilities, these “disruptive” technologies will lead to declining power sales and declining revenues. “As the cost curve for these technologies improves, they could directly threaten the centralized utility model.”

New technologies require new rules — new business models, new market designs, and new regulations — that foster innovation instead of stifling it.

We are at a pivotal point in America’s energy history. Decisions and investments made in the next decade will shape the course of the power sector, the economy, national security and the climate for decades to come.

That is why more than 150 top energy experts have joined America’s Power Plan, a project designed to tackle the tough questions and propose a path to overcoming regulatory, legal and economic barriers to a cleaner more efficient energy future. Together, these papers provide a policy toolbox to guide decision makers on utility business models, finance, market design, transmission and distribution policies, distributed energy resource integration and siting.

While America’s Power Plan presents state-of-the-art thinking, it is intended to start a discussion about our energy future, not to be the final word. We invite you to join the conversation.