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Carbon-cutting sparks debate about scale in power industry

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Carbon-cutting sparks debate about scale in power industry

SNL Image

Workers install solar panels on a roof in Arizona.
Source: Associated Press

Energy executives and analysts are divided over the best strategy to clean up the U.S. power system between those advocating for infrastructure projects aimed at expanding the country's electric grid and others pushing a more local, decentralized approach such as deploying rooftop solar panels and home-based batteries.

The industry is grappling with the issue following the release of a United Nations report that found the world needs to move more aggressively to hold down rising temperatures and as U.S. lawmakers consider how to respond to the Green New Deal, a proposal that, among other things, calls for a 10-year "national mobilization" to help the U.S. meet all of its electricity demand with renewable, nonemitting or "clean" energy resources.

Many Republicans and some Democrats have said they view the nonbinding resolution, which includes ideas on addressing income inequality, as unworkable. Senate Majority Leader Mitch McConnell, R-Ky., has called for a vote on the document, a move critics see as a cynical effort to create a political wedge issue.

"[If] you come to Washington for big ideas, you should go somewhere else," Sarah Ladislaw, a senior vice president and director of the energy and national security program at the Center for Strategic and International Studies, said March 25 at an energy conference in New York City hosted by BloombergNEF. "I think, unfortunately, [the Green New Deal is] a big idea that could, in a different political time, be rallied around in a whole lot of really productive ways, and it's sort of falling into the Washington trap."

There was general agreement at the conference in New York that the power industry already has the tools it needs to significantly reduce carbon dioxide emissions.

Chris Shelton, president of AES Corp. subsidiary AES Next, said emissions could be cut by about 90% using existing technology without increasing costs. Duke Energy Corp. Chairman, President and CEO Lynn Good put the potential cut to emissions using existing technology at up to about 50%.

How to deploy those resources remains a source of debate.

"The power system we developed in the last century isn't really the power system we're going to need for high levels of renewables. So the kinds of investments we're going to need are very different," said Audrey Zibelman, CEO of the Australian Energy Market Operator.

Some view a proposed 2,100-mile transmission line that would move wind energy from Iowa to Chicago as the sort of large-scale building project needed to expand the grid and incorporate more renewable energy.

"[This] is what is needed to build a more national grid that can move energy around," said David Biello, science curator at TED Conferences. "If we can have a national grid in the United States, we can have a much cleaner electricity generation sector."

Karen Weigert, vice president of business strategy and regional operations at Slipstream Group Inc., a renewable energy and energy efficiency company, said, "we have to figure out" whether low-cost renewable energy can be shipped economically from where it is generated to population centers. "So, in a sense, this has to be a harbinger," Weigert said. "This has to be the first step in looking at how we start to power the entire country with renewables from the places where they are most plentiful."

However, if history is any guide, the transmission line faces big challenges, including interstate permitting.

"[For] a while, there was this idea that local and disaggregated things were much easier to do because they just didn't have the challenges of projects like this," Ladislaw said. "And that's OK, but at some point, we're going to need to get back to big projects like this."

On the other side of the argument is Lynn Jurich, CEO of rooftop solar developer Sunrun Inc., who argued that distributed energy resources such as the ones her company sells offer the fastest route to cutting emissions.

"The centralized grid is going to be there, it is important, but it's going to be dwarfed by these distributed resources because people want [them], and because the cost curves are pointing in that direction," Jurich said. "[Let's] make sure … we're not building a bunch of centralized assets that will be stranded."

Ray Wood, head of global power and renewables at Bank of America Merrill Lynch, offered a similar outlook, saying he expects an increasing focus in the power industry on "distributed solutions" and energy storage. "I think the grid's going to change dramatically, and the role of utilities is going to change dramatically," Wood said.

Additionally, companies are eying the offshore wind market as the next big growth opportunity.

The power industry will be shaped by "big and small projects," said Ravina Advani, head of natural resources and renewables at BNP Paribas.