How Clean Energy is Part of Economic Recovery after Pandemic

April 2, 2020
U.S. Department of Energy
Mike Jacobs
Senior Energy Analyst

Policymakers looking to rebuild our economy must keep in mind peoples’ needs for the future after this public health crisis. Now, medical and safety needs for frontline workers are the first priority. Thinking about recovery, strengthening policies for the clean power sector and the people who work to build a cleaner and more robust energy supply will make us healthier in the future.  Congress can rebuild the economy with smarter investments in clean energy which will also lower the costs of electricity.

Today’s debate about federal support for the U.S. electric power sector while rebuilding the economy repeats the ongoing argument about whether we can rely on energy markets for our social and environmental goals (such as healthier cities and rural economies, less flooding and climate-change impacts). This would not be the first time that an economic crisis led to a federal economic recovery plan funding a major shift in energy priorities.

Congressional leaders have the opportunity to reinforce policies that stimulate billions of dollars invested in clean, renewable energy with an extension of tax credits for wind and solar, applying these to energy storage, and protecting or federalizing the renewable energy standards already in place in 29 states plus D.C.

The most dramatic federal efforts to strengthen the nation by building renewable energy infrastructure came in response to the 1930’s Great Depression. Economic development of southern Appalachians, and the Pacific Northwest through rural electrification, flood control and irrigation motivated Congress to fund the Bonneville and Grand Coulee dams on the Columbia River, the Wilson Dam on the Tennessee River and the Norris Dam on the Clinch River. At the time they were planned and built, these dams were oversized compared to energy demand, and then were used for national defense needs in World War II.

Now, a growing policy movement begun by states promotes renewable energy investment. This began with Renewable Energy Standards and now includes long-term procurements for energy storage, offshore wind as well as windfarms and solar gardens. Virginia’s legislative action in March starts a new round, with region-leading requirements for 5,200 MW of offshore wind and 2,700 MW storage procurements as part of requiring utilities to provide 100% carbon-free electricity. Another state, Massachusetts, released regulations for its unique Clean Peak Standard providing incentives for storage and renewables-storage hybrids, highlighting the newest technology for renewable energy as a replacement for aging fossil-fuel power plants.

Grid operators use renewables to save money

Grid operators have learned how the growth in renewable energy lowers the cost of operating the grid and saves consumers money. The lessons used now for running electric systems with 20%, 30%, or 40% wind and solar came from earlier experience with 2%, 3% and 4% wind and solar. The message so far has been that the flexibility and forecasting available has not required energy storage. The U.S. government fostered these lessons, including a members’ and users’ group to share experiences. While energy storage hasn’t been needed to get to these levels, there is great interest in making use of storage now that costs have come down and confidence in that technology is rising.

Government policies vs. markets still an issue

Energy storage is very new to the electricity market, despite pumped hydro storage built widely in the 1960s and 1970s as part of the utility investments in nuclear plant. Markets are still struggling to recognize what storage can do, and whether the benefits are captured by the owner or by others. There are  proposals to build 10,000 MW (roughly the amount of power of 8 nuclear power plants) using solar-plus-storage using batteries in the PJM region. These grid-scale plants face the challenge that prices in the wholesale market aren’t always the best guide to what is needed or what will be needed in a high-renewables future. Debates about the benefits of including solar-thermal plants using molten salt as heat storage in the supply mix ended almost 10 years ago but now are back again.

Pushing for the right thing

New federal spending for recovery, new rules for industry, new technologies all need active watchdogs looking out for the public. Our work pushing against the old ways in the electric power sector brings all this together. The electric utilities continue their work, both keeping the lights on and carefully (often slowly) responding to change. One grid operator that tries to lead on technology and innovation, PJM, is now starting work to get the rules sorted for solar-plus-storage. In March PJM began setting up a new Task Force to start work immediately (for completion by the end of 2020) on how solar-plus-storage fits into the electricity supply in 13 states from Illinois to North Carolina. With so many states, cities and businesses already showing their support for this combination of technology, this is overdue. PJM has at times looked to the federal government for clarification. On renewable energy, a swift move from Congress to stabilize the economy and the workforce building clean energy would keep PJM and other utilities on track.