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Electrification of US economy aligns incentives of utilities, stakeholders

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Electric utilities and high-tech corporations point to the increased adoption of electric vehicles as a key trend in the electrification of the U.S. economy and a cleaner energy grid.
Source: Tesla Inc.


Electric utilities, corporations and clean energy advocates are finding common ground on the need to enable the electrification of the U.S. economy and a cleaner energy grid.

"We sell electricity. Here is an opportunity to sell more electricity," Bill Murray, senior vice president of corporate affairs and communications for Dominion Energy Inc., said June 13 during a panel discussion at Advanced Energy Now | East in Richmond, Va.

Mark Cosby, senior manager of non-regulated products and services for Evergy Inc., said the utility sector and technology "need to evolve." He perceives a disconnect when trying to explain electrification to end-use customers.

"Our customers don't really care about electricity. They don't care about juice," Cosby said.

Still, Phil Flaherty, director of market development for utility technology company Bidgely, sees what he called "exciting" developments occurring in the energy transition and technology space.

"I think there is some low-hanging fruit in terms of electrification," Flaherty said.

The increased adoption of electric vehicles also presents a large market opportunity for electric utilities and high-tech corporations.

"EVs are being adopted at a phenomenal pace," Flaherty said. "That's happening with or without us."

Cosby said the key to incentivize this growth is to offer customers more choices in the models offered and provide the needed infrastructure. "It's about reducing the range anxiety," Cosby added.

Colin Murchie, senior director of business development at EVgo, said installing the required charging stations and related infrastructure for EV adoption is "not that hard," with little in the way of policy obstacles to impede this growth.

Murray, however, noted that utilities still have work to do on the distribution side to accommodate charging stations, adding that "rate design is key" to how utilities can fund these investments.

Wide-scale adoption of EVs and beneficial electrification represent key trends to help the U.S. continue to cut emissions and combat climate change. The U.N. Intergovernmental Panel on Climate Change said in an October 2018 report that greenhouse gas emissions worldwide must fall 45% from 2010 levels by 2030, reaching net zero levels around 2050, to keep global warming at under 1.5 degrees Celsius.

"I'm not Chicken Little about climate," Murchie said. "I think it is a solvable problem."

The right steps?

Stark differences emerge, however, when it comes to deciding the appropriate resources and policies to spur change.

Natural gas, a fossil fuel, and non-carbon emitting nuclear generation are at the center of heated debates over the types of resources needed to support the energy transition.

"You hear terms like natural gas is a bridge fuel," Flaherty said. "It's a pretty long bridge."

While Cosby boasted that 50% of Evergy's generation is carbon-free, largely consisting of wind, the utility also owns and operates the 1,255-MW Wolf Creek nuclear plant in Kansas.

Dominion frequently points to the need for natural gas generation and gas infrastructure to enable clean energy investments.

In addition, Dominion's five-year growth capital plan outlines $1.2 billion in spending for operating license extensions at the two-unit, 1,750-MW Surry nuclear plant in Virginia. In October 2018, Dominion filed its request with the U.S. Nuclear Regulatory Commission for a second 20-year renewal of the Surry operating licenses that, if granted, would keep the reactors online beyond 2050.

If a second relicensing is granted, it will serve as a pilot for not only the company, but the country, according to Murray. He also pointed out that nuclear is the largest around-the-clock carbon-free resource available.

Audrey Lyke, senior manager of government and regulatory affairs for Exelon Corp., said it is important that markets value the appropriate resources to ensure reliability, resilience and fuel security. Lyke doesn't want to see a greenhouse gas-emitting resource receiving the value that nuclear should obtain when moving toward a low-carbon future.

Jeff Dennis, managing director and general counsel at Advanced Energy Economy, said resources with on-site fuel also should not be overvalued when there is a "real opportunity for advanced energy technologies" to close the gap in a "level playing field market."

Energy efficiency

Large corporations also see a pivotal role for energy efficiency as the grid becomes more integrated.

Rick Counihan, head of energy regulatory affairs for Google LLC, said energy efficiency at the residential level "is still the cheapest clean energy resource."

"We should be putting more energy efficiency into low-income housing," Counihan said, adding that education, policy and valuation hurdles impede its growth.

"Energy efficiency politically is difficult because you can't see it," Counihan added.

Stakeholders said they "lost some blood in Ohio" when fighting to ensure the state properly valued energy efficiency. In June 2014, former Ohio Gov. John Kasich signed legislation that froze the state's renewable energy mandates, while making changes to energy efficiency and peak demand requirements for the state's utilities.

In November 2014, the Public Utilities Commission of Ohio approved an application from FirstEnergy Corp.'s Ohio utilities that allows their large industrial customers to opt out of utility-sponsored energy efficiency programs and run their own programs.

Lawmakers in Ohio continue to debate unraveling the state's renewable energy and energy efficiency mandates.

Meanwhile, the Grid Transformation and Security Act in Virginia requires Dominion subsidiary Dominion Energy Virginia, known legally as Virginia Electric and Power Co., and American Electric Power Co. Inc. utility Appalachian Power Co. to make more than $1 billion in investments in energy efficiency and energy assistance programs over the next decade.