Advanced Energy Perspectives

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.

This post is one in a series featuring the complete slate of advanced energy technologies outlined in the report This Is Advanced Energy.

Image courtesy of AEE member SolarCity.

Not sure why it fell to the International Renewable Energy Agency to tell us this, but the number of people employed by the solar industry in the U.S. has passed oil and gas extraction, as well as coal mining. Also, as reported by Bloomberg, IRENA points out that these solar businesses have grown 12 times faster than overall employment growth in the U.S.

This post is one in a series of feature stories on trends shaping advanced energy markets in the U.S. and around the world, drawn from Advanced Energy Now 2016 Market Report, which was prepared for AEE by Navigant Research.

With expiration of the production tax credit (PTC), the wind industry in the United States raced to commence construction on projects before the 2014 end-of-year cutoff of eligibility. As a result, more than 8.5 GW of wind power was brought online in 2015, producing revenue of $14.5 billion (up 75% over 2014), with another 9.4 GW now under construction that qualified under the old rules. (See above.) Now, with the long-term extension and gradual phase-out of the PTC over the next four years, passed by Congress in December, the wind industry boom is expected to continue for the next several years. The momentum should build toward a likely PTC- driven installation peak in 2018 (due to projects that commence construction prior to January 1, 2017, securing the 100% PTC), after which PTC gradually phases out through 2019 (80% of the full PTC for projects that commence construction in 2017, 60% in 2018, and 40% in 2019). At that time, depending on natural gas pricing, the ability to further reduce wind installation costs, and the Clean Power Plan, the wind industry will likely be better able to compete head-to-head with other resources in the marketplace – as it is now already doing successfully in several regions of the country.

We’ve blogged several times over the last two years on New York’s landmark Reforming the Energy Vision (REV) proceeding, which seeks to fundamentally reorient the way electric utilities are regulated in New York State. We have been strong supporters of this effort and, along with our state and regional partners, Alliance for Clean Energy New York and the Northeast Clean Energy Council, have filed comments at nearly every opportunity. Back in 2014, we blogged that The Devil is in the Details and later reviewed some of those details when the Department of Public Service issued its Track 2 White Paper. We also weighed in on benefit-cost analysis and, most recently, utility-solar collaboration on the future of net metering and compensation of distributed energy resources (DER). Truly, there is virtually no aspect of the regulatory framework that is not up for consideration in REV.

The details of what utility regulation will look like in New York just got clearer, when the Public Service Commission (PSC) issued its Track 2 Order on May 19. This Order addresses the fundamental issue of the utility revenue model as well as certain aspects of rate design. While there are many details still to be worked out (the Order is mainly about the framework and process), the PSC has formalized some bold ideas for how the utility business model will evolve in order to keep up with changing technology, evolving customer needs, and state energy and environmental goals.