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Publish Date: June 24, 2021 | Total runtime: 28:53
Guests: Miranda Ballentine, CEO, Renewable Energy Buyers Alliance (REBA)
Host: Todd Snitchler, president and CEO, Electric Power Supply Association (EPSA)
TRANSCRIPT
Todd Snitchler, host: What do Google, Amazon and Disney have in common? Besides being some of America’s largest companies and innovators, they are also some of the largest buyers and users of electricity. That means finding affordable, reliable and cleaner resources is essential to their business success. And, they all believe that competitive power markets are the best way to achieve their goals of reducing carbon emissions and putting more renewable energy on the grid.
This is Energy Solutions, a podcast from the Electric Power Supply Association, where we unpack the stories and trends behind America’s changing electric grid.
I’m your host, Todd Snitchler, EPSA’s president and CEO.
In this episode, you’ll hear from Miranda Ballentine, CEO of REBA. No, not the country singer – it’s the Renewable Energy Buyers Alliance. REBA represents Google, Amazon, Disney, and more than 230 other companies working to accelerate renewable energy procurement.
REBA says organized wholesale markets are – quote – fundamental – to advancing that goal. And the group doesn’t stop there – it says markets must be expanded to all regions of the country.
Miranda has an extensive and impressive resume – before joining REBA she was the CEO of a distributed energy company, served as managing director of the Rocky Mountain Institute’s Business Renewables Center, and was director of sustainability for Global Renewable Energy at Walmart Stores, Inc. She also served President Obama as the 4th Assistant Secretary of the Air Force for Installations, Environment, & Energy – managing a $9 billion annual energy budget in addition to environmental programs. And in 2013, Miranda was selected to join the World Economic Forum’s Young Global Leaders.
Here she is to explain more about what REBA’s working on, and why its member companies believe competitive power markets are part of the solution for a cleaner energy future.
Miranda Ballentine, CEO, REBA: So, REBA – the Renewable Energy Buyers Alliance – we are a trade association that was developed by large energy customers for large energy customers.
We have a pretty simple but powerful vision of the future, and that is a resilient zero carbon energy system where every organization has a viable path to procure renewables. So, while we are a trade association that was really built for the demand side of the clean energy markets, our community is broad. So, while the majority of our members are large clean energy buyers, we do also have in our community energy suppliers, developers, as well as kind of all of the kinds of companies who sit in between the buyer and the seller of power. So, you can think financiers, you can think lawyers, you can think buyers’ agents, consultants. So it’s really a comprehensive community.
We’re over 250 members now. Our members annual revenue is over $6 trillion, and they employ almost 14 million people, so it’s really become quite a powerhouse in our first couple of years.
Todd: I would say so. Why is it that your members are so interested in where their electricity comes from? I think that’s kind of a threshold question that a lot of people ask, like, “Don’t you just care about the lights being on, I mean, why do you really care where it comes from?”
Miranda: Well, it is a really kind of interesting phenomenon, if you think about it. Most energy customers – most businesses, universities city buildings – and even us as homeowners and residential energy customers – we’ve just historically paid a utility bill. And that’s, you know, as long as the powers on and it’s affordable, we’re happy.
But fundamentally, for the REBA community, for the large clean energy customers that kicked off and created this community, it’s really about solving the climate crisis. C&I – so commercial and industrial energy customers – are the largest source of energy-related greenhouse gas emissions in the United States.
They know that running their businesses requires power and it’s always going to require power, and that we have this crisis, as a species and as a planet, that they want to solve. They also believe that it’s good for business, good for shareholders, good for future customers, good for recruitment and retention. It’s all of that. But fundamentally if it weren’t for the climate crisis, I’m not sure that most companies would be doing this. So really that’s what it comes down to.
