Leaders in Washington, DC are turning their focus to a clean energy standard (CES) to push investments in renewable energy and move the country closer to achieving the Administration’s ambitious climate goals.
A properly designed CES can deliver significant benefits. An analysis conducted last fall by Energy and Environment Economics (E3) showed that a regional, technology inclusive, market-based CES in the PJM region would achieve nearly identical reductions in greenhouse gas emissions as a carbon price at a similar cost. It would also spur investment in new generation technology – reducing emissions by 80 MMT in 2030 at a savings of $2.8 billion compared to existing state policies, which are projected to raise electricity bills by $3 billion per year by 2030.
Getting the CES Right: The Elements for a Competitive Clean Energy Standard
In order to deliver a reliable, least-cost energy transition, the CES must be designed to support competition and ensure reliability, rather than simply mandate change. Competitive electricity markets have already created a solid foundation for investment in new lower-carbon technology, and have saved consumers billions of dollars. According to the Renewable Energy Buyers Alliance, 80% of the 30 GW of corporate renewable power purchase agreements have occurred in competitive power markets, and more than 80% of all wind and solar energy has been built in states that belong to competitive markets. Emissions have dropped by 39% in the PJM region since 2005, and 55% in the New York Independent System Operator footprint since 2000.
As lawmakers consider this proposal, they should recognize how markets have already driven substantial investment in clean energy technology and craft policies that protect this innovative environment.
While EPSA and our member companies – along with economists and a majority of business and environmental stakeholders – believe an economy-wide price on carbon would create the best outcomes for consumers and the environment, we have given careful attention to a CES that can approach the efficacy of carbon pricing.
A well-designed CES should harness the ability of competitive markets – as well as the attributes of all resources – to enable a least cost and reliable energy transition. It must also include a mechanism to provide partial credit to low-carbon emitting generation resources such as natural gas to capture additional low-cost emissions reduction opportunities and help ensure reliability. If political consensus around a price on carbon cannot be reached, we would support a CES that approaches the efficiency of carbon pricing and continues to foster the nondiscriminatory competitive markets that allow all resources to compete to reduce emissions and lower costs for customers.
Competitive Power Suppliers Are Investing in Renewable Energy
EPSA member companies are already showing how markets drive investment in renewable generation and energy storage technologies that are helping to make the grid more efficient.
Here are some EPSA member company and competitive market highlights from across the country:
- LS Power became one of the first utility-scale private developers of solar generation more than 12 years ago and has since developed, constructed, and operated $1.8 billion worth of solar projects across the U.S.
- In California, Vistra Energy began operating a 300 MW lithium-ion battery storage facility at its Moss Landing facility in Monterey, California in 2020.
- Tenaska has announced that it is partnering with Capital Dynamics to build nine battery storage projects to provide 2,000 MW of storage capacity to the California market.
- Efficiency and clean generation investments in the PJM region, which includes 13 states and the District of Columbia, have reduced carbon dioxide emissions 39 percent since 2005, while delivering $3.2 billion to $4 billion in cost savings to customers.
- Since the NYISO launched competitive markets in 1997, CO2 emissions in the state have dropped 55 percent, thanks to investment in cleaner generation.
EPSA member companies own and operate more than 6,700 MW of power generation from renewable sources, as well as power produced by zero-emission nuclear plants. Competitive power markets have spurred innovation and cost reductions across the country and have added thousands of megawatts of battery storage capacity to the grid.
These and other examples show the success of competitive power markets. We are glad to see support for market-based energy policy at the national level that fosters private investment in cleaner power generation and energy storage technology.
