Why Utilities are Making a Necessary Foray into Renewables
- Dec 20, 2018 10:29 pm GMT
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Last week, the Washington DC policy-focused publication The Hill ran an opinion piece titled "Why utilities are making a necessary foray into renewables." In this piece, the author recounts how difficult it was 30 years ago to install a small solar test facility but how much utilities have changed their tone on renewables in the years since-- analyzing why such a shift has taken place.
The article recounts how the Public Utilities Regulatory Policies Act (PURPA) was passed in 1978 seeking to spur innovation by requiring the purchase of electricity from private plants employing new technologies, including renewables. But then the 1992 Energy Policy Act required utilities to give transmission to independent power generators, but came with a roll back in renewable incentives that resulted in a dormant U.S. renewable energy sector from the 1990s to the early 2000s.
Since then, though, this article details how states adopted renewable portfolio standards, prices began to fall rapidly, and renewable industries ballooned. "The combined capacity of solar and wind generation grew from 9.5 GW in 2005 to 113 GW in 2017.
In the end, though, the final three paragraphs were the most important, which I'll repeat verbatim:
"Across the country, consumers on both sides of the political aisle have expressed their desire for more clean energy. A poll released in September 2018 found that 76 percent of likely voters support more action by the government to promote solar energy. Some utilities continue to resist these shifts. In November, voters in Nevada approved a ballot measure to require utilities to supply 50 percent of their energy from renewable sources, despite active opposition from the State's largest utility.
While some utilities are attempting to block the growth of renewables in their service territories, others are embracing renewable energy. In October, the Northern Indiana Public Service Company (NIPSCO), a subsidiary of NiSource, once one of the most coal-reliant utilities in the country, announced that it could save customers between $1.2 billion to $2 billion by retiring its remaining coal generators and replacing them with a combination of renewable and gas generation over the next 10 years. Driven by lower costs and a host of other benefits, many utilities are adopting clean energy as a significant portion of their generation fleets.
The utility industry won't change quickly. Most utilities have large fleets of fossil and nuclear-powered facilities built around centralized transmission and distribution networks. These systems change slowly. But smart utility companies are looking 20 years down the road and thinking about how they will compete in a new world of distributed generation. They can't afford not to do so."
So clean power has become a business imperative for these companies, going along with retiring coal plants. But that last point, that slow change (necessary due to the size and economics of their existing large fleets) means the change should start now, seemed most poignant to me.
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