Recently, I embarked on a week-long tour of energy conferences, including the ACORE Renewable Energy Policy Forum in Washington DC, the Climate Leadership Conference in Baltimore, and Bloomberg’s New Energy Finance Summit (BNEF) in New York City. While the conferences each had a different focus within the renewable energy and climate space, I noticed key themes in the various sessions and conversations that I had with attendees.
The age of energy abundance
“We’re entering an age of energy abundance.” While this statement is from a speaker at the Bloomberg event, supporting evidence was discussed at all three conferences. Many speakers noted that current and projected natural gas prices remain low and that wholesale electricity generation costs are falling as renewable energy generation with zero marginal cost comes online. Meanwhile, advances in energy efficient technology are driving down total energy use per capita. The combination of new, low-cost renewable electricity supply and energy efficiency seems likely to yield energy abundance for developed countries. Coming 50 years after many predicted we’d literally run out of energy, this is a remarkable turn of events. This new reality also necessitates a shift in mindset for policymakers, the energy industry, and consumers alike: instead of fearing a scarcity in our energy supply, it’s critical that we now focus on limiting energy’s environmental impact.
Instead of fearing a scarcity in our energy supply, it’s critical that we now focus on limiting energy’s environmental impact.
The challenge of intermittent generation
The next wave of policy innovation and technological progress supporting renewable energy generation will center around reliable, cost-effective integration of intermittent generation. Large scale wind and solar projects regularly win energy request for proposals (RFPs) with highly competitive prices, so it’s not unreasonable to think that tax credits and grants will be allowed to fade away. But now the next chapter begins: we need new rules guiding how intermittent supply is valued, larger wholesale energy markets, more energy storage deployment, and clear market signals to shift demand. More progressive policies in these areas are actively being discussed and implementation will enable continued rapid deployment of renewable energy generation.
All eyes on transportation
In 1990, the electricity sector was the single largest emitter of carbon dioxide emissions (CO2), responsible for roughly 25% more emissions than the transportation sector (the second largest emitter). Over time, the emissions profiles of the two sectors slowly converged, and in 2017 the transportation sector took the lead as the largest source of emissions . This statistic was clearly weighing prominently on conference attendees’ minds. Although none of the conferences I attended were explicitly about transportation or electric vehicles, all three included multiple sessions and much hallway conversation about the transportation sector, the environmental challenges it presents, and how it’s likely to evolve in the decades ahead.
Similar to the adoption of solar photovoltaic technology a decade ago, the EV story today is one of high growth rates on a very small existing base. Applying the solar adoption model to EVs today, conventional wisdom predicts that in another decade, we will see an exponential increase in the number of EVs on the roads globally. In fact, BNEF’s most recent Electric Vehicle Outlook predicts this number will hit 30 million by 2030. Activities and policies that will support this outcome, including an expanded public charging network, more EV options for consumers, less expensive batteries, and continued subsidies at the state and federal level are all currently or soon-to-be underway.
…in another decade, we will see an exponential increase in the number of EVs on the roads globally.
RECs remain a critical ingredient
All three conferences provided ample evidence of the critical role that renewable energy certificates (RECs) play in tracking the generation and use of renewable energy. RECs are indisputably the currency of renewable energy transactions, whether meeting renewable portfolio standards (RPS) or tracking voluntary renewable energy purchases. However, it’s challenging to maintain the accounting integrity of RECs in an age of distributed solar and cap-and-trade systems that overlap state RPS guidelines set up to protect the voluntary market. Going forward, I anticipate that electrification of the transportation system will bring even more tracking and attribution challenges. It seems clear that all market participants benefit when everyone is clear what a REC represents, when everyone can trust that a REC hasn’t been double-claimed, and when market rules are aligned. One concrete action in support of these outcomes might be for every tracking system to adopt a policy of all-generation tracking; the New England Power Pool (NEPOOL), PJM General Attribute Tracking System (GATS), and New York GATS have all been built this way and it helps with tracking across state boundaries.
The meta theme of continuous change undergirds everything in the energy industry and the tricky part — as always — is to know which topics will still be relevant two, five, and ten years from now. As I reflect on these recent industry conferences, I believe that these four themes — recalibrating to an age of energy abundance, addressing intermittent generation, decreasing transportation emissions, and supporting effective systems for tracking renewable energy generation and use — will stand the test of time.