The technology-neutral policies laid out in this paper are no-regrets actions to get us to 90 percent zero carbon electricity while reducing wholesale electricity costs 10 percent.

The United States could deliver 90% clean electricity nationwide by 2035, without the need for new fossil fuel plants, according to a study released today from the University of California, Berkeley — with the right policies.

The U.S. would need to double solar and wind annual deployments through the 2020s, and then triple historical maximums in the 2030s. We have done this before, with natural gas power plant deployment rates in 2002. Storage deployment would need to grow 25% each year, from 523 megawatts (MW) in 2019 to 20,000 MW in 2035. We would need some new transmission lines to interconnect new generation, but relatively few interregional lines. All coal plants could retire, and we would need no new gas plants.

If those policies aren’t put into place, the potential for clean energy, jobs, and cutting health costs will be squandered. The report suggests:

The rapid buildout of additional renewable energy would inject $1.7 trillion of investment into the economy and increase energy sector jobs by up to 530,000 per year through 2035, across all regions of the US, without raising consumer bills. Delivering 90% clean electricity by 2035 also avoids $1.2 trillion in environmental and health costs through 2050 by reducing damages from air pollution and carbon emissions.

Wind, solar, and battery storage can provide the bulk of the electricity.

The report also comes with a set of recommendations on how to achieve this goal from nonpartisan policy firm Energy Innovation that can be read here.

Dr. Amol Phadke, senior scientist and affiliate at UC Berkeley’s Center for Environmental Public Policy, said:

Cost reductions in clean technology have occurred much faster than anticipated just a few years ago. This is the first report to integrate the latest low prices for renewable energy and storage and shows it is technically and economically feasible to deliver 90% carbon-free electricity on the US power grid by 2035.

Recent research published in Environmental Science and Policy found that not only would two US presidential terms of inaction create a situation where any chance of hitting emissions targets would be pushed to near zero, it would also have a knock-on effect internationally.

**

RMI, Mark Dyson, June 2020

This “2035 report” is only the latest addition to the growing mountain of evidence that clean energy is the least-cost, least-risk choice for new investment in the US grid. But the work also breaks new ground in several areas, and contributes new insights and actionable strategies for utilities, regulators, policymakers, and other stakeholders.

Three aspects of the study deserve particular attention from utilities and stakeholders planning the transition to a decarbonized grid:

1. A focus on near-term opportunities avoids “missing the trees for the forest”

Much ink has been spilled in the utility industry on the feasibility of “100 percent clean” electricity grids, with 2050 being a common deadline to achieve this outcome. Such targets can be useful north stars for the industry to anchor discussion around; indeed, the latest climate science suggests a need for the global economy to reach net-zero carbon by 2050, making it imperative that the grid is as close to zero-carbon as possible.

However, the discourse concerning how to achieve a 100 percent carbon-free grid, and in many cases the debate around if it is even possible, has taken attention away from the opportunity at hand and the urgent climate imperative: to move as quickly as practical towards ever-higher levels of carbon-free electricity. In other words, the ongoing debates on net-zero carbon pathways have, in many cases, missed the trees for the forest.

The 2035 report avoids that trap. The authors still acknowledge the uncertainty around technology development through 2050, load growth due to electrification, and other possible confounding factors that may appear 15 years from now that are important for reaching a 100 percent clean grid. But by focusing on what is certainly possible in the next 15 years, not what is hypothetically feasible three decades from now, this study shows it practical and economic to eliminate the lion’s share of electricity emissions quickly.

1. Industry-standard modeling tools and benchmark data sources

Utilities often criticize 3^rd party studies of future grid evolution, claiming that they use less rigorous, non-utility modeling software. On the other hand, stakeholders often criticize utility-sponsored planning because it often uses out-of-date clean energy cost assumptions inconsistent with actual project costs today.

The 2035 report avoids both pitfalls. GridLab and UC Berkeley use PLEXOS, an industry-standard grid simulation model widely deployed by utilities, researchers, and system operators around the world, to simulate a 90 percent clean grid. Further, they run this hourly simulation across multiple years of historical data to capture renewable and load variability and ensure that a 90 percent carbon-free portfolio is reliably able to meet load across different weather conditions.

The authors also use the US Department of Energy-sponsored Annual Technology Baseline, which has emerged as the benchmark source for current and future projections of electricity resource costs, including wind and solar. This corrects a major issue with many utility-led studies that often fail to account for actual wind, solar, and storage cost declines.

1. A clear, practical, and affordable roadmap for implementation

The 2035 report starts deliberately from the constraints imposed by today’s US electricity grid, and accounts directly for the steel currently in the ground in arriving at an investment pathway to support a 90 percent clean electricity future by 2035.

The study, and a companion article from Energy Innovation that lays out a policy roadmap to support a 90 percent decarbonized grid, tackles head-on many of the pressing questions facing utility planners, regulators, and policymakers as they grapple with the practicalities of the utility industry’s ongoing energy transition:

• New gas power plants: The 2035 report, echoing analysis from Rocky Mountain Institute and others, finds strong evidence that new gas-fired power investments are not justified in the near or long term; instead, utilities and grid operators can leverage the sizable fleet of existing gas power plants to provide “backup” power for when renewables’ output is low.
• Coal retirement: The 2035 report and its accompanying policy brief lay out a clear pathway for minimizing costs associated with existing coal plants, including both their current operations expenses (generally higher than new wind and solar project costs) as well as the minimal “stranded” costs that may remain in 2035 after most operating coal plants have been depreciated on their owners’ balance sheets. Securitization and other tools allow net-positive financial outcomes for consumers and utilities as coal plants retire, while supporting workers and communities currently dependent on coal plants and mines.
• Transmission expansion: Due to the high level of wind and solar development required to cost-effectively reach 90 percent clean energy by 2035, the study finds that over $100 billion in new transmission investment is justified to help deliver those low-cost renewables to US homes and businesses. That total investment, spread over the 15-year study period, would add only 1-2 percent to current US electricity rates, while enabling a diverse and low-cost supply mix for decades to come.

In short, the Berkeley/GridLab report represents a distinctive new chapter in the evolving discourse playing out around the country regarding the future of the US electricity system. The study will likely be an important benchmark against which individual utilities’ investments are evaluated for compatibility with least-cost and feasible decarbonization outcomes.

Investors, utilities, regulators, and policymakers should take advantage of the wealth of insight and information contained within this body of work, and plan accordingly for their own role in accelerating the decarbonization of the US power grid.

www.energyinnovation.org 98 Battery Street; San Francisco, CA 94111 policy@energyinnovation.org

REWIRING THE U.S. FOR ECONOMIC RECOVERY by Sonia Aggarwal and Mike O’Boyle, June 2020

The results of the 2035 Report: Plummeting Solar, Wind, and Battery Costs Can Accelerate our Clean Energy Future (The 2035 Report) are dramatic. Given the plummeting costs of clean energy technologies, the United States could reach 90 percent zero-carbon electricity by 2035, maintain reliability, while lowering customer electricity bills from today’s levels, on the path to 100 percent zero-carbon by 2045. To reach 90 percent, this infrastructure build-out would productively put about $1.7 trillion dollars in investment to use over the next 15 years, supporting about 530,000 more jobs each year and avoiding at least $1.2 trillion in cumulative health and environmental damages. And it would reduce economy-wide greenhouse gas emissions (GHGs) by 27 percent by 2035.

Building a reliable 90 percent zero carbon electricity system is a huge opportunity for economic recovery—a fantastic way to invest in a healthier economy and support new jobs, without raising electricity bills. But America’s current electricity policy framework is not on track to deliver this economic opportunity.

To realize the promise of this affordable, reliable, clean power system, the U.S. would need to double solar and wind annual deployments through the 2020s, and then triple historical maximums in the 2030s.3 We have done this before, with natural gas power plant deployment rates in 2002.4 Storage deployment would need to grow 25 percent each year, from 523 megawatts (MW) in 2019 to 20,000 MW in 2035. We would need some new transmission lines to interconnect new generation, but relatively few interregional lines. All coal plants could retire, and we would need no new gas plants. Most of the existing gas fleet would be maintained but run infrequently, providing 70 percent less energy than today, and helping to balance the system.5

1 The authors would like to thank Mark Ahlstrom (Energy Systems Integration Group); Allison Clements (Energy Foundation); Eric Gimon, Silvio Marcacci, Bruce Nilles, and Robbie Orvis (Energy Innovation); Bracken Hendricks (Evergreen and Roosevelt Institute); Sam Ricketts (Evergreen and Center for American Progress); Betony Jones (Inclusive Economics); Taylor McNair (GridLab); Courtney St. John and Phoebe Sweet (Climate Nexus); and David Wooley (University of California, Berkeley) for their helpful feedback on this report. Any remaining errors are the responsibility of the authors.

2 Modeling allowed for all known zero-carbon electricity options, including wind, solar, biomass, geothermal, large hydro, nuclear, and fossil generation with carbon capture and sequestration (CCS). Least cost optimizations eschewed new nuclear or CCS in the final mix, due to cost. All generation sources are supported by transmission, storage, demand response, and flexible grid operations.

3 15.1 GW of solar was installed in 2016 and 13.1 GW of wind was installed in 2012. See Bolinger, Mark and Seel, Joachim et al. “Utility-Scale Solar: Empirical Trends in Project Technology, Cost, Performance, and PPA Pricing in the United States – 2019 Edition.” Lawrence Berkeley National Laboratory 2019. URL: https://emp.lbl.gov/utility-scale-solar; “Wiser, Ryan and Bolinger, Mark. “2018 Wind Technologies Market Report.” Office of Energy Efficiency and Renewable Energy, Department of Energy August 2019. URL: https://emp.lbl.gov/sites/default/files/wtmr_final_for_posting_8-9-19.pdf.

4 65 GW of new gas power plants were built in 2002. See “Electric Power Annual 2002.” Office of Coal, Nuclear, Electric and Alternate Fuels, Energy Information Administration December 2003. URL: www.eia.gov/electricity/annual/archive/03482002.pdf.

Without the addition of new policies, we are not on track to deliver the most cost-effective electricity system explored in the 2035 Report, nor will we maximize societal benefits like public health and climate impacts. Policies, utility regulation, and power market structures will need an upgrade. Luckily, policymakers and regulators can take promising actions to remedy this. The technology-neutral policies laid out in this paper are no-regrets actions to get us to 90 percent zero carbon electricity while reducing wholesale electricity costs 10 percent. These policies enable all technologies to compete to achieve a clean, affordable, reliable grid.

We emphasize that the list below represents an optimal set of policies to first get the U.S. to a 90 percent, and ultimately 100 percent zero-emission electric power system. Success, however, does not depend on all adopting all of these policies at once, and most progress can be made with a federal clean energy standard that builds on and complements state policy leadership.

Importantly, either Congress or the U.S. Environmental Protection Agency under its existing Clean Air Act authority could put the CES building blocks in place.

In brief, top policy actions include:

• Adopt a federal clean electricity standard reaching 55 percent clean (carbon free) by 2025, 75 percent by 2030, 90 percent by 2035, and 100 percent by 2045. Increased ambition on state clean energy standards is an important complement to this action.
• Extend federal clean energy investment and production tax credits and conversion to more liquid incentives, and extend these incentives to battery storage. These are more important in the absence of a clean energy standard.
• Support coal-dependent communities by shoring up underfunded pension and healthcare benefits, providing stopgap funding for local services, and providing pathways for employment in the clean energy economy through local investment and training programs.
• Use utility- and government-backed refinancing of retired coal equity and debt to lessen the customer and utility burden of the coal-to-clean transition.
• Support a national effort to streamline renewable energy and transmission siting to accelerate responsible clean energy deployment.
• Strengthen federal authority to improve regional transmission planning, allocate transmission costs, and reduce unfair interconnection costs.