Todd: It’s good that you say that. I think EPSA’s members and REBA’s members both believe in those issues and trying to address the emissions question, but we also both believe in competitive electricity markets that are essential for trying to drive that energy transition. So you know, people always look at us and go, “We understand, we think, where your members are coming from, but why do companies like Amazon and Google support competitive markets? Or any of your other Members, for that matter?”
Miranda: Oh, you know it’s interesting because, as these companies begin to have an interest in being more intentional about what type of power that they consume and where their energy comes from and the generation source and the pollution related to their energy, rather than just paying their power bill, as they have in the past, many of them assume that they can come out and competitively source electricity – just like they competitively source everything else.
So you know, where I come from, you know, I’ve worked for Walmart for many years, I worked for the federal government for many years. There’s virtually nothing that you buy without competitive sourcing and RFP-ing and competition. You know fundamentally, if you’re a corporation or large organization, fundamentally you believe in competitive markets.
So many of these companies have been very surprised to discover that there are lots of parts of the country where both they and their energy providers – whether it’s their utility or their retail energy provider don’t actually have the ability to competitively source the type of power that they’re looking for.
And what we know is that over 80% of the corporate renewable energy deals that have happened in the United States to date are in wholesale markets, are in organized markets. And that’s not because 80% of the facilities of these companies are in wholesale markets. Only about 60 or 65% of corporate facilities are in wholesale organized markets.
But the rules of the road in wholesale markets really make it much more conducive for large energy customers to use their buying power to drive down the cost and drive up the scale of the type of power that they want to buy.
For most businesses, energy is the second largest controllable operating expense in the business. So if you take out things like taxes and leases and depreciation costs, which are not necessarily controllable costs, power is way up there on the list, usually a distant second for most businesses compared to labor costs, as you note.
But for most of history, companies have seen the cost of energy to be essentially fixed to their production costs or their sales costs. So most models would just say, “Okay, if our sales go up, if our production goes up, if our manufacturing goes up, let’s just assume our power goes up by an equal share.”
So, it’s really only been in very recent history that companies have started saying, “No wait a minute, this is a cost we can actually control.” It makes a big difference, and I’ll tell you, companies are really catching on to this.
So when Walmart started identifying this in the early 2000s and others of course said, “Well you know, we all know, Walmart’s about low costs if it makes sense for them.” So I just think that’s a really important point, and I wanted to sort of underscore it because a lot of companies today still don’t really recognize that energy is a cost they can control.
But let’s get back to your original question, which is, “Alright, what are the other benefits of wholesale markets, what are the other benefits of organized markets? Why do customers really believe that this works?” Beyond the fact that we know 80% of renewable energy projects are happening in wholesale markets today, which is evidence in and of itself that that market structure supports rapid deployment of zero-carbon energy.
There are an abundance of studies which, of course, you know, and hopefully your audience knows, but let me just name a couple of them that really dig into some of the other benefits of wholesale markets, because it’s not just low cost and low carbon that we all want as energy customers.
We also need a reliable source of power, meaning when we turn, flip the switch, we want the lights to come on.
We also need a resilient source of power, which is different than reliability. They’re related, of course, but they are two distinct concepts.
Resilience is really when there is an unexpected event that takes out the power system, whether that’s a hurricane, or a polar freeze in Texas, or fires in California, or a cyber –attack, as we saw with the Colonial Pipeline not too long ago. When there is an unexpected event, how quickly can the system get back up and running?
And we see over and over whether it’s the CAISO S.B. 350 study, whether it was the Southeast EIM study, we see over and over that both in in the study environment and in the practical real-world environment that having wholesale and regional transmission markets allows for greater reliability, greater resilience. So that’s a key driver.
We also see over and over that wholesale markets and ISOs and RTOs are really good for innovation. They spur new types of technologies. They’re technology neutral. They’re nondiscriminatory. They’re operated with open access for transmission and price transparency, and they really level that playing field. And that spurs innovation and new investment in next generation zero-carbon technologies that are lower cost.
