It’s not utilities leading the energy revolution

It's policy--not utility preference--that is enabling the renewable energy revolution.

It’s policy–not utility preference–that is enabling the renewable energy revolution.

Last Friday, we noted that Ceres has released a major new report ranking the renewable energy production and energy efficiency programs of the 32 largest electric utility holding companies in the U.S.

But that note came in a brief update to our post Exelon supporting solar power in Massachusetts? Um, nope.  It was easy to miss and the report–and its implications–deserve more attention.

That’s especially so now that two experts, from very different ends of the energy arena, have weighed in with their perspectives.

Layout 1But first, a few notes about the Ceres report itself. Ceres found that renewable energy accounts as much as 20% of the electricity sales of only one U.S. utility, NV Energy in Nevada. Only six utilities, including NV Energy, have more than 10% of their electricity generation from renewables.

On the other hand, seven utilities–six of them heavily nuclear–generate less than two percent of their power from renewables. South Carolina’s SCANA gets the turkey award for using absolutely no renewable-generated electricity at all. That’s the same SCANA building two new nuclear reactors at its Summer site in South Carolina, which, if completed, will completely kill any hope of significant utility generation of renewables in the state since most of their power already isn’t needed. Given South Carolina’s sunny climate, we can only hope their high cost will help spur rooftop solar in the state.

The full ranking of the 32 utilities are to the right. Energy efficiency rankings of the utilities were only slightly different; check the Ceres report for those.

But why is it that NV Energy provides–on a percentage basis–ten times more renewables than seven major utilities? Is NV Energy run by a bunch of solar-powered hippies? Or is something else at work?

Former FERC Chairman Jon Wellinghoff, who wrote the foreword to the Ceres report, says the utilities have nothing to do with it:

“It’s been nothing that the utilities have done per se,” Jon Wellinghoff, the most recent former chairman of the Federal Energy Regulatory Commission and a partner at Stoel Rives, told Utility Dive in an interview. “What’s really driving the leaders is … both legislative and regulatory policy.”

….NV Energy may have ranked first in renewable energy sales in the U.S. in 2012, but that’s because “choices were made [in Nevada] a number of years ago to put in very aggressive renewable portfolio requirements,” Wellinghoff said.

Similarly, “there’s no utility that has an inherent incentive to improve the efficiency of its customer,” he added, “because, for the most part, that reduces revenues to the utility by reducing sales.”

In other words, those Renewable Energy Standards a majority of states have adopted are working. Without them, the utilities would be doing virtually nothing to advance renewables.

Case in point: SCANA. South Carolina has no Renewable Energy Standard at all. So why should SCANA bother when it thinks it can make more money forcing ratepayers to pay for expensive nuclear power? And that’s also the reason the bottom of the Ceres chart is dominated by southern utilities, where state governments have been loath to encourage renewable generation (of course, that’s typically because the utilities lobby them not to).

The success of Renewable Energy Standards is why utilities like Exelon want to get nuclear power included in them, and why right-wing groups like the American Legislative Exchange Council (ALEC) are working secretively on behalf of utilities to get rid of them entirely.

Wellinghoff also makes some interesting comments on renewable power and grid reliability, which nuclear and fossil fuel-dominated utilities frequently cite as an excuse not to develop renewables:

“I don’t think there will be negative impacts on grid reliability,” Wellinghoff told Utility Dive. “Ultimately, the system operators … are flexible enough and smart enough to manage the increased levels of variable resources onto the grid.”

Wellinghoff pointed to Australia and Germany to show that high levels of renewables need not impact grid reliability. “In Australia, they have over 10% distributed solar integrated into their grid — one of the highest levels in the world — and yet they’re managing their system … without any significant issues,” he said. “In Germany, they have, at times, over 50% of their total load … [is met] with solar and wind.”

In fact, Germany actually “has a much, much higher level of reliability than we do in in the U.S.” And that’s with “much, much higher levels of renewables,” he said. “So that’s not an issue.”

So what’s really having an impact on grid reliability? “Our reliability issues in the U.S. have little if anything to do with solar or wind,” he said. “They have to do with aging infrastructure that needs to be replaced and grid modernization that needs to take place.”

Wellinghoff acknowledged the issue of “stranded assets”–otherwise known as uneconomic nuclear reactors and coal plants–but didn’t have much sympathy for the utilities that hold them.

“They’re seeing that in Germany and they’re seeing that in other places where fast deployment and ramping of these technologies at a distributed level is displacing the central station generation,” he said. “But that’s the risk that these investor-owned utilities take when they make those investments. Those are risks their shareholders will have to bear.”

At the other end of the expert spectrum is David Crane, CEO of NRG Energy, which is the largest solar developer in the U.S.–although it still makes most of its money from fossil fuel sales, a reality the company says it is trying to turn around.

Crane argues that it should be corporate America that leads the charge for clean energy.  Citing companies like Apple and Coca-Cola, Crane said this week, “Who are we going to look to lead on this?” Crane asked. “For the first time in American history, could we have a social movement that’s actually triggered by corporations?”

Crane believes NRG’s biggest rivals are not other utilities, but companies like Google and Home Depot. Google is investing heavily in various clean energy technologies while Home Depot poses a different kind of threat to NRG–and to traditional utilities as well:

Crane is concerned electricity may get “so distributed and so simplified that our biggest competitor becomes Home Depot,” where people could buy panels and put them on their rooftops themselves, he said.

“You just can’t believe if you’ve been in the power industry your whole life as I’ve been how simple solar photo-voltaic is,” he said.

That’s all well and good, but we think we’d like to see the Renewable Energy Standards stick around a while longer anyway….

Michael Mariotte

August 1, 2014

Permalink: https://safeenergy.org/2014/08/01/its-not-utilities-leading-the-energy-revolution/

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