5 The 90% Clean case saw a maximum gas dispatch of 361 GW in 2035, with an additional 90 GW of gas capacity in reserves to meet reliability standards. This is about 80% of the 540 GW of gas capacity currently operating in the U.S. Because little to no new gas capacity is needed to meet this need, this strategy creates significant cost-savings in moving to a clean energy future. The remaining natural gas fleet provides an important role meeting demand in low solar and wind periods, but it experiences annual capacity factors under 10 percent.

• Invest in R&D to develop the technologies needed to get to 100 percent clean electricity by 2045.
• Reform wholesale markets to reward flexibility, be compatible with federal and state clean energy targets, and support investment in a least-cost, technology-neutral portfolio of supply and demand-side resources.
• Reform utility business models to incent demand-side management and create fair rules for utility investment decisions.

CONTENTS

Contents…………………………………………………….. 4

A Clean Energy Standard Would Drive Success… 5

Supporting Clean Energy Deployment at Speed and Scale……………………………………………………. 7

Tax Credits……………………………………………… 7

Bolstering U.S. Manufacturing of Clean Energy……………………………………………………………… 8

Dealing With Stranded Assets……………………. 9

Permitting and Siting………………………………. 12

Interconnection and Transmission Planning reform………………………………………………….. 13

Support for an Equitable and Fair Transition…. 16

Addressing Market Failures in Wholesale Markets……………………………………………………. 18

Principles………………………………………………. 19

Required Market Reforms……………………….. 20

Public Participation in Wholesale Market Governance……………………………………….. 20

Expose the Value of Flexibility………………. 20

Require All Generators and Imports to Participate in Economic Dispatch………….. 21

Minimize Restrictions on Resource Participation………………………………………. 22

Pay for Uncompensated Reliability Services………………………………………………………… 22

Remaking Utility Regulation for the Modern Grid……………………………………………………………….. 24

Performance-Based Regulation and New Utility Business Models…………………………… 24

Competitive All-Source Procurement……….. 25

R&D to Support the Pathway to 100 Percent Clean Electricity…………………………………………. 27

Long-Duration Storage……………………………. 27

New Resource Adequacy Frameworks………. 27

Inadequacy of Dispatch and Planning Models……………………………………………………………. 28

Voltage, Frequency, and Stability Control Technologies…………………………………………. 28

Conclusion………………………………………………… 29

A CLEAN ENERGY STANDARD WOULD DRIVE SUCCESS

A clean energy standard sets a clear goal for the share of total electricity that will come from zero-carbon sources in a future year. A technology-neutral clean energy standard for the electricity sector should include all sources of zero-carbon electricity (solar, wind, biomass, hydro, geothermal, nuclear, carbon capture and storage, and any other proven source of zero- carbon electricity). It should require retail utilities to hit interim targets at least every five years (ideally every three), building up from the existing share of clean energy in the nation’s electricity mix (approximately 40 percent today).

Setting a national clean energy standard of 55 percent by 2025, 75 percent by 2030, 90 percent by 2035, and 100 percent by 2045 would be ambitious and achievable, giving America the clean energy backbone it needs to decarbonize other sectors on the path to net zero economy-wide emissions by 2050.6 Getting underway now to build the clean energy needed to reach 90 percent by 2035 gives engineers and developers time to evaluate the best technologies and pathways to get us to 100 percent carbon-free electricity at least cost by 2045.

Congress or the U.S. EPA could require states to submit plans laying out their path to meet the clean electricity standard, and to update those plans every three years. Legislation should require retail utilities to develop scenarios complying with this pathway as part of utility resource planning, and demonstrate compliance by procuring clean electricity certificates. The federal government could direct funds to the U.S. Department of Energy (DOE) and national labs to track and report state-by-state progress while providing customized technical assistance for state policymakers on how to reach the goal.

States will start from different clean electricity baselines. But given dramatic cost declines for key electricity generation technologies the cleanest electricity available today is usually the cheapest electricity, and the 2035 Report makes it clear that 90 percent zero carbon electricity is achievable while lowering customer electricity bills.7 The availability of low-cost zero carbon electricity generation options puts us in a fundamentally different situation than even just a few years ago. Moreover, a just and equitable transition to clean energy sources will spur substantial economic development.

6 According to the Intergovernmental Panel on Climate Change, global emissions must reach net zero by 2050 for a reasonable chance of keeping global temperature rise less than 1.5 degrees Celsius. See “Summary for Policymakers of IPCC Special Report on Global Warming of 1.5° C.” The Intergovernmental Panel on Climate Change October 2018. URL: https://www.ipcc.ch/2018/10/08/summary-for-policymakers-of-ipcc-special-report-on-global-warming-of-1-5c-approved-by- governments/; Energy Innovation’s “Net Zero Scenario,” reaches economy-wide net-zero emissions while employing a 100

percent clean electricity standard by 2050. See “Net Zero Scenario” Energy Innovation: Policy and Technology, LLC. November 2019. URL: https://us.energypolicy.solutions/scenarios/home.

7 Gimon, Eric and O’Boyle, Mike. “The Coal Cost Crossover: Economic Viability of Existing Coal Compared to New Local Wind and Solar Resources.” Energy Innovation: Policy and Technology, LLC. March 2019. URL: https://energyinnovation.org/publication/the-coal-cost-crossover/; Teplin, Charles and Dyson, Mark et al. “The Growing Market for Clean Energy Portfolios.” Rocky Mountain Institute 2019. URL: https://rmi.org/insight/clean-energy-portfolios-pipelines-and- plants/; Dyson, Mark and Glazer, Grant et al. “Prospects for Gas Pipelines in the Era of Clean Energy.” Rocky Mountain Institute 2019. URL: https://rmi.org/insight/clean-energy-portfolios-pipelines-and-plants/.

States (generally via their public utilities commissions) should require regulated utilities to procure these resources in a technology-neutral way (i.e., via all-source procurement8), allowing all zero-carbon resources (including energy efficiency, storage, demand response, and other distributed energy resources) to participate. Second, the all-source procurement should be competitive, meaning the utility or other buyer would have to structure the solicitation as an open request for offers that adheres to a set of standards to accommodate wide participation. Third, it would treat uneconomic assets and the remaining balances on them as sunk costs, while providing for some combination of ratepayer and U.S.-backed securitization of those balances.

These actions could make the clean electricity transition very affordable in states that are starting from a lower share of renewables.

A federal clean energy standard enacted by Congress, or an EPA successor to the Clean Power Plan should ensure no state lags too far behind. EPA has significant authority to regulate GHGs from new and existing power plants under Clean Air Act Section 111. Given the rapid decline in technology costs demonstrated by the 2035 report and real-world contract prices, EPA should consider requiring states to create implementation plans for rapid decarbonization of their electricity systems under a similar but more ambitious structure than the Clean Power Plan. Such plans could require reductions GHGs from coal and gas plants given available, lower-cost alternatives that avoid pollution, or plans could take a fleet-wide approach to meet the standard. This includes carbon pollution limits for new gas plants. In the absence of a legislative clean energy standard, an administrative standard becomes essential to a cost-effective, rapid decarbonization of the U.S. electricity system.

Who Can Get It Done

Decision-maker	Policy
U.S. Congress	Pass a federal Clean Energy Standard with the following schedule: 55 percent by 2025, 75 percent by 2030, 90 percent by 2035, 100 percent by 2045
Governors, state legislatures, public utilities commissions	Pass Clean Energy Standards of 90 percent by 2035 (or earlier), 100 percent by 2045 (or earlier)
U.S. Environmental Protection Agency	Under Clean Air Act authority, require states to create implementation plans for rapid decarbonization of their electricity systems given the availability of lower-cost and lower-pollution alternatives, and limit carbon pollution from new gas-fired power plants.

8 Wilson, John D. and O’Boyle, Mike et al. “Making the Most of the Power Plant Market: Best Practices for All-Source Electric Generation Procurement. Energy Innovation: Policy and Technology, LLC. and Southern Alliance for Clean Energy April 2020. URL: https://energyinnovation.org/wp-content/uploads/2020/04/All-Source-Utility-Electricity-Generation-Procurement-Best- Practices.pdf.

SUPPORTING CLEAN ENERGY DEPLOYMENT AT SPEED AND SCALE

Beyond a clean energy standard, a suite of complementary policies can help clear the way for building low-cost new clean energy at speed and scale.

TAX CREDITS

Right now, wind and solar projects equivalent to about half of the entire U.S. electric grid capacity are waiting for approval from grid operators.9 But like many industries, the renewable energy industry has been affected by the current COVID-19 pandemic and related economic crisis. Some projects that were underway before widespread stay-at-home orders are experiencing significant delays. In the first two months of COVID-19 hitting the U.S., more than 600,000 workers in the clean energy industry filed for unemployment.10 This is a critical time to support these industries that can provide good jobs for Americans across the country, once it is safe to return to development sites.

Thus, it will be important to extend11 the lifetime of the production tax credit for wind, and the investment tax credit for solar and solar-paired storage, following the Internal Revenue Service’s rationale for increasing construction and safe harbor deadlines of these credits from four to five years to accommodate the slowdowns in wind and solar projects due to COVID-19.12 This policy is much more important in the absence of a federal clean energy standard – the 2035 Report demonstrates a 90 percent clean energy standard could drive rapid decarbonization and cost declines without extending federal tax incentives.

It will also help to convert those tax credits to direct payments: Today, because of illiquidity, the government only provides about 60 cents worth of incentive for every dollar it spends.13 Section 1603 of the American Recovery and Reinvestment Act (ARRA) converted tax credits to direct payments, and Congress could adopt this provision again. An alternative accomplishing the same goal is a refundable tax credit, wherein developers can receive the full value of the tax credit, regardless of their tax liability14. Lawrence Berkeley National Lab found that Section 1603

9 544 GW Interconnection queues in the United States currently include 544 GW of wind, solar, and stand-alone battery storage, roughly half of the 1,100 GW required. See Bolinger, Mark and Seel, Joachim et al. “Utility-Scale Solar: Empirical Trends in Project Technology, Cost, Performance, and PPA Pricing in the United States – 2019 Edition Slides.” Lawrence Berkeley National Laboratory 2019. URL: https://emp.lbl.gov/sites/default/files/lbnl_utility-scale_solar_2019_edition_slides_final.pdf.

10 “Clean Energy Unemployment Claims in COVID-19 Aftermath, April 2020.” E2 May 13, 2020. URL: https://e2.org/reports/clean- jobs-covid-economic-crisis-april-2020/.

11 Extend the “start of construction” and “placed in service” deadlines, as well as the program end-dates.

12 “COVID 19 Impacts on American Wind Industry and Mitigation Proposals.” American Wind Energy Association March 18, 2020. URL: https://www.awea.org/Awea/media/Resources/COVID-19ImpactsonWindIndustryandMitigationProposalsforHill.pdf.

13 Varadarajan, Uday and Pierpoint, Brende, et al. “Supporting Renewables while Saving Taxpayers Money.” Climate Policy Initiative September 2012. URL: https://climatepolicyinitiative.org/wp-content/uploads/2012/09/Supporting-Renewables-while- Saving-Taxpayers-Money.pdf.

14 Bhattacharyya, Bidisha. “Renewable Energy Tax Credits: The Case for Refundability.” Center for American Progress May 28, 2020. URL: https://www.americanprogress.org/issues/green/reports/2020/05/28/485411/renewable-energy-tax-credits-case- refundability/.

produced more than 51,000 short-term jobs last time, so this adjustment to program structure is good for workers and good for the clean energy industry.15

Who Can Get It Done

Decision-maker	Policy
U.S. Congress	Extend existing tax credits for all zero-carbon electricity sources, as well as electricity storage projects. Convert them to direct payments, or make them refundable.

