Table 2.2: Description of Brookings-Battelle Clean Economy Categories (Energy, Energy Efficiency and Renewables)

Table 2.2: Description of Brookings-Battelle Clean Economy Categories (Energy, Energy Efficiency and Renewables)

Source: “Sizing the Clean Economy: A National and Regional Green Jobs Assessment,” The Brookings Institution, Metropolitan Policy Program, July 31, 2011 http://www.brookings.edu/metro/clean_economy.aspx

Breakthroughs in electric vehicle technology contribute to an overall economy driven by improvements in technology. Technology, particularly information and communications, bores even deeper into most products and services across the economy. In the power sector, smart-grid technology revolutionizes the energy services market, tying in smarter equipment and appliances, and allowing for a more efficient and flexible power grid. Unsurprisingly, smart grids lead to smarter energy customers. This includes industrial companies where energy cost saving can drop to the bottom line and increase their competitiveness. The variable output from wind and solar generators becomes much easier to manage and integrate with flexible gas-fired reserves, efficient regional energy markets, geographically and technologically diverse renewable energy, and a smarter power grid encompassing both transmission and distribution systems.

Underlying these consumer choices are a range of institutional changes in the electric industry in the WECC region. A federal policy for carbon pricing is now in effect along with a renewable energy portfolio standard for the nation. Federal policy now aligns with internationally agreed-upon goals. Carbon prices range from $50 per ton toward of $100 per ton. Incentives for clean and energy-efficient operations in industry have remade some of the tax code.

The tension and dynamics in the emerging energy market make for a trade-off between costs and features (with prices now increasingly signaling full life-cycle costs) and more progressive views of energy. Should some consumers and special groups be protected from some prices and market effects? Policy, nevertheless, leans toward change. Economic growth allows some cushioning of impacts on some parties through the use of rebates, tax breaks and financial aid.

The new long-term model for the power system begins to settle firmly into place during these years. It provides an effective and efficient mix of elements, including: (1) DC transmission; (2) Smart grid and metering systems; (3) Integrated distributed and renewable generation with storage and flexible gas-fired reserves; (4) Independent power networks serving some large customers, local communities and industrial parks; (5) Load management enabled by connection to final consumers getting real-time price signals; (6) A WECC-wide EIM system using sub-hourly scheduling and coordination that is working well despite some occasional “learning” opportunities when unexpected weather or other demand-related anomalies conditions occur; and (7) Cyber investments in the power grid that support national security.

Forecasted water and air pollution problems for shale gas development prove mostly misplaced as monitoring and sensing applications emerge and are backed by strong regulatory enforcement. Protecting the air and water does reduce the number of sites deemed appropriate for drilling and strong regulatory enforcement does impose exploration and development costs that increase the price of natural gas. This increase in price is accepted as it reflects the true costs of safely developing gas fields. Large integrated oil and gas companies bring rationality to the gas market after a short-term boom-and-bust cycle wipes out smaller unstable players. On balance, the reduced need for gas driven by advances in low carbon technologies and the increased costs of gas exploration and development results in natural gas prices in a moderate and competitive range. It allows natural gas to maintain its foothold in the power generation markets where it plays an important balancing function as the amount of intermittent renewable generation increases.

The evolution of the power system is not without problems. It’s not really carbon free, so the system fails to completely address long-term climate concerns effectively. Even if it’s easier to manage, energy does not come cheap for all and protecting low-income customers requires special attention as the incidence of increased electricity rates is regressive. In addition, large penetrations of utility-scale wind and solar technologies have some impacts on the environment even with aggressive mitigation practices. Some wind generation impacts bird migration adversely while some solar farms disturb delicate desert ecosystems. Electricity generation must use less water since the security of clean water supplies evolves into a national concern because of persistent drought conditions, which, incidentally, lower hydro power generation.

Land-use issues make for intense court battles. State, provincial, and tribal governments must address all of these issues. State and federal courts must decide whether and how to assign damages to carbon emitters, including electric utilities, in response to climate change class action suits seeking payments for environmental damages. A rapid expansion of natural gas use is also restrained by the need for supporting investments in pipelines, storage and other related infrastructure to deliver the gas. In some cases, there are also challenges with integrating gas with power generation due to contracting issues and natural gas pricing policies.

With the return to stable economic growth, coal supporters suggest that successful pilot projects demonstrating the safety and effectiveness of carbon capture and sequestration (CCS) should slow the phase out of existing coal-fired plants and encourage new plants to be sited and built. Environmental advocates show up at public hearings with evidence to the contrary, especially relating to long-term containment risks of sequestered carbon emissions. Activists argue for the environmental dispatch of power, which would make coal plants the last resort. Low natural gas prices challenge coal advocates as they watch power companies add new gas generation, sometimes to manage peak demand from the transportation sector. Variations in demand from the transport sector cause peak demand to shift and the need for flexible ramping of resources to increase, particularly when combined with unanticipated turns in daily weather patterns.

Power companies have a leading role in the electrification of the U.S. economy and make moves to restructure their companies to remain viable, eyeing expansion of their transmission grids and power management systems in order to share resources more effectively. New subsidiaries and service arms now serve growing demand. Finding the right mix of assets while responding to tighter environmental standards can be problematic.

In addition, rising customer expectations driven by real-time communications increase the pressure for change on the industry. The power system assimilates Moore’s Law—the long-true rule of thumb that the number of transistors that can be placed inexpensively on an integrated circuit doubles approximately every two years—and drives cycles of updating and the turnover of services and applications. Over time, the standards for smart grid applications developed by the National Institute of Standards and Technology (NIST) guide a myriad of new investments as they are reported and implemented by a variety of standards-setting bodies, including WECC.

A series of persistent weather-related disasters coupled with international pressure to address greenhouse gas concerns provide the U.S. president and Congress with the political impetus to develop national climate change adaptation and carbon reduction goals. In following rounds of global negotiations, developing nations make binding commitments, which they now believe they can make with improved technologies that will not negatively impact their economic growth (See Figure 2.3 below for an overview of climate change concerns expressed internationally). Those commitments contribute to global growth in clean technology investments and potential export markets for U.S. companies.