By Hannah Levitt
The future of clean power depends on state and local governments implementing policies that expand the market for renewable energy development, according to energy policy experts at a seminar hosted by the Energy Policy Institute at the University of Chicago Thursday.
Energy policy and economics expert Susan Tierney and New York State “energy czar” Richard Kauffman explained to an audience of about 100 people that the current challenge in the proliferation of clean power solutions lies in finding an economically well-designed policy for the power grid.
According to Kauffman, the existing grid was not designed for renewables or distributed generation, but these resources have been added to the existing power grid instead of creating a hybrid grid, due to policy constraints.
Kauffman is the chairman of Energy and Finance for New York State and chair of the New York State Energy Research and Development Authority. He leads the state’s Reforming the Energy Vision (REV) initiative, which aims to support renewable energy and efficient markets in New York.
“There are technical challenges certainly, but the fundamental reason why we’re not building that grid is because of policy,” Kaufman said. “So really what REV aims to do is to change the policy to drive capital to build the grid of tomorrow as opposed to just rebuilding the grid of yesterday.”
REV was created after Hurricanes Sandy and Irene and Tropical Storm Lee brought the lack of resilience of the power grid to New York Gov. Andrew Cuomo’s attention, Kauffman said. According to the REV website, its core component is a Clean Energy Standard requiring 50 percent of New York’s electricity to be from renewable energy sources by 2030.
Tierney pointed to the recent passage of the Future Energy Jobs Bill in Illinois as another example of the kind of policy that drives change. This law includes a subsidy to keep two of Exelon’s Illinois nuclear power plants open despite the fact that they operate at a loss.
Audience member and University of Chicago alumnus Edward Krapels explained that in his experience, incomplete market design harms the development of renewable energy. Krapels is the founder and director of Anbaric, a company that supports independent transmission projects.
“We don’t price carbon, we don’t price things that we should be pricing, and it really makes the system almost unusable for the development of renewable energy,” Krapels said.
Tierney and Kauffman identified pricing for utility providers and consumers as one of the major challenges in the future of clean energy. According to Kauffman, utilities are currently capital-inefficient because the utility industry has been protected by regulation and thus hasn’t had to be capital efficient.
This seminar comes in the wake of President Donald Trump’s first week in office and the accompanying executive orders with potential consequences on climate and energy policy. Despite President Trump’s campaign promise to revive the coal industry, Tierney thinks the trend will continue towards de-carbonization of the power grid.
“I don’t think that the administration is going to be able to do much about that because of the fundamental market momentum, and I think that the new administration and Congress will continue to encourage more natural gas production it rather than discourage it,” Tierney said of increasing the coal industry’s market share, especially as compared to natural gas.