For example, PJM’s faster responding frequency regulation market introduced in 2012 has really facilitated the deployment of storage.
And PJM alone now has over 280 megawatts of installed battery storage capacity. You mentioned in my past, I’ve got a little stint in the storage world. And that’s compared to 130 megawatts installed in all the non-RTO markets.
Todd: Mhm.
Miranda: We really do see that RTOs can spur innovation and deployment of different types of technologies.
Todd: And those are vitally important things as we look at a fairly rapid transition of the energy system. What used to take 20 or 30 years to turn over a fleet may turn over much quicker than that. And so innovation will really help to drive the reliability needed to keep the system functional while we see those changes.
So how is REBA engaging and working with policymakers, and what’s the message you’re trying to share with them?
Miranda: To unlock markets, we’re going to have to partner at the state level, at the regional level, and right now, in particular, at the federal level. We have an Administration, and a Congress and a Federal Energy Regulatory Commission who are really keen to use markets to decarbonize and stabilize and build a more resilient system for the 21st century threats we see.
So, what REBA does is we really galvanize our buyer community. As you’ve already mentioned, there are a number of wonderful organizations, yours included, that galvanize the supply side of the community. And that’s so important and so critical and so important for us to partner. At the same time, we know that policymakers really like to hear from energy customers.
Todd: Yes they do.
Miranda: You know, we – our community, we’re not energy businesses. So we don’t necessarily have a stake in this game. We’re not looking to build our own business. We’re looking for things that are good for the community, good for energy costs and good for decarbonizing the power grid.
Our members are very iconic American brands, so when the Administration received a letter from 36 large energy customers, including companies like Disney and Johnson & Johnson and General Motors and Walmart and Target and Google, you know, these are companies that bring jobs. These are companies that have been good for America, good for American competition. And policymakers really hear that voice in a different way.
Todd: So, I guess, as we look at that, there are a couple of proposals that are being kicked around Washington more than the states, although a version of them is probably really being indirectly discussed in the states. And that’s carbon pricing or a clean energy standard. It’s evolved from renewable portfolio standards. But I say all that to say there are a lot of different versions of the same kind of concepts. What would you say to policymakers that are considering one or more of these proposals? And probably equally as important, what would you say to the skeptics who say, “Ugh, this is just another overreach by government to try and, you know, meddle with things they should stay out of”?
Miranda: Yeah, all really good questions. You know, there are a lot of different policy and regulatory frameworks that could be brought to bear to solve these challenges. We’ve seen success in the past with market-based approaches. So, we at REBA really believe in a multi-path approach.
So, first and foremost, unlocking markets, as we’ve been talking about all morning. Wholesale organized markets, in our view, are the fundamental regulatory framework to help unlock markets so that large energy customers – or any energy customers – who want to use their buying power to accelerate this transition can do so. So we need to unlock markets.
At the same time having these top-down policies – and there are lots of different pros and cons to all the ones that you’ve listed. Right now, we’re digging in quite deeply on clean energy standards.
Todd: As are we.
Miranda: But these types of top-down approaches that set an ambition for the whole country to achieve are also necessary to get us there. And how we develop those in a way that doesn’t stifle markets is of utmost importance to us.
Now, the benefit of clean energy standards as opposed to, for example, a carbon tax, is you’re focused on the outcome as opposed to just the financials.
But there are benefits to a carbon tax, too, so there are lots of different ways you can get there.
Todd: As I look at that, I think well, let’s add one more complication to the mix. And that is that we had a letter from nine former FERC Commissioners that was sent in support of wholesale competitive markets to integrate more renewable generation and really unlock the benefits of markets, as you note. Which we were thrilled to see, I assume you were as well.
What is it that you hope the current Commission or policymakers would take from that letter? What would your two takeaways, if you have two takeaways, what would they be?
Miranda: So I’ve lived in Washington for almost 22 years, and I can tell you it’s a rare day in Washington when both Democrats and Republicans agree.
