If you’re a utility regulator, you’re undoubtedly hearing about new regulatory models, more specifically, performance-based regulation. But regulatory processes can constrain the ability to get policies designed well in the implementation and incentive design phase. Experience shows it pays to get out in front of this movement and start the conversation now with stakeholders in your state.
We launched America’s Power Plan five years ago under the premise that renewables growth would soon accelerate, and therefore we needed to proactively examine and reform institutions that impede a high-renewables, low-cost, reliable grid. Updated levelized cost of energy (LCOE) data and forecasts from international energy analysts show that renewable energy costs keep falling, making changing outdated institutions more urgent than ever.
Offshore wind has always seemed just out of reach in America, but the offshore wind boom has officially arrived in Northeast Atlantic states – to the tune of 8,000 MW of planned capacity. In fact, the U.S. offshore wind industry is in a similar situation to Europe’s ten years ago. If they follow the same consistent path, Northeast consumers, local economies, and investors all stand to benefit.
Three often-used market terms – price suppression, capacity payments, and price spikes – that contain hidden biases against good market design and clean energy have become accepted into the market vernacular. It’s time to re-examine these terms, refine them, and reframe the conversation about designing markets for a clean, affordable, reliable electricity future.
For specific insights, we asked experts in the field, many of whom have been involved in America’s Power Plan from the beginning, to comment on changes they are witnessing in the field and what they are hopeful about for 2018. We focused on five topics: the implications of the changes in relative costs of electricity technologies, new utility models, wholesale power markets, transmission policy, and customer rate design. Here’s what we heard from some of our nation’s brightest minds.
Resilience may be the most trending topic in today’s electricity sector. The Department of Energy’s (DOE) report on baseload retirements impacts and subsequent Notice of Proposed Rulemaking (NOPR) to subsidize baseload units for the resilience they allegedly provide the U.S. power system begged the question not only whether 90-days of fuel onsite improves resilience – but more fundamentally, what is resilience and how can it be measured?
To reach a clean, resilient, affordable future, markets must evolve to value flexible resources – the key to reducing integration costs for variable resources. Two recent reports from America’s Power Plan (APP) outline how markets can evolve in the short- and long-term to cost-effectively integrate ever higher amounts of variable renewable generation like wind and solar.
On September 29, the Department of Energy released a Notice of Proposed Rulemaking (NOPR) that would bail out unprofitable coal and nuclear plants. It will be important to build a robust record that supports analysis from the DOE’s own report on reliability and resilience published in July—markets are more-than-adequately supporting reliability, and customers should benefit from lower costs as clean energy comes in to undercut other resources. In response, we offer some resources from the experts of America’s Power Plan and others.
Regulators interested in PBR are searching for real-life examples where it has worked well. Luckily, the United Kingdom began moving in this direction a few years ago. Though the U.K. is different in its public policy priorities and regulatory capacity and philosophy than many U.S. states, RIIO already provides U.S.-relevant lessons from their experience.
Last year America’s Power Plan published a five-step framework for getting the most out of grid modernization to ensure customers get the value promised from grid modernization investment programs. Electrification is one subset of these efforts, and a similar approach (adding market development as a precursor) can help regulators prepare for immense market changes. Getting the most out of vehicle electrification requires supporting market development, integrated distribution planning, defining goals, setting metrics, defining targets, and exploring changes to utility financial incentives.