BOLSTERING U.S. MANUFACTURING OF CLEAN ENERGY

Reaching 90 percent clean electricity by 2035 would require deploying an average of about 35 gigawatts (GW) of new solar each year, 36 GW of new wind each year, and 10 GW of new four- hour batteries each year.16 America’s current annual manufacturing capacity for solar is 7 GW17, and wind is 9 GW.18 Manufacturing capacity for lithium ion batteries (the dominant grid-scale storage technology solution today) will scale with demand for a much larger electric vehicle market. A federal clean energy standard would provide a strong domestic demand for these technologies, and could be designed to provide a guaranteed market for a substantially expanded American manufacturing base for these technologies.

Direct financial support is a tried-and-true way to scale up American manufacturing. The ARRA authorized a 30 percent tax credit for investments in advanced energy manufacturing projects, which ended up totaling more than $2 billion in support. In the power generation business, for example, this funding helped increase the share of domestically-produced wind turbine components from 25 percent in 2006-2007 to 72 percent in 2012.19 The program was oversubscribed and capped at $2.3 billion – future use of this tax credit should greatly increase or remove caps in order to truly scale American clean energy manufacturing.

In the transport sector, the Advanced Technology Vehicles Manufacturing loan program helped the American auto industry retool with $8 billion in loans and commitments to projects that supported the production of more than four million fuel-efficient cars. The program saved

15 Bolinger, Mark and Wiser, Ryan et al. “Preliminary Evaluation of the Impact of the Section 1603 Treasury Grant Program on Renewable Energy Deployment.” Lawrence Berkeley National Laboratory April 2010. URL: https://eta- publications.lbl.gov/sites/default/files/report-lbnl-3188e.pdf.

16 In total, 518 GW of new solar by 2035, 540 GW of new wind, and 147 GW of total batteries. In particular, since the battery industry is quite nascent, the real deployment schedule would likely start quite a bit lower than 10 GW in the early years, and ramp up more in the later years.

17 Pickerel, Kelly. “The Largest Solar Panel Manufacturers in the United States by Capacity.” Solar Power World November 25, 2019. URL: https://www.solarpowerworldonline.com/2019/11/the-largest-solar-panel-manufacturers-in-the-united-states-by- capacity/.

18 “Wiser, Ryan and Bolinger, Mark. “2018 Wind Technologies Market Report.” Office of Energy Efficiency and Renewable Energy, Department of Energy August 9, 2019. URL: https://emp.lbl.gov/sites/default/files/wtmr_final_for_posting_8-9-19.pdf.

19 “The Recovery Act Made the Largest Single Investment in Clean Energy in History, Driving the Deployment of Clean Energy,

Promoting Energy Efficiency, and Supporting Manufacturing.” Office of the Press Secretary, The White House February 25, 2016. URL: https://obamawhitehouse.archives.gov/the-press-office/2016/02/25/fact-sheet-recovery-act-made-largest-single- investment-clean-energy.

33,000 jobs and boosted Tesla, which now employs more than 10,000 people at its Fremont, California factory.20 Support for advanced manufacturing would come at a critical time as other major manufacturing nations in Europe and Asia are providing such transition support as part of their recovery packages.

Direct loans and loan guarantees leverage side-by-side funding from the private sector. They lower the cost of advanced technologies as new business ventures always face higher interest rates when seeking financing. DOE’s Loan Programs Office estimated $39 billion loan and loan guarantee authority could leverage as much as $100 billion of private investments in innovative approaches to modernizing energy infrastructures across all energy sectors. Congress should accelerate access to this lending authority by allowing state and local governments to access federal financing, and empowering state and local actors to deliver project finance. These loan programs are very cost effective for government; the Loan Programs Office had yielded the Treasury net receipts of more than $2 billion by 2015.21

Who Can Get It Done

Decision-maker	Policy
U.S. Congress	Reinstate the manufacturing tax credit used during the American Recovery and Reinvestment Act to support domestic manufacturing of clean energy technologies.
U.S. Congress; DOE	Fund a large increase in DOE’s capacity to provide low-cost capital to companies with proven experience willing to expand manufacturing capacity of solar, grid-scale storage, and wind in the U.S.

DEALING WITH STRANDED ASSETS

Retiring coal has demonstrably positive economic and environmental impacts, but retiring power plants can cause financial disruption for utilities22, due to the fact that utilities have continued to invest in aging power plants and such capital costs are paid off over decades, usually at least 30 years. Under conventional state regulation, monopoly utilities have the right to charge

20 “Project Summary.” Department of Energy. Accessed June 5, 2020. URL: https://www.energy.gov/lpo/ford#:~:text=ECONOMIC%20IMPACT,2009%20through%20Model%20Year%202013; Project Summary.” Department of Energy Accessed June 5, 2020. URL: https://www.energy.gov/lpo/tesla; “Tesla Factory.” Tesla Accessed June 5, 2020. URL: https://www.tesla.com/factory.

21 A report from the Government Accountability Office found program costs of $2.2 billion. The report notes “LPO-supported companies have made approximately $4.4 billion in principal and interest payments to the US Treasury,” implying the program provided net cash flow benefits of $2.2 billion through 2020. See “DOE Loan Programs Current Estimated Net Costs Include $2.2 Billion in Credit Subsidy, Plus Administrative Expenses.” Government Accountability Office April 2015. URL: https://www.gao.gov/assets/670/669847.pdf.

22 Note this should not be considered a problem for power plants in restructured competitive power markets, because private companies entered those markets to sell power, taking on the risk of resource changes over time. This is different than the regulated utility situation, because captive customers are left with the bill for undepreciated balances unless policymakers or regulators step in to alleviate this.

customers the full cost of paying off the remaining power plant balance, including risk-adjusted returns for shareholders and creditors. Rural cooperatives and municipalities face similar credit risks when unpaid coal debt remains long after the plant retires. The result: When new, cheap renewables replace expensive, dirty generation, customers can get stuck with the bill for old power plants, even when they’re no longer in use – unless policymakers step in to address this.

The 90 Percent Clean case in the 2035 Report retires the remainder of the U.S. coal fleet and replaces it with clean power that is cheaper to build and operate than continuing to run the existing coal plants. Coal capacity drops from over 200 GW in 2018 to zero by the end of 2035. According to Carbon Tracker, over $200 billion is “owed” just to monopoly utilities (who own more than half the existing fleet) on these power plants.23

Some of these costs will be repaid while coal plants operate less and less over the next 15 years, while significant undepreciated capital costs could remain after retirement absent action by regulators. In cases where capital owed on retired assets is significant, customers could realize even greater savings from the clean energy transition by using cheap capital. Very low-interest government-backed and rate-payer backed bonds can be used to pay the undepreciated book value of early-retired coal plants. For government-backed bonds, the federal government could consider buying retired coal assets for their remaining book value, socializing the costs that would otherwise be borne by customers of the monopoly utility. Using ratepayer-backed bonds to buy down utility-owned retired coal plants would achieve similar savings on financing, but the remaining lower costs would be socialized only by those specific utility customers (at a much lower interest rate).

In reality, the end of the coal fleet could be much faster; the marginal economics of coal get exponentially worse as these plants run less and less.24 The COVID-19 crisis, for example, has laid bare the vulnerability of coal-fired power plants to market forces: Collapsing demand has mostly resulted in running existing coal plants fewer hours, hastening the trend of renewables generating more power on average than coal-fired generation.25 As the 2035 Report shows, we don’t need these plants around for reliability, and as renewables and storage currently and

increasingly are the more cost-effective source of energy and other grid services, the justification for keeping these plants around evaporates.

Government-backed or ratepayer-backed bonds can be important tools to reduce the cost of retiring uneconomic coal-fired plants. Selling the undepreciated balances to bond-holders is commonly referred to as “securitization.” Whether state legislation is needed for securitization varies – about half of states already have authorizing legislation on the books, as the tool was

23 Gray, Matt and Watson, Laurence. “No Country for Coal Gen – Below 2°C and Regulatory Risk for U.S. Coal Power Owners.” Carbon Tracker September 2017. URL: https://carbontracker.org/reports/no-country-for-coal-gen-below-2c-and-regulatory-risk- for-us-coal-power-owners/.

24 “The Coal Cost Crossover: Economic Viability of Existing Coal Compared to New Local Wind and Solar Resources.” Energy Innovation March 2019.

25 Plumer, Brad. “In a First Renewable Energy is Poised to Eclipse Coal in the U.S.” New York Times May 13, 2020. URL: https://www.nytimes.com/2020/05/13/climate/coronavirus-coal-electricity-renewables.html

used during utility restructuring in the late 1990s, and to pay for large unforeseen capital investments like storm recovery. Legislators can consider Colorado’s legislation authorizing coal debt securitization as a model in achieving a balance between ratepayer, public, impacted community, and utility interests.26

Our modeling also shows we don’t need to build any new natural gas-fired power plants to meet a 90 percent clean energy standard. Current utility plans to spend over $100 billion to build at least 88 GW of natural gas27 capacity would exacerbate stranded asset risk for both generation

and supporting pipeline infrastructure, conflicting with many of the same utilities’ plans (and climate plans on their host states) to reach net-zero emissions by 2050.28 In general, the economics of these projects are inferior to portfolios of clean energy resources explored in the 2035 Report, and described in further detail by the Rocky Mountain Institute (RMI).29

Who Can Get It Done

Decision-maker	Policy
U.S. Congress	Offer federal debt financing for utilities where compliance with clean energy standards leads to coal and gas closures, and regulated utilities have reasonable outstanding unpaid balances on those plants.
State Public Utility Commissions	Prohibit regulated utility investment in new natural gas, unless there is a clear, demonstrated need with no reasonable clean alternative; require explanation of how such investments would benefit customers, coexist with rapid clean energy deployment, and remain useful over the lifetime of the asset.
State Legislatures	Authorize public utility commissions to create ratepayer- backed bonds that securitize uneconomic coal and gas units, relieving utility customers of the obligation to pay high costs of capital, while making utilities whole for their reasonable investments. Include funding for supporting workers and communities in these financial plans.

26 “Colorado Energy Impact Assistance Act.” HB19-1037. 2019 Regular Session. URL: https://leg.colorado.gov/bills/hb19- 1037#:~:text=The%20bill%2C%20known%20as%20the,the%20cost%20to%20electric%20utility.

27 “A Bridge Backward? The Financial Risks of the ‘Rush to Gas’ in the U.S. Power Sector” Rocky Mountain Institute URL: https://rmi.org/wp-content/uploads/2019/09/clean-energy-portfolio-two-pager.pdf.

28 Holzman, Lila and O’Boyle, Mike. “Natural Gas: A Bridge to Climate Breakdown” As You Sow and Energy Innovation, LLC. March 2020. URL: https://energyinnovation.org/wp-content/uploads/2020/03/Natural-Gas_A-Bridge-to-Climate-Breakdown.pdf.

29 “The Growing Market for Clean Energy Portfolios.” Rocky Mountain Institute 2019 and “Prospects for Gas Pipelines in the Era of

 Clean Energy.” Rocky Mountain Institute 2019.