Todd: Especially now.
Miranda: Especially now. So to have a letter from nine former FERC Commissioners from both parties who have served under five Presidents, that the bottom-line takeaway from that letter calling on the current FERC Commissioners to get the job done on expanding organized wholesale markets to every region of the country – bottom line message is that there’s unequivocal alignment.
Todd: Yes.
Miranda: That wholesale markets are good for customers, that they lower prices, and that they accelerate decarbonization.
Todd: And we think that was very helpful. So, as we like to kindly refer to people like you and I, so for the “energy nerds,” can we dig in a little bit on REBA’s more specific vision and recommendations that you have. I know you had a very detailed plan that you put up on your website.
Miranda: So let’s start actually with the REBA Institute’s Pathways study that we released last year. Where we looked at three different policy pathways. We looked at a number, a handful of states as sort of representative of the nation. And we looked at advancing state policies, such as state-level CES, that mandate renewable energy. In that case, we were looking specifically at renewable portfolio standards.
We were looking at – “Pathway Two” was expanding utility subscription programs. “Pathway Three” was introducing organized wholesale markets in states where they didn’t exist yet today.
So that first pathway study really looked at those three pathways and found that the best outcome actually was a combination of all three.
However, that expansion of wholesale markets as the underlying policy really accelerated the other two pathways. So having wholesale markets allowed RPS/CES to do more, faster. Expanding wholesale markets allowed the second pathway of expanded utility subscription programs to do more, faster. We’re actually now working on a second version of that pathways study. It goes one click deeper, looks at all 50 states, and actually looks at eight different policy pathways, and we’re expected to release that this Fall.
Todd: We look forward to seeing that.
Miranda: Yeah, it should be really great.
Additionally, however, given that, we have also just released a report – from the REBA Institute again, working with Grid Strategies – that was really sort of a meta-analysis looking at all the studies out there on wholesale market design. And fundamentally that document led to us creating a set of “Buyers’ Principles” on wholesale market design that really lay out three big recommendations: One, wholesale markets can really level that playing field for all energy resources. They can safeguard, number two, market integrity, and really they’re designed to scale.
Todd: You’ve talked a lot about what your members are doing and about the work that you’re doing. Can you point us to a couple of success stories? Where would you say, “This is a great example where a REBA member was able to achieve an objective or where REBA was able to engage,” and say, “This is the kind of thing we aim to do more of, and this is a success story that made sense for us, or for our members”?
Miranda: As we’re really looking to get to a fully decarbonized power system, one of the big trends, Todd, that I think your listeners ought to really be aware of, is we’re in a significant transition where companies are now seeing renewable energy as a means to the end. Where the end is a fully decarbonized power system. And sometimes, the next new wind or solar project is not necessarily the carbon-optimized project.
So, whether it was Microsoft’s carbon negative commitments announced last year, whether it’s Google’s 24/7 decarbonization commitment, we’re seeing more and more companies actually achieving 100% renewable energy on an annualized basis through their contracting today.
And then sort of scratching their heads, saying, “Oh okay, well on an annualized basis I’m procuring enough renewables to offset my annualized demand, but I know on any given day, that data center that manufacturing facility, that retail building, is still using carbon intensive power. So how can I use my procurement power now to actually ensure that I’m maximizing my decarbonization impact?”
So, we’re seeing more and more companies looking at the marginalized decarbonization impact of their procurement. So that may be things like choosing wind or solar that’s in different regions of the country, more carbon intensive grids. Or it may be companies looking at different blends of projects. Google just recently announced a project earlier in 2021, that I thought was really interesting, that combined hydropower, solar and storage. And they also announced a big geothermal project.
We also have a really interesting case study that we just launched on a project with Anheuser-Busch and BayWa r.e. which was the largest pan-European corporate solar deal. So that was sort of an interesting one. So there are lots of really interesting success stories that were we’re seeing.
