Advanced Energy Perspectives

Nevada scored a major win for advanced energy last week, when Governor Steve Sisolak signed a new, stronger clean energy standard into law. SB 358, sponsored by Sen. Chris Brooks, doubles the state’s Renewable Portfolio Standard (RPS), to 50% by the year 2030. Passing both houses of the legislature without a single no vote, the RPS legislation was the latest – and biggest – step toward Nevada becoming an advanced energy leader nationally. It was also a source of satisfaction for AEE and member companies involved in our Gubernatorial Engagement work in the Silver State last year.

A new working paper from the University of Chicago’s Energy Policy Institute is creating a bit of a stir. It concludes that one of the most popular, successful, and common state-level renewable energy policies – Renewable Portfolio Standards, or RPS – is far more expensive than previously believed. But there are reasons – multiple, in fact – to take the authors’ provocative conclusion with a grain of salt. So, too, their implied alternative, which would be to take a policy that seems to be working in 29 states and replace it with one that has nowhere been implemented on a scale sufficient to change the electric power mix as much as the RPS targets now being adopted by states around the country.

This is the fifth in a six-part series on utility business model reform provided by Rocky Mountain Institute, America's Power Plan, and Advanced Energy Economy Institute, originally published by Utility Dive.

Technologies are quickly advancing, providing a wide array of industries from transportation to healthcare to financial services with tools to modernize their products and services, while utility regulation has struggled to keep up. A key stumbling block is that many solutions are only offered as services rather than capital investments that a utility owns and operates. Utilities earn a rate of return on capital equipment, such as poles, wires, transformers and on-premise IT systems. By contrast, operating expenses, such as salaries, maintenance and payments for services, come out of a limited budget, so utilities manage these expenses to avoid overspending and eroding their earnings. The net effect is a significant disincentive for utilities to procure service-based solutions provided by private advanced energy companies. This limits utilities from taking advantage of many new technologies that are solely offered through service contracts, such as cloud computing, since these services displace an earnings opportunity.

In order to encourage utilities to make IT investments that are in the best interests of both them and their customers, two states — New York and Illinois — have looked at changes in how cloud services are treated for accounting purposes. These accounting innovations could potentially be applied to other utility needs that could be met more cheaply or flexibly as services than as capital assets.

Media Day at the Washington Auto Show kicked off with remarks by EPA Administrator Andrew Wheeler defending the Trump Administration’s efforts to roll back CAFE emission standards for light-duty vehicles. AEE was also on hand, focusing on something Wheeler never mentioned: Electric vehicles (EVs) have arrived, and are driving toward the future of U.S. mobility.

With the budget sucking up the legislative oxygen in Colorado, AEE hosted an Advanced Energy Lobby Day in Denver, supporting a number of bills that will reshape the state’s energy market, creating significant investment opportunities for a rapidly growing industry here. Like other Western governors, Gov. Jared Polis entered office on the promise of expanding clean energy investments while ensuring a just transition for the communities impacted by the shifting economics of energy. The bills supported by AEE would help him fulfilled that promise. We navigated the Capitol, meeting with legislators between committee hearings and floor votes, communicating the business message on advanced energy. With a little less than a month of session remaining, we push forward on bills that would reduce barriers to EV charging infrastructure, securitization of coal-fired power plants to be retired, and carbon mitigation plans.