PERMITTING AND SITING

Wind and solar plants require significant but manageable land area. In the 90 Percent Clean case in the 2035 Report, we anticipate that 515 GW of ground-mounted solar generation30 would occupy 13,200 square kilometers (km2) of land.31 The additional 596 GW of wind capacity would require 149,000 km2 of land, though only 10 percent of this space would be unusable, with the other 90 percent continuing to allow farming and grazing between the turbines. Thus, 596 GW of wind would occupy about 15,000 km2 of land, sited on 149,000 km2 of farmland. This combined amount of occupied land for new wind and solar installations, 28,200 km2, is about triple the land currently devoted to golf courses, and equivalent to about half the land owned by the Department of Defense.32

Reducing permitting and siting conflicts by pre-screening federal and state lands for suitability is crucial to enable this rapid buildout of new renewable resources and associated transmission.

This is already ongoing in the Western U.S., through the federal West-wide Energy Corridors33 planning process. The planning process identifies continuous strips of federal land across jurisdictional boundaries suitable for transmission development. Federal agencies have also prescreened areas of ideal development for solar energy in six Western states (Solar Energy Zones)34 and offshore wind energy off the Atlantic Coast (Wind Energy Zones).35 Texas also provides a model with a history of pre-approving and building out transmission to “Competitive Renewable Energy Zones” where clean energy resources are abundant.

Robust stakeholder engagement minimizes environmental, cultural and other stakeholder conflicts. Eventually, these processes streamline federal siting, review, and permitting processes for developers. Each site receives streamlined approval because it undergoes National Environmental Policy Act review and responds to local stakeholder concerns before it is leased to developers. Efforts to engage with private landowners are crucial to completing many of the corridors will increase the likelihood of success.

30 About 60 GW of solar is on rooftops in the 90 percent Clean case.

31 Ong, Sean and Campbell, Clinton et al. “Land-Use Requirements for Solar Power Plants in the United States.” National Renewable Energy Laboratory. June 2013. URL: https://www.nrel.gov/docs/fy13osti/56290.pdf.

32 654 million acres are dedicated to grazing. See Merrill, Dave and Leatherby, Lauren. “Here’s How America Uses Its Land.”

Bloomberg July 31, 2018. URL: https://www.bloomberg.com/graphics/2018-us-land-use/.

33 “West-wide Energy Corridor Information Center.” Bureau of Land Management, National Forest Service, and Department of Energy. Accessed June 5, 2020. URL: http://corridoreis.anl.gov/.

34 “Approved Resource Manage Plan Amendments/Record of Decision (ROD) for Solar Energy Development in Six Southwestern States” Bureau of Land Management October 2012. URL: http://blmsolar.anl.gov/documents/docs/peis/Solar_PEIS_ROD.pdf.

35 “Wind Planning Areas.” Bureau of Ocean Management. Accessed June 5, 2020. URL: https://www.boem.gov/sites/default/files/renewable-energy-program/Mapping-and- Data/BOEM_Wind_Planning_Areas_12_15_2016_metadata.pdf.

Data is also key to pre-screening renewable resource and transmission areas. The Western Electricity Coordination Council has developed the Environment Data Viewer,36 a tool that should be expanded for the rest of the U.S. to enable smart infrastructure development. The tool uses Geographic Information Systems data for different land conflicts, enabling users to create maps of low-conflict land. For example, existing rights of way are the lowest conflict (green), while low- conflict undeveloped land is yellow, and land with explicit environmental, infrastructure, or cultural conflicts ranges from orange to red. The tool uses professional judgment of transmission planners, Bureau of Land Management and U.S. Forest Service, environmental leaders and even archaeologists to build the classifications in the tool.

Who Can Get It Done

Decision-maker	Policy
U.S. Congress	Require the Department of Energy and Department of Interior to develop and update national energy corridors and renewable energy zones, and publish a national database of land conflicts to facilitate development and responsible siting.

INTERCONNECTION AND TRANSMISSION PLANNING REFORM

Today’s grid operator and state regulatory approaches to transmission planning and generation interconnection are not up to the task of delivering a low-carbon grid at speed and scale. While 544 GW of renewable generation lies in wait to interconnect to high-voltage transmission systems37 – nearly half of the capacity needed to meet a 90 percent clean energy standard – these projects face unreasonably high barriers due to conventional interconnection rules. Rather than investing in transmission planning that would more efficiently serve society’s economic and policy goals, today’s rules typically require every new generation resource to separately pay grid upgrade costs to interconnect their power plant the system, when there would be far greater societal benefit to view transmission planning and upgrades with a more holistic regional perspective. The Federal Energy Regulatory Commission (FERC) should exercise its authority and expand its capacity to require regional transmission expansion and simplified interconnection

rules that support the realities of society’s policy goals and a 90 percent by 2035 clean energy standard.

Transmission networks can be planned in advance to accommodate a sensible mix of very low- cost renewable resources, creating net benefits for customers, and Congress should reform

FERC’s electric transmission authority to support the changing electricity system in a cost- effective manner. To begin, cost-allocation should be driven by analysis of the benefits38 and

36 “Environmental Data Viewer.” Western Electricity Coordinating Council. Accessed June 5, 2020. https://ecosystems.azurewebsites.net/WECC/Environmental/.

37 These include both RTO and non-RTO transmission systems. See “Utility-Scale Solar: Empirical Trends in Project Technology, Cost, Performance, and PPA Pricing in the United States – 2019 Edition.” Lawrence Berkeley National Laboratory 2019.

38 Benefits should include quantifiable environmental, resilience, and public policy benefits, in addition to direct economic benefits. The basic idea is to codify the lax suggestions of FERC Order 1000. The Midcontinent Independent System Operator

balanced by a consideration of the negative factors beyond direct cost (e.g., land-use impact, landscape degradation, habitat disruption). Congress could give FERC a clearer mandate to enforce and expand Order 1000 (FERC’s regional transmission planning order), by requiring timely plans, accounting for public policy in planning, and allocating regional costs to beneficiaries where regions fall short.39

The Midcontinent Independent System Operator (MISO) Multi-Value Project (MVP) transmission expansion plan (submitted to FERC for approval in 2011) provides an example of regional cost allocation that benefits all electricity customers. The MVP portfolio proactively identified regional transmission solutions, or MVPs, that meet one or more of three goals. These lines:

• Reliably and economically enable regional public policy needs,
• Provide multiple types of regional economic value, and/or
• Provide a combination of regional reliability and economic value.

The costs of this MVP portfolio were allocated across the region, rather than only to specific developers, utilities, states or market participants. The results from the most recent review of the program speak for themselves:

• Benefits in excess of its costs, with a benefit-to-cost ratio ranging from 2.2 to 3.4;
• $12.1 to $52.6 billion in net benefits over the next 20 to 40 years;
• Enabling 52.8 million megawatt-hours of wind energy to meet renewable energy mandates and goals through year 203140.

Duplicating MISO’s cost allocation and adopting a more comprehensive, proactive regional planning approach in the rest of the country could reduce interconnection queue waiting times and improve the risk for developers, while benefiting all electricity customers throughout a region. Such planning processes could build on the intent of Order 1000 but strengthen its requirements to account for public policies, allocate costs, and submit meaningful regional plans. This should also apply to FERC-jurisdictional transmission outside the nation’s independent system operators (ISOs) and regional transmission organizations (RTOs).

Congress could also push FERC to act on cost-allocation for new multi-state transmission lines. Though these lines do not feature prominently in the 2035 Report, their benefits are clear from other modeling exercises.41 For example, FERC should encourage high voltage inter-regional

(MISO) Multi-Value Projects methodology is a model to consider building upon. See “Multi-Value Projects (MVPs).” Midcontinent Independent System Operator, Inc. URL: https://www.misoenergy.org/planning/planning/multi-value-projects-mvps.

39 See Holden, Emily. “State Regulators, Clean Energy Advocates Square Off on Bill Pre-empting Power Line Siting Authority.” E&E News April 22, 2015. URL: https://governorswindenergycoalition.org/state-regulators-clean-energy-advocates-square-off-on-bill- pre-empting-power-line-siting-authority/.

40 “A 2017 Review of the Public Policy Economic, and Qualitative Benefits of the Multi-Value Project Portfolio.” Midcontinent Independent System Operator, Inc. September 2017. URL: https://cdn.misoenergy.org/MTEP17%20MVP%20Triennial%20Review%20Report117065.pdf.

41 Bloom, Aaron. “Interconnections Seam Study.” National Renewable Energy Lab 2018. URL: https://www.terrawatts.com/seams-transgridx-2018.pdf.; MacDonald, Alexander E. and Clack, Christopher T.M. et al. “Future Cost-Competitive Electricity Systems and Their Impact on U.S. CO2 Emissions.” Nature Climate Change January 2016. URL: https://research.noaa.gov/article/ArtMID/587/ArticleID/542/Rapid-affordable-energy-transformation-possible.

transmission to access least-cost (and clean) resources, by requiring regional Order 1000 Planning Authorities to develop compatible models (incorporating state energy resource plans) and pursue interregional transmission where benefits exceed costs. Alternatively, Congress could vest DOE with authority to plan large interregional lines, reducing complexity of coordinating planning between regions. A more holistic cost benefit analysis of this nature can also help address the most common reason many important transmission lines have failed: disagreements between states over how to fairly allocate costs. For multistate lines, FERC could require states denying a regionally beneficial line to demonstrate certain criteria are met to justify denial, similar to the rate design structure used in the Public Utility Regulatory Policy Act.

Who Can Get It Done

Decision-maker	Policy
U.S. Congress	Affirm FERC’s authority for transmission cost allocation and planning for public policy impacts to the grid, including regions outside of ISOs/RTOs. Give particular attention to the federal clean energy standard, or in its absence state and utility clean electricity goals. Make clear the intention to reduce interconnection queue times and require beneficiary customers to pay their fair share.
U.S. Congress	Provide states with matching funds to pay for interstate transmission lines with demonstrable reliability, cost, and renewable integration benefits. Consider vesting DOE with authority to plan for and site interregional transmission lines to streamline development of the nation’s most crucial and beneficial long-distance transmission projects.
FERC	Exercise authority to require regional transmission expansion and simplified interconnection rules that support the realities of society’s policy goals and a 90% by 2035 clean energy standard.
FERC	Require regional Planning Authorities to develop compatible models (incorporating state energy resource plans) and pursue transmission where benefits exceed costs. Require states denying a regionally beneficial line to demonstrate certain criteria are met to justify denial.
FERC	Require regional transmission planning bodies created under FERC Order 1000 to propose to FERC multi-value transmission projects, accounting for state and federal clean energy policies, with Federal authority to promulgate a cost allocation methodology where regions fail to act.

SUPPORT FOR AN EQUITABLE AND FAIR TRANSITION

The 90 Percent Clean case in the 2035 Report results in a net increase of 8.5 million job-years by 2035, or approximately 530,000 total jobs annually, as employment from expanding renewable energy and battery storage more than replaces jobs previously supported by the extraction, transport, and burning of coal and gas. Americans as a whole will have more jobs, but jobs lost in coal will be particularly acute, approaching zero in 2035 and geographically concentrated around plants and mines. Coal-fired electric power generation employed a total of 86,000 U.S. workers in 2018, alongside 75,000 workers in coal fuels.42 Policy must ensure these communities are not left behind, but rather strengthened by a federal clean energy standard.

Coal’s decline is already impacting communities and the need for supporting these communities is abundantly clear. Three kinds of policies can help overcome these negative community impacts: transition assistance to assure basic services and community income do not collapse, reinvestment in clean energy and environmental restoration in these communities, and job retraining to provide new economic opportunity for anyone who wants to join the clean energy transition workforce.

Communities currently involved in fossil fuel extraction often rely heavily on current tax revenue to sustain municipal services; pensions also provide economic security to workers who have in many cases endangered themselves to earn a decent living and provide energy powering

America’s prosperity. With the coal industry’s collapse, federal programs must shore up both, ensuring these communities and workers can transition to a sustainable economic future.

