Advanced Energy Perspectives

Now just a month into the Trump Administration, the new President has remained consistent with the promises he made on the campaign trail. Of note to the business community, including the advanced energy industry, President Trump has made it clear that he wants to grow the economy through unleashing the American private sector. One element of this strategy is the President’s energy agenda. President Trump’s America First Energy Plan, posted on the White House website on Inauguration Day, provides a window into this agenda. The Plan calls for boosting production of the nation’s oil and gas resources but makes no mention of the advanced energy products and services that are pumping $200 billion into the economy annually and supporting over 3 million U.S. jobs. For an “America First” approach to energy, that is a glaring omission.

On Nov. 17, the Federal Energy Regulatory Commission (FERC) issued a notice of proposed rulemaking (NOPR) that has the potential to significantly expand opportunities for advanced energy technologies in the coming years. The proposed rule will allow more competition from advanced energy technologies in the regional electricity markets under FERC’s jurisdiction, driving down costs for consumers while giving the industry greater chance to grow. AEE has frequently noted that current rules do not allow advanced energy to compete fully in wholesale markets. With unnecessary obstacles removed, the advanced energy industry will be able to grow with the simple force of free markets. With Thanksgiving just behind us, we’re thankful for this effort by FERC to remove market barriers for advanced energy in wholesale markets.

This summer, the House Energy & Commerce Committee wrote a letter to the Federal Energy Regulatory Commission (FERC) seeking the agency’s input on the challenges facing our electric grid and the organized wholesale electricity markets which FERC regulates. Driven by a number of factors, including environmental regulations, changing consumer expectations, and booming growth in advanced energy technologies, the grid is undergoing rapid changes, the letter notes. In light of these changes, the Committee wants to explore questions about whether the organized competitive electricity markets established in the 1990s have delivered on promises to lower costs, maintain reliability, and spur innovation and whether Congress should amend the underlying law, the Federal Power Act. A formal hearing will take place tomorrow.

Organized markets are the best way to facilitate competition and drive down electricity prices, but, as they exist now, the markets overseen by FERC are far from perfect. AEE hopes members of Congress will use the hearing as an opportunity to highlight ways these markets can be improved. AEE is working with the R Street Institute - a think tank whose motto is “free markets, real solutions” - to help Congress see how these markets work and how they can be improved to take advantage of the benefits advanced energy provides.

Reliability is one of the biggest responsibilities shouldered by the regulators and grid operators that manage our power system. Advanced energy technologies and innovative operational techniques have the potential to increase reliability while lowering costs and increasing customer participation at the same time. However, current practices do not allow these solutions to compete head-to-head with incumbent technologies to provide reliability services. Instead, grid operators tend to address reliability challenges by offering financial incentives to beef up traditional transmission and generation assets. By not allowing advanced energy technologies to compete for reliability services, the Federal Energy Regulatory Commission (FERC), which oversees wholesale power markets, is missing an opportunity to drive down costs through competition while increasing reliability at the same time.