Advanced Energy Perspectives

There are a couple of major issues currently before FERC and Congress that will impact advanced energy resources in wholesale markets. One of them is a decision expected from FERC soon after it regains a quorum of voting members that threatens to force operators of renewable energy facilities to artificially jack up their prices in a way that leaves them uncompetitive. The other, on which FERC has launched a proceeding but is also within congressional purview, involves building the transmission that is needed to get low-cost renewable energy to consumers. Here, and in two new wholesale market briefs, we explore the implications of these two issues for advanced energy resources, especially large-scale renewable energy development.

AEE's Jeff Dennis testifying before the House Committee on Energy and Commerce's Subcommittee on Energy

Since Democrats won a majority in the U.S. House of Representatives, the topic of deep decarbonization in the power sector has attracted more attention in our nation’s capital. While this topic has received the most attention through Members of Congress, most notably Rep. Alexandria Ocasio-Cortez, calling for a Green New Deal, many other policymakers across the political spectrum have put forward ideas on moving towards a decarbonized power sector. Most recently, Democrats on the House Energy and Commerce set a goal in July 2019 to reach net-zero carbon emissions by 2050 and have begun a series of hearings to gather feedback from stakeholders. In October, at a hearing entitled “Building a 100 Percent Clean Economy: Solutions for the U.S. Power Sector,” AEE was invited to testify on the role the advanced energy industry has played to date.

Two-thirds of the nation’s wholesale electricity sales occur in a competitive market managed by a Regional Transmission Organization (RTO) or Independent System Operator (ISO), with over 200 million customers in these areas and over $120 billion in annual energy transactions taking place. Under the Federal Power Act, these markets are overseen by the Federal Energy Regulatory Commission (FERC), which ultimately determines the rules for how wholesale electricity is bought and sold in the marketplace. RTOs/ISOs develop the market rules that dictate whether and how energy resources can participate and compete. Wholesale electricity markets should allow all resources to compete on price and performance, as the Federal Power Act requires that the rates, terms, and conditions of service governing wholesale competitive markets be “just and reasonable” and not grant any “undue preference or advantage.” Many market rules, however, are outdated, having been designed with older technologies in mind. Those rules can favor incumbent technologies and disadvantage newer and more innovative energy options – that is, advanced energy.

In the advanced energy industry, all eyes are on the incredible shrinking FERC. With now two open seats, the Commission can barely muster a quorum – and not always, as a Trump Administration ethics pledge is keeping Commissioner Richard Glick from participating in important cases. Media outlets have reported that the White House plans to offer a single nomination to fill McIntyre’s seat, a potentially troubling departure from the tradition of pairing Republican and Democratic nominees. In flux as it is, FERC faces a range of pending decisions that could have huge impacts on the nation’s electricity market – and on advanced energy growth. Ultimately, what the advanced energy industry is looking for from FERC Commissioners – those now seated, and new ones to come – is for barriers to competition in wholesale markets to come down.

Today, Florida Congressman Matt Gaetz (R-FL-1) released a “Green Real Deal” resolution in response to the Democratic proposal authored by Sen. Ed Markey (D-MA) and Rep. Alexandria Ocasio-Cortez (D-NY-14). The introduction of each proposal marks a significant shift in the focus on advanced energy at the federal level. Over the previous 24 months, the advanced energy industry spent much time and energy – often with a coalition of unusual allies – beating back proposals that would have provided out-of-market payments to uneconomic power plants to the tune of $34 billion. Fast forward to today, and both parties are putting forward visions on federal energy policy with advanced energy at the center. Neither is going to become law any time soon. Rather, they represent starting points in a discussion that will take place over the coming years. Here’s what each of these starting points contain for advanced energy.