The first step is providing stopgap funding to supplement the tax base provided by retired coal infrastructure. Colorado provides one model for this – new legislation created a “Just Transition Office,” empowering it to submit a plan to the legislature to establish benefits including supplementing tax revenue and healthcare benefits to coal transition communities.43 The next step is to shore up federal programs that sustain pensions owed to coal workers: The Black Lung Disability Trust Fund is currently $6 billion in debt,44 while the Pension Benefits Corporation faced a $53.9 billion deficit in 2018 and is on a path to insolvency by 2025.45

Policy can also create new employment opportunities in these communities and ensure the new jobs are family-supporting careers. The first is environmental remediation, as coal plant retirements leave ash ponds and mine reclamation as major public works to restore the land and ensure community health. This fund could build on and expand the 2019 RECLAIM Act, which

42 “2019 U.S. Energy & Employment Report.” Energy Futures Initiative and National Association of State Energy Officials URL: https://static1.squarespace.com/static/5a98cf80ec4eb7c5cd928c61/t/5c7f3708fa0d6036d7120d8f/1551849054549/USEER+201 9+US+Energy+Employment+Report.pdf.

43 “Just Transition from Coal-Based Electrical Energy Economy.” Colorado HB19-1314. 2019 Regular Session URL: https://leg.colorado.gov/bills/hb19-1314.

44 “Black Lung Benefits Program: Options for Improving Trust Fund Finances.” Government Accountability Office May 2018. URL: https://www.gao.gov/assets/700/692103.pdf.

45 Manganaro, John. “PBGC Fiscal Year 2018 Report Highlights.” Plan Sponsor November 16, 2018. URL: https://www.plansponsor.com/pbgc-fiscal-year-2018-report-highlights/.

had more than a dozen Republican co-sponsors, and proposed appropriating $1 billion for the Abandoned Mine Reclamation Fund to revitalize communities hardest hit by the downturn of the coal industry. The Center for American Progress estimates that a $2 billion investment in orphan oil and gas well clean-up has the potential to create 14,000 to 24,000 jobs in energy producing states.46 Providing universal broadband access is another force multiplier for economic opportunity in rural coal communities.

Thankfully, more than two thirds of coal power used in America has high-quality renewable resources and suitable land within 35 miles, such that wind or solar can replace these plants at immediate savings to customers;47 that share grows to 86 percent by 2025. New wind and solar built near these old plants could put people in the same community to work, and would also take advantage of transmission freed up by retiring coal, obviating the need for new and costly lines. However, while clean energy workers earn higher and more equitable wages when compared to all workers nationally,48 coal plant operators tend to earn substantially more on average than clean energy production workers.49

Congress should increase tax incentives (or more liquid cash grants) for wind and solar developers if projects are sited near coal communities. To support job quality, access to the incentives can be conditioned on offering training programs for workers from these communities to work on construction and maintenance of new facilities, as well as meeting certain labor standards such as ensuring high-quality benefits, living wages, rights to organize, and apprenticeship opportunities.50 Coal workers are not going to be enough to fill the national need for a renewable workforce however, federal funds must address the need for job training to support the rapid growth of these industries under a 90 percent clean energy standard.

46 Kelly, Kate and Rowland-Shea, Jenny. “How Congress Can Help Energy States Weather the Oil Bust During the Coronavirus Pandemic.” Center for American Progress April 29, 2020. URL: https://www.americanprogress.org/issues/green/reports/2020/04/29/484158/congress-can-help-energy-states-weather-oil- bust-coronavirus-pandemic/

47 “The Coal Cost Crossover: Economic Viability of Existing Coal Compared to New Local Wind and Solar Resources.” Energy Innovation March 2019.

48 Muro, Mark and Tomer, Adie et al. “Advancing Inclusion Through Clean Energy Jobs.” Brookings Metropolitan Policy Program April 2019. https://www.brookings.edu/wp-content/uploads/2019/04/2019.04_metro_Clean-Energy-Jobs_Report_Muro-Tomer- Shivaran-Kane.pdf.

49 Coal power plant workers earn $36/26/hour on average, while clean energy production workers earn $28.41. See “2019 U.S. Energy & Employment Report.” Energy Futures Initiative and National Association of State Energy Officials URL: https://static1.squarespace.com/static/5a98cf80ec4eb7c5cd928c61/t/5c7f3708fa0d6036d7120d8f/1551849054549/USEER+201 9+US+Energy+Employment+Report.pdf; For clean wage see “Advancing Inclusion Through Clean Energy Jobs.” Brookings Metropolitan Policy Program April 2019.

50 “Good Jobs for 21st Century Energy Act.” S.2185. 116th Congress URL: https://www.merkley.senate.gov/news/press- releases/merkley-trumka-senate-democrats-announce-major-new-legislation-to-create-good-paying-jobs-in-the-transition-to- clean-energy-2019.

Who Can Get It Done

Decision-maker	Policy
U.S. Congress; State Legislatures	Provide stopgap funding to supplement the tax base provided by retired coal infrastructure. Consider setting up a national Just Transition Office with state satellite offices.
U.S. Congress	Shore up federal programs that sustain pensions for coal workers: including the Black Lung Disability Trust Fund and Pension Benefits Corporation.
U.S. Congress	Build on and expand the 2019 RECLAIM Act, which proposed appropriating $1 billion for the Abandoned Mine Reclamation Fund to revitalize communities hardest hit by the downturn of the coal industry.
U.S. Congress	Increase tax incentives (or more liquid cash grants) for wind and solar developers if sited near coal communities. Condition incentives on training and employing workers from these communities to work on construction and maintenance of new facilities, as well as increased labor standards.
U.S. Congress; Dept. of Labor	Address the need for job training to support the rapid growth of these industries under a 90 percent clean energy standard.

ADDRESSING MARKET FAILURES IN WHOLESALE MARKETS

In the 2035 Report, variable renewables dominate new additions to the power supply with complementary gas, storage, and hydro resources providing needed flexibility. But even though the resulting resource mix is lower cost than today’s system, current market structures are not likely to support the required investment to deliver this resource mix – existing market structures are more likely to stand in the way by skewing investment toward uneconomic fossil resources.

When they were first created, competitive markets for electricity, or RTOs/ISOs, were designed around the technical elements of the grid at the time. Grid operators dispatched large central station power plants to follow inflexible load, with power flowing in one direction from these central generators out to customers. RTOs/ISOs managed the scheduling and dispatch of these power plants, ensuring they had enough to meet relatively predictable demand. While this system and its concomitant rules, procedures, and definitions seemed reasonable when it was designed 20 years ago, it is increasingly strained as the grid modernizes and zero-carbon electricity makes up a greater share of the total. These markets need an upgrade to ensure they are finding the least-cost, reliable solution for customers as new technologies become available and the resource mix changes.

The system no longer generates the majority of its energy from large baseload power plants, and is transitioning to a highly flexible system made up of many smaller, more modular resources.

New carbon- and fuel-free resources are available that have different characteristics. Low-cost battery storage is a flexible source of grid services and creates new opportunities to shift supply and demand. New demand-side technologies enable grid operators to send price signals that, for the first time, can allow supply and demand to be truly co-optimized. It is an exciting time of new options for grid managers, but the market structure has not adequately adjusted to these changes.

The keys will be truly allowing all technologies that can provide reliable service to compete on equal footing and exposing the value of grid flexibility.

In particular, the 2035 Report shows the importance of flexible resources to complement a least- cost, renewables dominant system. While 450 GW of natural gas (down from 537 GW in 201851) operational in the scenario with 90 percent zero-carbon electricity, that gas operates at around a 10 percent capacity factor, providing flexibility and energy when wind and solar are in occasional short supply. But other resources not modeled (e.g. demand-side resources), or not commercialized today (e.g. long-duration storage), could provide similar services. New markets will have to pay for these services – the modeling suggests that keeping natural gas plants around but idle most of the time is a conservative solution against which other new technologies should compete to provide these flexibility and energy services in a technology-neutral market structure.

PRINCIPLES

The set of ten principles below are intended to ensure technology neutrality and achievement of power system goals at least cost in the RTO/ISO construct.52 Wholesale electricity markets should:

• Accommodate rapid decarbonization, including the elimination of barriers to participation of zero carbon resources.
• Support grid reliability, up to the amount that customers would knowingly be willing to pay.
• Facilitate demand-side participation and grid flexibility.
• Keep costs affordable for customers by promoting short-run economic efficiency through optimized dispatch of the lowest-cost resource mix, and the use of both existing and emerging technologies that can manage reliability and congestion.
• Keep costs affordable for customers by promoting long-run economic efficiency— including efficient, competitive entry to and exit from the market—under conditions of significant uncertainty.

51 “Table 4.3 Existing Capacity by Energy Source, 2018.” Electric Power Annual. Energy Information Administration October 18, 2019. URL: https://www.eia.gov/electricity/annual/html/epa_04_03.html.

52 Aggarwal, Sonia and Corneli, Steven et al. “Wholesale Electricity Market Design for Rapid Decarbonization.” Energy Innovation: Policy and Technology, LLC. June 2019. URL: https://energyinnovation.org/wp-content/uploads/2019/07/Wholesale-Electricity- Market-Design-For-Rapid-Decarbonization.pdf.

• Minimize the exercise of market power and manipulation.
• Minimize the potential for distortions and interventions that would prevent or limit markets’ ability to achieve efficient outcomes, consistent with the public interest (including overarching public interest in a sustainable environment and economy).
• Enable adequate financing of resources needed to deliver cost-effective reliability, based on an efficient allocation of risk (i.e., those that can best mitigate risk should bear it). Customers should not be on the hook for poor investment decisions made by private investors.
• Be capable of integrating new technology as electricity needs evolve, and adapting as technology changes.
• Have designs that are readily and realistically implementable.

REQUIRED MARKET REFORMS

Public participation in wholesale market governance

The RTOs/ISOs that run the U.S. regional wholesale electricity markets are, in large part, captured by the incumbent transmission owners and generators they regulate.53 RTO/ISO governance structures are not prescribed by FERC, so each regional wholesale market’s governance structure is unique. But governance ultimately impacts how responsive these entities are to different perspectives, and RTO/ISO governance structures create an outsized role for regulated transmission and generation owners to influence market rule changes and RTO/ISO proposals.

By contrast, consumer, state, clean technology, and environmental stakeholders in many wholesale markets have limited opportunity to participate in market rule changes and proposals and vastly fewer resources to support their participation. As a result, RTO/ISO proposals tend to favor incumbents, stifle innovation, and lack upfront input from state, consumer, and environmental interests that have to then battle bad proposals in FERC-regulated dockets.54 Court decisions have prevented FERC from fixing flawed governance.

Congress could introduce legislation clarifying FERC’s authority to direct or modify RTO/ISO governance, and providing a framework for evaluating stakeholder and state regulator access to decision-making.

Expose the Value of Flexibility

The transformation of the resource mix both benefits from an increasing amount of flexibility and provides the means of providing such flexibility. For example, as solar makes up a higher share of electricity generation in the California Independent System Operator region, grid operators need more ramping capability to allow full use of the solar electricity and other clean energy resources. Flexibility comes in many forms, but is not something market operators have

53 Simeone, Christina. “PJM Governance: Can Reforms Improve Outcomes?” Kleinman Center for Energy Policy May 19, 2017. URL: https://kleinmanenergy.upenn.edu/sites/default/files/proceedingsreports/PJM%20Governance%20Reforms.pdf

54 Simeone, Christina. “PJM Governance: Can Reforms Improve Outcomes?” Kleinman Center for Energy Policy May 19, 2017.

traditionally considered when designing products or procuring new resources. In fact, several RTOs/ISOs rely heavily on markets for capacity, which is typically defined as megawatts of power available year-round. As the grid evolves and more wind and solar come online, capacity becomes too blunt an instrument. A focus on flexibility is more prescient.