Todd: They’re testing a number of ideas in various places to see what may work and what could be replicated, which I think is helpful.
Miranda: That’s right.
Todd: And, of course, our members are investing in renewable projects and construct them in organized markets, but not exclusively, in an effort to try and provide some of the resources that corporate buyers are looking for. So there’s clearly a joining of the interest on both sides of the energy equation from those who are producing and those who are consuming, and I think that’s really a good spot for both of us to be in.
So, what are you most excited or optimistic about as you look at the next five to 15 years in the energy space?
Miranda: Oh gosh, what am I most optimistic about? So I’m really optimistic about the catalyzing and complimentary technologies that are going to help us truly decarbonize the grid. So I’m really excited about the transition and transformation that we’re going to have to make, in the next, really, five years, to expand the full suite of carbon-free energy technologies into the marketplace, number one.
Number two, I’m really excited about some of the changes that we’re seeing in the West and Southeast. In terms of expanding organized markets. Whether it’s the legislation in Colorado and Nevada that have been mandating transmission organizations join RTOs. And then, in the next decade or so, whether it’s RTO benefit studies happening in Utah and Colorado. And legislation just passed in Oregon not too long ago, requiring further study.
In the Southeast, which is an area where we really, really struggle to deploy utility scale renewables because of the lack of organized market. Although I will say distributed renewables have done better in the Southeast.
But to really get to the scale we need, we are going to need more than the rooftop solar projects. So you know, I’m excited about looking at what can happen in the Southeast – and even the Southeast Energy Exchange Market (SEEM) filing to FERC by the southern utility companies.
They have really increased the conversation there. They’ve sparked a conversation that that hasn’t happened in the Southeast in a long time. So I’m excited about that work too. I know that not everyone is excited about exactly how things are going in those regions, but I think there’s a lot to be excited about there.
Todd: And there’s certainly no shortage of work to do in those regions as well.
Miranda: Yeah, and you know, let me say one other thing that I’m really excited about. You know, this community of corporate buyers has just not slowed down.
In 2020, despite everything going on that year, we had an absolute record year for corporate renewable energy deals. We had 35 buyers announce over 100 deals. We surpassed 10 gigawatts for the first time in a single 12-month period – 10.6 gigawatts in one year. And the first quarter of this year, Todd, is just going gangbusters.
We’ve already seen 3.2 gigawatts announced in the first quarter, this year. Which is more than all of 2017 – the entire year. All of 2016 – the entire year. I mean this has just been a huge quarter. So, we’re really seeing that exponential momentum from the leaders bringing along the next generation of clean energy buyers and just putting the market to work and getting deals done.
Todd: And those are clearly the market signals that members like ours look for to drive their investments, because if the opportunity is there, they will fill that space. And so those are the kind of nice marriages of opportunity that I think exist. So we want to thank you, Miranda, for joining us and for telling us more about REBA and how it fits into the policy landscape.
[Music transition plays.]
Todd: At EPSA, we know competition is ultimately the best foundation to advance nearly any energy solution – that includes expanding renewable growth and ensuring that our cleaner energy future works for businesses, customers, and a reliable electric grid.
Thanks for listening to Energy Solutions. You can find more information about why REBA advocates for competition on their website at www.rebuyers.org. And find more market-based solutions and progress being made by the power sector to reduce emissions on EPSA’s website at www.epsa.org.
If you liked this episode, please share it on social media, or with your coworkers, friends and family. You can also connect with us on Twitter @EPSAnews and on LinkedIn. And subscribe, follow, leave a rating or comment on Spotify, Pandora, Google or wherever you listen to podcasts.
[Energy Solutions theme music plays.]
Energy Solutions is brought to you by the Electric Power Supply Association. EPSA represents America’s competitive power suppliers, bringing about 150,000 MW of power generation resources to customers throughout the United States. Discover the power of competition at www.epsa.org.
