By Jeff Turcotte, assistant vice president, Government Affairs, EPSA
The Bottom Line: EPSA’s Jeff Turcotte reflects on the White House Electrification Summit, noting that grid reliability must be a top priority, with dispatchable power generation needed to safely and cost-effectively electrify America’s economy.
Any discussion of electrification must be coupled with a discussion of how the electric grid will handle the increase in electricity demand—and dispelling the notion that investing in weather-dependent, non-dispatchable resources alone will be sufficient.
EPSA watched with interest the White House’s Electrification Summit on December 14, which featured a discussion of efforts to substantially electrify significant portions of the U.S. economy. In opening remarks, it was noted that the U.S. needs to triple the rate of electrification to reach net zero emissions by 2050. EPSA strongly maintains that electrification efforts across the economy – from transportation to home/commercial heating, to appliances – are crucial to meeting greenhouse gas reduction efforts.
However, simply shifting demand from other forms of energy (e.g., gasoline, natural gas, or home heating oil) to the electric grid without concurrently working to ensure grid reliability is not sound public policy. Any discussion of electrification must be coupled with a discussion of how the electric grid will handle the increase in electricity demand – and dispelling the notion that investing in weather-dependent, non-dispatchable resources alone will be sufficient to keep the lights on. We will need a both/and, not an either/or source of supply for decades to come.
As Dr. Arati Prabhakar emphasized, the grid of the future “has to be a grid that is stable, that is secure against physical threats and cyber threats. It has to be a grid that is resilient to the extreme weather events that we’re already living in, and it has to be a system that can do all of that while still delivering electricity to every person in America and every part of America at a very low cost.”
Today, and for decades to come, that need can only be met by maintaining a sufficient amount of dispatchable power generation.
A Foundation of Dispatchable Electric Generation
Providing an estimated 20-25% of the nation’s electric generating capacity, EPSA members remain an essential cog in advancing sustainability goals while ensuring that electricity is reliable and affordable. As electrification drives increased demand for electricity, competitive markets are the best way to keep prices down and ensure customers have the energy resources they need, while also facilitating cost-effective innovation and integration of new lower-carbon technology.
As EPSA members build new lower and zero-emission resources, we continue to hold that markets need to both (1) prepare for an increase in electricity demand over the coming years and (2) simultaneously value generation that is flexible, dispatchable, and not subject to unfavorable weather conditions. While wind, solar, and other zero emission resources will certainly play an important role in greater decarbonization of industries across our economy, they alone cannot be the answer. Fully formed public policy on electrification must guarantee a foundation of reliable, dispatchable generation that can produce electricity when the sun isn’t shining and the wind isn’t blowing. A competitive market structure that incentivizes a strong foundation of flexible, dispatchable resources can most efficiently ensure regional reliability, and not only help achieve electrification goals, but allow for ongoing investment in variable resources without the sacrifice of reliability which is a non-starter.
Managing Consumer Costs Through Competition
Of course, all of this investment – both in power system reliability and the Administration’s stated goal to “deploy, deploy, deploy” massive amounts of new clean energy technology – will come at a cost to the American public and it is time advocates were more straightforward about those costs. Whether the investments being hailed by policymakers are done either through federal or state spending, or through a regulatory structure, ultimately there is only one wallet in the room – the ratepayer/taxpayer. EPSA strongly believes that when markets are designed to incentivize and reward desired attributes or behaviors, they remain the most efficient way of achieving reliability and policy goals and retain the risk to investors and shareholders and not on captive customers. The innovation, competition, and efficiencies driven through competitive markets allow reliability and policy goals to be met without sacrificing affordability.
As various federal agencies begin to stand up programs authorized by Congress in the past two years that will result in greater demand for electricity, EPSA urges policymakers and regulators to insist that ongoing and future electrification efforts be properly aligned with policies that ensure a foundation of flexible, balancing, dispatchable resources to support the reliability of our critical infrastructure.