The best way to create value for flexibility is to enhance price signals in the energy markets themselves, to ensure they are rewarding flexible resources. Examples include reducing or eliminating dependence on capacity markets; raising or removing the price caps, which would incent resources to be available and have the flexibility to produce during times of system need; adopting reserve shortage adders like operating reserve demand curves, which better reflect the value of resources to the system as it approaches a shortage; and creating specific market products that pay for and obtain the type of flexibility needed by grid operators. RTOs/ISOs should test and demonstrate how demand-side and clean energy resources can participate as aggregated resources, and provide these services reliably through pilots (see also “all-source

procurement” recommendations, below).

Require All Generators and Imports to Participate in Economic Dispatch

In wholesale electricity markets, some amount of self-scheduling occurs where power plant operators, for a range of reasons, choose to run their plants regardless of the real-time market price of electricity. Valid reasons sometimes exist for choosing to self-schedule. For example, a hydro plant may not be able to reduce its output if doing so means that it will overflow or violate environmental constraints.

Though valid instances do exist, in practice self-scheduling is often the product of contract terms benefitting the utility while shifting risk to customers, rather than the presence of technical limitations on a resource.55 When self-scheduling makes up a significant share of the total amount of electricity available to market operators, it can introduce challenges to operating the grid flexibly. The challenge is in the fact that if power plants are price-takers (i.e. they will dispatch at any price) then they are not responsive to changes in the market prices that reflect the constraints of the electric grid at any given time and would otherwise elicit flexibility. Self- scheduling decisions can also squeeze out renewables from providing zero-marginal-cost power and thereby increase customer costs.

All FERC-jurisdictional utilities and generators, including imports and renewables, should be required to participate in economic dispatch. Enforcing this in organized wholesale markets requires only a rule change from FERC or the RTOs/ISOs, but in vertically integrated markets, the shift would be more significant. Even in vertically integrated markets, wholesale power is available from other utilities; utility efforts to dispatch their own generation prejudices independent power producers and excess power from neighboring utilities, resulting in higher customer costs. FERC should explore the relationship between vertical utilities’ self-dispatch and the ability for wholesale entities to access new markets with cheaper power, and consider

55 Daniel, Joseph. “The Billion-Dollar Coal Bailout Nobody is Talking About: Self-Committing in Power Markets.” Union of Concerned Scientists June 3, 2019. URL: https://blog.ucsusa.org/joseph-daniel/billion-dollar-coal-bailout-nobody-is-talking-about.

limiting uneconomic dispatch within vertically integrated non-RTO/ISO utilities to achieve just and reasonable wholesale rates.

Minimize Restrictions on Resource Participation

As new technologies emerge and request to participate in the market, RTOs/ISOs have often reacted by imposing restrictions on the types of connections and services those technologies can offer. The emphasis should be on approaches that allow any resource, including aggregations or subsystems of smaller demand-side resources, to participate in providing any services that they are technically capable of providing in a performance-based, technology-agnostic way.

For example, wind and solar can also provide flexibility to the grid, but are often restricted from doing so effectively. Under a more open participation model, wind, solar, storage, and demand- side resources could offer many flexibility services currently provided by fossil plants. One analysis found that allowing solar to pre-curtail and provide ramping services in the California market counterintuitively resulted in less involuntary curtailment, less gas burn, and greater flexibility.56 Inconsistent responses to FERC Order 841, which requires each RTO/ISO to define

participation models for energy storage, and FERC’s responsive review of proposals prejudicial to

storage, exemplify this issue and an appropriate regulatory response.57

Varied approaches to aggregating demand-side resources, and limits on their participation also prejudices markets toward conventional solutions. RTOs/ISOs should be required to facilitate means by which demand-side resources can fully participate through aggregation. This includes allowing aggregators or distribution utilities to participate directly in RTO/ISO markets rather than requiring these resources be controlled directly by RTOs/ISOs. Addressing restrictions on resource participation can tap into a significant amount of flexibility that is available today but going unused.

Pay for Uncompensated Reliability Services

An evolving resource mix on the grid will increase the value of certain grid services while decreasing the value of others. For example, turbine-based generators (including steam and gas turbines) provide inertia and frequency response (through governor response) and this is a useful response after a major transmission or power plant outage. Because turbine-based generators have been ubiquitous in the past, RTOs/ISOs did not see a need to specifically procure frequency response (other than through standards) or indeed to even pay for this service, and grid operating practices have adjusted to the relatively slow frequency response provide by such resources. However, the growth in inverter-based resources (such as wind, solar,

56 “Investigating the Economic Value of Flexible Solar Power Plant Operations.” Energy and Environmental Economics, Inc. October 2018. URL: https://www.ethree.com/wp-content/uploads/2018/10/Investigating-the-Economic-Value-of-Flexible-Solar- Power-Plant-Operation.pdf; Nelson, James H. and Wisland, Laura. “Electricity in California: The Role of Non-Flexibility in a Cleaner

 Electricity Grid.” Union of Concerned Scientists August 2015. https://www.ucsusa.org/sites/default/files/attach/2015/08/Achieving-50-Percent-Renewable-Electricity-In-California.pdf.

57 Gramlich, Rob and Goggin, Michael. “Too Much of a Wrong Thing: The Need for Capacity Market Replacement or Reform.” Grid Strategies, LLC. November 2019. http://eelp.law.harvard.edu/wp-content/uploads/Ari-and-Jason-Burwen-Transcript- Final.pdf.

batteries and many newer loads) means that less of this traditional frequency response may be available to system operators over time.

However, using the power electronics and software of their modern inverters, wind, solar, and battery resources can provide almost any desired grid behaviors, including frequency response and other grid-support services, and can do so with great speed and accuracy.58 However, an opportunity cost may exist for these resources to provide these services, and the ideal grid service may be different from the service that conventional generators were capable of providing, so a new product should be defined and market mechanisms should be created to encourage provision of the services from whichever resources can do so with the lowest cost and the greatest benefit to the grid.

As new resources enter the electricity mix and create value for new and different services, RTOs/ISOs should create new products that expose the value of these services and encourage their provision at least cost.

Who Can Get It Done

Decision-maker	Policy
U.S. Congress	Introduce legislation clarifying FERC’s authority to direct or modify the governance of RTOs/ISOs, and providing a framework for evaluating stakeholder and state regulator access to decision-making.
FERC,RTOs/ISOs	Enhance price signals in the energy markets themselves. Reduce or eliminate dependence on capacity markets; raise or remove the cap on scarcity prices; and adopt reserve shortage adders like operating reserve demand curves, which better reflect the value of resources to the system as it approaches a shortage.
FERC, RTOs/ISOs	Keeping in mind a preference for enhancing energy price signals and reducing dependence on capacity-like mechanisms, expose the value of flexibility through specific products that pay for and obtain the type of flexibility that has system value.
FERC, RTOs/ISOs	Require all generators participating in wholesale markets, including imports and renewables, to participate in economic dispatch. Consider expanding this requirement to non- RTO/ISO, FERC-jurisdictional utilities and generators.
FERC, RTOs/ISOs	Address restrictions on resource participation in energy, ancillary services, and capacity markets, particularly wind, solar, storage, efficiency, and demand response. Continue and build on the work of Order 841.

58 Loutan, Clyde and Klauer, Peter et al. “Demonstration of Essential Reliability Services by a 300-MW Solar Photovoltaic Power

Plant.” National Renewable Energy Laboratory April 2017. URL: https://www.nrel.gov/docs/fy17osti/67799.pdf

DOE/National Labs	Work with FERC and RTOs/ISOs to develop useful technology pilots, model language to increase resource participation, and model rules to pay for flexibility.
FERC, RTOs/ISOs	As new resources enter the electricity mix and create value for new and different ancillary services, RTOs/ISOs should create new products that expose the value of these services and allow encourage their provision at least cost.

REMAKING UTILITY REGULATION FOR THE MODERN GRID

In the U.S., federal and state jurisdiction over electricity industry is split – the federal government regulates wholesale electricity sales under the authority granted to Congress from the Interstate Commerce Clause of the Constitution, while the rest (typically characterized as retail sales) is left to the states. Due to natural electricity grid monopoly characteristics, monopoly distribution utilities of some kind will always serve as an interface between customers and the bulk grid system. State utility commissions govern monopoly distribution utilities, and play a primary role in ensuring these entities meaningfully contribute to a low-cost, reliable electricity future.

PERFORMANCE-BASED REGULATION AND NEW UTILITY BUSINESS MODELS

If current trends hold, significant portions of power demand will be met with resources that operate on the distribution system, either owned and operated by local utilities or customers

themselves. These “distributed energy resources” comprise battery storage, distributed solar PV, energy efficiency, demand response, and electric vehicles, which can all contribute both energy and much-needed flexibility to the system. Each has the opportunity to provide system flexibility and help with zero-carbon energy, but the distribution utility serves as a gatekeeper by determining price signals to electricity customers and managing the operation of the distribution grid. Regulators need new approaches to ensure distribution utilities are properly incented to optimize the system around the value these resources provide.

Performance-based regulation (PBR) is a model for aligning utility incentives with societal goals like affordability, reliability and resilience, and better environmental outcomes.59 PBR reforms the current method of paying for utility service. Under the current regime, utilities increase earnings by building more stuff, on which they recover costs plus a regulated return for

59 Littell, David and Kadoch, Camille et al. “Next-Generation Performance-Based Regulation: Emphasizing Utility Performance to Unleash Power Sector Innovation. Regulatory Assistance Project September 2017. URL: https://www.raponline.org/knowledge- center/next-generation-performance-based-regulation-emphasizing-utility-performance-unleash-power-sector-innovation/; Gold, Rachel and Myers, Amanda, et al. “Performance Incentive Mechanisms for Strategic Demand Reduction.” American Council for an Energy Efficiency Economy and Energy Innovation: Policy and Technology, LLC. February 2020. URL: https://energyinnovation.org/wp-content/uploads/2020/02/Performance-Incentive-Mechanisms-for-Strategic-Demand- Reduction.pdf; Aggarwal, Sonia and O’Boyle, Mike. “Getting the Most out of Grid Modernization.” Energy Innovation: Policy and Technology, LLC. URL: https://energyinnovation.org/wp- content/uploads/2017/02/GridModernizationMetricsOutcomes_Feb2017.pdf.

Electrification and Flexible Demand With rapid U.S. electricity grid decarbonization, transitioning transportation and buildings from oil and gas to electricity can drastically reduce emissions in those sectors. Thankfully, electric cars, heat pumps and air conditioners, and water heaters can also provide significant grid flexibility to complement wind and solar variability, reducing energy transition costs. On the other hand, rapid transportation and building electrification would increase electricity demand, and thus the need for clean energy deployment. The 90 Percent Clean case in the 2035 Report accounts for very little of this potential flexibility or new load, but the broader modeling literature suggests significant positive impacts of flexible load on cost and reliability.1 Even without electric vehicles and buildings driving greater demand, flexible demand management today is already an underused source of grid flexibility. Brattle economists identified nearly 200 GW of cost-effective demand flexibility potential in the U.S. by 2030. This demand flexibility potential, which equates to 20 percent of estimated U.S. peak demand in 2030, would more than triple the existing demand response (DR) capability and would be worth more than $15 billion annually in avoided system costs.1 Well-timed charging of electric vehicles and building heating can reduce power system costs significantly by making the most of renewable generation, reducing peak demand to reduce the need for grid upgrades, and reducing the need for storage, gas peaker plants, and other sources of flexibility on the bulk system. Studies of Colorado1 and Minnesota1 by Vibrant Clean Energy indicate that deep decarbonization of the vehicle and building sectors is possible at a low cost if vehicles and building components provide grid flexibility, charging or preheating buildings or water heaters when renewables are readily available, and delaying when they are not.

shareholders. PBR breaks this link, instead it explicitly ties utility profits to the outcomes indicative of a clean, resilient, affordable power system. Innovative PBR mechanisms include performance incentive mechanisms for demand-side optimization and decarbonization, multi-year rate plans to incent affordable service, and earnings sharing mechanisms to incent customer-side

(“non-wires”) solutions in lieu of traditional

infrastructure.60

State regulators should explore and expand performance-based regulation as a complementary policy to encourage early compliance with clean energy goals, incent cost-effective demand-side management, and control utility costs through the transition. For example, Hawaii’s Public Utility Commission (HIPUC) has recognized that current utility regulation is incompatible with the state’s 100 percent clean energy standard.61 The HIPUC has undertaken thorough stakeholder engagement, and identified a range of performance- based regulation approaches as key pillars of reform needed to achieve an affordable clean energy future.

COMPETITIVE ALL-SOURCE PROCUREMENT

Regulated monopoly utilities will be the largest (and in many cases, only) “buyers” of wholesale power. They participate in wholesale electricity markets on behalf of customers, both purchasing from competitive markets and hedging against these markets with long-term bilateral contracts for certain resources. Many others are vertically integrated, owning and operating power plants and the poles and wires that ultimately reach customers.

Monopoly utilities have embedded incentives to insulate themselves from competition or the need to innovate, which often results in them choosing to build and

maintain overly risk-averse portfolios of resources and passing the related unnecessary costs

60 Cross-Call, Dan and Gold, Rachel et al. Navigating Utility Business Model Reform: A Practical Guide to Regulatory Design.” Rocky Mountain Institute November 2018. URL: https://rmi.org/wp- content/uploads/2018/10/RMI_Navigating_Utility_Business_Model_Reform_2018-1.pdf.

61 “Performance Based Regulation.” State of Hawaii Public Utilities Commission. Accessed June 5, 2019. URL: https://puc.hawaii.gov/energy/pbr/.

through to customers. Moreover, those same utilities pass on significant environmental risks to customers through their pollution. Regulation must ensure utilities procure any new resources fairly, allowing all different kinds of technologies – including customer-owned resources and demand management – to compete to provide the least-cost clean energy solution to customers under a 90 percent clean energy standard.

All-source procurement has emerged as a model for obtaining needed energy at very low costs. As noted above, federal funds assisting states in compliance with a 90 percent clean energy standard should come with conditions, including requiring competitive all-source procurement. In particular, regulators and utilities should observe the following principles62 in procurement:

• Regulators should use an open resource planning process to determine a technology- neutral total procurement need before opening procurement.
• Regulators should require utilities to conduct competitive, all-source bidding processes, including demand-side resources, with robust bid evaluation.
• Regulators should conduct advance review and approval of procurement assumptions and terms.
• Regulators should renew procedures to ensure that utility ownership is not at odds with competitive bidding.
• Regulators should revisit rules for fairness, objectivity and efficiency.

To effectively incorporate demand-side resources into procurement, DOE and the national labs should sponsor new pilots for “clean energy portfolio” development in partnership with distribution utilities. RMI has demonstrated that portfolios of distributed energy resources, storage, wind, and solar, can provide the energy and services of a conventional gas plant at lower cost.63 Now we need real-world models of this portfolio-based approach, resulting in a scaling up of valuable distributed energy resources in procurement.

Who Can Get It Done

Decision-maker	Policy
Public Utility Commissions	Explore and expand performance-based regulation to encourage early compliance with clean energy goals, incent cost-effective demand-side management, and control utility costs through the transition. Use Hawaii’s open and thorough stakeholder process as a model.
DOE/National Labs	Sponsor new pilots for “clean energy portfolio” development in partnership with distribution utilities.

62 Wilson, John and O’Boyle Mike et al. “Making the Most of the Power Plant Market.” Energy Innovation: Policy and Technology, LLC. April 2020. URL: https://energyinnovation.org/wp-content/uploads/2020/04/All-Source-Utility-Electricity-Generation- Procurement-Best-Practices.pdf.

63 Dyson, Mark and Engel, Alex. “The Economics of Clean Energy Portfolios.” Rocky Mountain Institute 2018. URL: https://rmi.org/insight/the-economics-of-clean-energy-portfolios/.

Public Utility Commissions	Require utilities to undertake all-source procurements when they identify the need for more generation resources, allowing all resources to compete to meet a technology- neutral need, using the principles above.
Congress	Condition federal funds assisting utilities with compliance with a 90 percent clean energy standard on competitive all-source procurement, using the principles above.

R&D TO SUPPORT THE PATHWAY TO 100 PERCENT CLEAN ELECTRICITY

Although the 2035 Report shows we can maintain a dependable, affordable electricity grid while rapidly deploying wind and solar, it makes sense for the federal government to support research now to clarify the path to 100 percent. Increased funding for research, collaboration, and technology transfer efforts can speed along the development and acceptance of needed solutions, with particular focus on system needs like long-duration storage and system stability.

LONG-DURATION STORAGE

The 2035 Report shows a 90 percent clean electricity system can meet customer demand for every hour of the year over the whole period. To do this, nearly 80 percent of existing gas capacity operates at a low capacity factor, provides energy during sustained but infrequent shortages of wind and solar power. To squeeze the remaining GHGs out of the electricity sector, we will likely need resources that provide dispatchable, long-duration energy, or a way of capturing and sequestering carbon. Some technologies are promising, including flow batteries, new battery chemistries, compressed air energy storage, modular nuclear, and electrolysis- derived hydrogen production, but none have reached commercialization for power provision yet. To prepare for the last 10 percent of decarbonization, Congress should leverage and amplify the incredible capacity of DOE and the national labs for research in developing and commercializing the most promising of these technologies.

NEW RESOURCE ADEQUACY FRAMEWORKS

Resource adequacy (RA) is a key way of assessing the reliability of a given set of resources.64 The current RA framework focuses on having sufficient conventional generation (or using newer resources only as if they are conventional-like generators), plus a reserve margin, available when the system demand peaks. This is often defined as megawatts of electricity generation capacity available year-round. But the grid is changing, and reliability no longer solely depends on having enough power plants to meet infrequent peak demand. Instead, as renewables become a greater share of the total energy mix, day-to-day grid flexibility will be key to reliability. Many new kinds of resources will be available to help provide the flexibility the system needs – distributed energy resources, storage, and demand response are some of the most important.

64 Gimon, Eric. “Why Climate Advocates Should be Interested in Resource Adequacy.” Energy Innovation: Policy and Technology, LLC. April 2020. URL: https://energyinnovation.org/wp-content/uploads/2020/04/Why-Climate-Advocates-Should-Be-Interested- In-Resource-Adequacy.pdf.

System needs will change under a high share of renewable energy – researchers must develop new metrics that can give utilities, regulators, and system operators the confidence they need to invest in a low-cost low-carbon portfolio that moves beyond dispatching power plants to meet peak demand.

INADEQUACY OF DISPATCH AND PLANNING MODELS

Standard models for transmission system planning used by RTOs/ISOs fail to account for the capabilities of new technologies. They treat electricity demand trends as static, and do not properly model capabilities of new, clean resources like energy storage, demand response, solar, and wind. For example, solar-plus-storage together can meet summer peaks in many systems, yet the models do not allow for this option to be considered. Standard models determine which plants generate in real-time, relying on generic “participation models” based on conventional power plant characteristics. New forms of generation (e.g., renewable energy), storage, demand- side resources, and combinations thereof, are forced to fit into existing participation models, unfairly discriminating against these resources while promoting dispatch of fossil fuel generators.

DOE and FERC have roles to play to standardize models and articulate modeling capabilities RTOs/ISOs must possess to qualify as regional planning entities. Federal agencies can empower the national laboratories to improve these models and develop open-source tools that utilities, RTOs/ISOs, and state public utility commissions can use in their planning and operations.

VOLTAGE, FREQUENCY, AND STABILITY CONTROL TECHNOLOGIES

Wind and solar PV generation (and many modern loads) are electrically connected to the electricity system via power electronic converters. This stands in contrast to the synchronous generator that has dominated electrical generation technology from the beginning. Some fundamental issues and opportunities come along with this underlying change in the nature of the electricity system.

As previously noted, using the power electronics and software of modern inverters, wind, solar, and battery resources can provide almost any grid behaviors that are desired, and can do so with great speed and accuracy. In 100 percent clean electricity systems with little or no synchronous generation, some of the other grid resources, including renewable generation and storage, may need to provide additional stability and reliability services. Congress should fund already ongoing research into technologies, such as grid-forming inverters65, to commercialize technologies needed to support a 100 percent clean energy grid by 2045.

Who Can Get It Done

Decision-maker	Policy
U.S. Congress	Allocate funds to DOE and national labs to create new models for resource adequacy under high shares of renewables,

65 GFI have been tested successfully in microgrids, but not as part of the bulk system. See Ellis, Abraham. “Grid Forming Inverters in Interconnected Systems.” Sandia National Laboratories 2018. URL: https://der-lab.net/wp-content/uploads/2018/11/Ellis_GFI- Vienna.pdf.

	improve electricity sector resource planning and wholesale market models, and study and commercialize grid-forming inverters and grid stability in high-renewables electricity systems.
National Association of Regulatory Utility Commissioners; PUCs	Support regulated utility research and development to support the transition to 100% clean. Consider pooling resources at the RTO/ISO level, regional level, or multistate utility level to share risk and increase impact.
Department of Energy (DOE)	Allocate funds to improve electricity sector resource planning and wholesale market models. Use national laboratory capabilities to improve these models and develop open- source tools that utilities, RTOs/ISOs, and state public utility commissions can use in their planning and operations.
Federal Energy Regulatory Commission (FERC)	Articulate advanced modeling capabilities RTOs/ISO must possess and use to qualify as regional planning entities.
DOE; National Labs	Conduct research in conjunction with utilities and RTOs/ISOs into grid-forming inverters and other technologies to support system stability and security.

CONCLUSION

America has an opportunity to harness cheap, clean electricity to transform our economy, boosting jobs and cutting pollution while lowering electricity bills for citizens. It would be a crime to waste it. We have the technology, the enterprising businesses to get it done, a solid manufacturing base to build, and we know the policy pathway. Bold action to adopt a clean energy standard can set the nation on the right course, and complementary policies can help support action at every level from federal to state and local communities.

**

The US has incredible potential to lead the world in the shift to green energy, and this new Berkeley study confirms that. Indeed, it’s vital for our planet’s future that both the US and China get on board and take similar steps to what the EU is taking now in their green stimulus packages. There is good movement at the state and city level in America, but it needs federal support and leadership to truly be effective. EPA rollbacks aren’t helping.

To put it bluntly, the world simply cannot afford the inertia and backward movement that the US federal government has allowed and even promoted since the beginning of 2017.

**

Falling renewable, storage costs make 90% carbon-free US grid feasible by 2035, UC Berkeley finds

Kavya Balaraman@kavya_balaraman, Utility Dive, June 9, 2020

• The U.S. can deliver 90% of its electricity from carbon-free sources by 2035, according to a new report from the University of California, Berkeley, and experts say accelerating clean energy deployments could also play an important role in the country’s economic recovery.
• Building out renewables to achieve this target will add more than 500,000 jobs per year as well as $1.7 trillion in investments into the economy, without raising customer bills, the report found.
• The country is experiencing a cost-crossover, as clean energy resources become cheaper than continuing to run existing fossil fuel resources, Sonia Aggarwal, vice president at Energy Innovation and co-author of an accompanying report outlining policy measures to achieve the 2035 target, told Utility Dive. “I see it as an amazing opportunity for America to create a bunch of jobs to decarbonize our electricity sector, and do all of that without raising electric bills for customers at a time when budgets are awfully tight,” she said.

Dive Insight:

Unemployment data indicates that around 600,000 people working in clean energy lost their jobs in March and April alone, Bob Keefe, executive director of Environmental Entrepreneurs (E2), told Utility Dive. But “these aren’t jobs that have disappeared. These are jobs that are still there — we just need to get them back to work.”

After the 2008 recession, the U.S. invested around $90 billion in clean energy, resulting in around 100,000 projects across the country and putting thousands of construction workers back on the job, according to Keefe. “History shows us that clean energy is the best way to restart our economy,” he said.

Most policy proposals for near-complete decarbonization target a 2050 deadline, according to the Berkeley report, but the falling costs of solar, wind and battery storage makes a 90% carbon-free grid by 2035 feasible.

Achieving that target will require retiring all coal plants by 2035 without building more fossil fuel plants, retaining existing hydropower and nuclear capacity, and reducing generation from natural gas plants to 10% of total annual electricity generation. Within that mix, renewables and battery storage will provide 70% of annual generation, while hydropower and nuclear will provide another 20%. This portfolio will reduce wholesale electricity costs by about 10% by 2035, and avoid $1.2 trillion in environmental and health-related damages — including 85,000 premature deaths — through the middle of the century, the report’s authors say. 

And as the U.S. faces the prospect of recovering from the economic turmoil caused by the COVID-19 pandemic, this scenario would support 500,000 more jobs per year compared to a business-as-usual scenario. 

“Everybody’s asking what we can do to speed the recovery,” David Wooley, professor at the UC Berkeley Goldman School of Public Policy and co-author of the report, told Utility Dive. “And we think this strategy is very effective because of the large number of jobs it produces with no adverse impact on consumer costs, and very low costs in terms of government.”

The researchers undertook the study because they sensed that the rapidly declining costs of utility-scale renewables weren’t being captured in most plans, he said. What they found is “particularly in a slack labor market like we’re in now because of the crisis, this can have a really powerful effect on employment. It’s not the only thing you would do in regard to recovery, but it’s one thing you could do.”

The findings mirror arguments that a coalition of California energy groups — including Advanced Energy Economy, California Energy Storage Alliance and the Solar Energy Industries Association — made in a letter to state lawmakers and Gov. Gavin Newsom last week.

With policy support, the clean energy sector could restore over 100,000 jobs in California and unlock billions of dollars in private investments, the groups said. They urged decision-makers to create an inter-agency working group that could look at ways to promote this growth, including by accelerating the deployment of renewables and achieving California’s 2030 climate goals ahead of schedule. 

“The clean energy economy was a huge reason for California’s success coming out of the 2008-09 recession. We did it before, we can do it again,” Michael Colvin, director of regulatory and legislative affairs at the Environmental Defense Fund’s (EDF) California energy program, told Utility Dive. EDF is a member of the coalition.

California has suffered more clean energy job losses than any other state by huge margin, he said, and putting the sector back to work can help stimulate the rest of the economy. 

“Energy is such a foundational input to the economy that if you can stimulate that, you end up stimulating a lot of other things simultaneously,” Colvin added.  One way for the state to do that would be through its integrated resource planning proceeding, according to Colvin. In March, the California Public Utilities Commission approved a decision asking load-serving entities to craft plans around two greenhouse gas reduction targets for the electric sector — a 46 MMT target, and another for 38 MMT. Opting for the lower target is “an immediately obvious” measure to help accelerate clean energy deployments, he said. 

There are, however, uncertainties around the ability to get to a 90% carbon-free electricity by 2035, especially because that goal is dependent on a set of policy changes, according to Wooley. Some of those changes are outlined in the accompanying paper from Energy Innovation.

A key action would be adopting a federal standard to reach 55% carbon-free electricity by 2025, 75% by 2030, 90% by 2035 and 100% by 2045, as well as extending investment and production tax credits for clean energy resources and tying them to battery storage as well. A federal standard will provide some investment certainty and market consistency to help build clean energy resources at the required scale, Aggarwal said. 

The scenario’s reliance on federal policy changes is “a big if,” according to Wooley.

“[U]nder the current Congress, that seems pretty unlikely. But we’re not that far away from what potentially could be an important political change at the federal level,” he said. 

Another policy measure involves utility and government-backed refinancing of retired coal equity and debt. 

“There’s actually a lot of undepreciated balance on the remaining coal fleet that utilities have on their balance sheets,” Aggarwal said.

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Unpacking The 90% Renewable Energy In US By 2035 Scenario

June 10th, 2020 by Steve Hanley on Clean Technica

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Mark Twain had a gift for demolishing cherished beliefs in just a few words. One of his famous witticisms claimed, “Man is the only animal that blushes — or needs to.” He also said, “What you don’t know won’t hurt you near as much as what you do know that t’ain’t true.” One shibboleth that “t’ain’t true” is the common belief that nations can’t afford the cost of transitioning to renewable energy.

Image credit: UC Berkeley

A new study from the University of California Berkeley and GridLab claims the US could transition to 90% renewable energy by the year 2035. The changeover would cost no more than what the utility industry will spend during the next 15 years anyway, while creating a half million new high value jobs. The best news of all? After retiring most of the existing fleet of thermal generating stations, the wholesale cost of electricity would be 13% less than it is today.

A Daunting Challenge

The primary factor in the Berkeley report is the stunning drop in the price of renewable energy — a downward trend the researchers expect to continue or even accelerate. “Previous studies concluded either we need to wait until 2050 to decarbonize or the bills will go up if you decarbonize,” co-author Amol Phadketells the press. “I think we really need to revisit these conclusions because of the dramatic decline in costs. The key thing that was very exciting to us, and why we were prompted to do this study is that the cost declined much faster than all the experts in the field anticipated, including us.”

The goal is 90% renewables by 2035, not 100%, because the authors foresee the need for some electricity made from gas facilities. They say supplying 10% of America’s electricity from gas generators would eliminate the hardest and most expensive piece of the puzzle — long term storage and no new gas-fired facilities would need to be built to do so. 2035 was chosen as the target date because that allows enough time for most of the current thermal generation plants to be fully depreciated, eliminating the stranded assets problem.

The goal of installing an average of 70 MW of new renewable energy assets every year for the next 15 years will be one lollapalooza of a challenge, but it can be done, the researchers say. They point out that 65 GW of new gas generation were added in 2002, so adding capacity is not the problem. Saying it can’t be done just “t’ain’t true.”

Regional, Not Intercontinental, Transmission Lines

One of the common beliefs about building a nearly 100% renewable grid is that it will require massive new investment in intercontinental high voltage transmission lines. Green Tech Media says, “Previous clean-grid visions use continent-spanning transmission projects to transport power from optimal renewable-producing regions to load centers. That requires billions of investment dollars and overcoming local resistance to permitting such projects.” Maybe that was the thinking at one time but “t’ain’t true” anymore. “As the price of wind and solar have come down dramatically, the conventional wisdom that wind is only cost-effective in the wind belt in the middle of the country, solar is only cost-effective in the sunny Southwest — that’s not true anymore,” says Ric O’Connell of  GridLab. “While we still need to build significant transmission, most of that transmission is more regional as opposed to inter-regional.” Those regional grids — which could include plenty of microgrids — are far less expensive to construct than HVDC transmission lines to connect solar power from sunny Arizona to customers in New York City.

Jobs, Jobs, Jobs

Image credit: UC Berkeley

The Berkeley/GridLab study also projects the transition to renewable energy could add about 500,000 net new jobs to the economy every year. “[I]ncreased employment from expanding renewable energy and battery storage more than replaces lost employment related to declining fossil fuel generation…..These jobs include construction, manufacturing, operations and maintenance, and the supply chain. Overall, a 90% clean grid supports more than 530,000 renewable energy jobs each year compared to existing policy.”

Federal Policy Initiatives Required

What will be needed to make this all happen is a vigorous policy initiative at the federal level, something like a federal renewable energy standard to replace the patchwork of standards created by the individual states. Sonia Aggarwal of Energy Innovation tells Green Tech Media, “Passing federal policy as soon as possible is a huge step in the right direction. At the same time, I think the scale-up of potential deployment within the renewable energy industry will be really important to pay attention to.” That means streamlining the permitting and interconnection process while also clarifying market rules.

For instance, at the present time, FERC has adopted a new policy that will greatly benefit thermal generators in the New York region to the detriment of renewables. New renewable capacity means curtailment of electricity from thermal generators — they can’t sell their electricity, so they have to give it away. The FERC rule requires the PJM grid operator to take the dirty electricity first, a boon to fossil fuel interests but bad news for renewable energy generators, especially those building new offshore wind farms along the Atlantic coast. Continued federal support of thermal generation is another proposition that is believed by certain people but “t’ain’t true.”

Social Justice & Renewables

The new FERC policy is a direct result of the Trump administration’s love affair with fossil fuels. It also jams federal policy down the throat of the states. Most states in the Northeast have aggressive clean energy policies that the federal initiative is blocking. This struggle is playing out in many different scenarios. At the same time that New York is bemoaning the heavy handed FERC ruling, it is also overriding local siting policy in the western part of the state in order to promote its own clean energy agenda.

Where to put all those renewables will require careful consideration of the needs of local communities, especially communities of color and Indigenous people, who for too long have borne the brunt of the pollution created by oil, gas, and chemical operations in the US.

The other concern is that the people working in thermal energy production today not be unfairly impacted by the inevitable job loses coming to that sector of the economy. It is all well and good to say technological changes will create new jobs, but if that means selling a home, uprooting a family, and moving halfway across the country, that is a burden many cannot afford. Also, in America, health insurance is tied directly to one’s job. If your job ends, so does your access to affordable healthcare. It’s not enough to say a new job will provide coverage if pre-existing conditions are excluded. Today, most personal bankruptcies are related to the inability to pay medical bills. Any transition to renewable energy must take into account the economic needs of those most directly affected. Saying lots of new jobs will be created implies there will be no negative impact to current workers, which definitely “t’ain’t true.”

Conservatives & The Green Economy

The Republican Party of today is bitterly opposed to the transition to renewable energy. The Washington Post reports that conservative strategists are rolling out new talking points designed to convince voters that renewables will bring an end to millions of jobs and cost trillions of dollars. If the UC Berkeley researchers are correct, that simply “t’ain’t true.”

“If You Like the Pandemic Lockdown, You’re Going to Love the Green New Deal,” the conservative Washington Examiner said in the headline of a recent editorial. Elizabeth Harrington, spokeswoman for the Republican National Committee, wrote in an opinion article in The Hill that Democrats “think a pandemic is the perfect opportunity to kill millions more jobs” with carbon-cutting plans. Mercedes Schlapp, a senior campaign adviser to Trump, said on Fox Business that Joe Biden supports “rainbow and unicorn deals like the Green New Deal” that would raise energy prices and harm an already-ailing economy.

Today, Americans spend far too much time talking past each other and far too little time listening to what others have to say. One thing that definitely is true is that burning fossil fuels is killing people and dangerously destabilizing the environment. We need to work together on solutions, not hunker down in our intellectual bunkers, hurling verbal bombs at each other.

The 2035 Report from UC Berkeley and GridLab is thoughtful, well researched, and artfully presented. If you want to be well informed, considering taking some time to read and review it for yourself. It’s an excellent starting point for a discussion about how the US could be preparing for the future in a way that is practical, rational, and a benefit to all Americans.