Public Power Decarbonization Series - Part 2: The Current Crisis of Slow Utility Decarbonization
- Aug 24, 2021 2:35 pm GMT
Public Power Decarbonization Series
This article is Part 2 of a three-part series on the role of Public Power in decarbonizing and electrifying our society and economy. In the first article we establish the clear imperative to decarbonize and what that means for Public Power. In Part 2, we review the Crisis of Slow Public Power Decarbonization. In Part 3, we connect the dots between decarbonization and distributed energy resources (DER), showing a second imperative for public power: integrating DER into utility grid modernization. As we continue this series, we’ll explore a wide variety of impacts, constraints, risks, costs and benefits, including supply chain issues, the broad impact of decarbonization on our society and economy, and the upsides of an Electrify Everything Economy.
Public Power leadership is essential, now more than ever
Our nation’s citizens and businesses are watching to see how electric utilities react to disruptions to power service and integration of renewable energy. If we are serious about addressing the “Code Red” climate emergency described in the latest International Panel on Climate Change (IPCC) report, electric utility monopolies and federal agencies must lead with a coordinated, genuine and serious stand to decarbonize the grid as quickly as possible. Failing to accept the mantle of leadership and to accelerate decarbonization will stall policy initiatives, raise transition costs, confuse the public and erode public trust, and lead to independent decarbonization efforts that leave public monopolies and government agencies in a diminished and disempowered follower role.
Public Utilities Serve an Enormous American Footprint
Figure 1: U.S. Utlities by Ownership Type
Figure 2: Utility Territories by Ownership Type Source: U.S. Energy Information Administration
Approximately 2,000 local, publicly owned utilities (POUs) provide electricity distribution services to local communities across the US, accounting for 24M customers or about 13.5% of the nation's population. Larger publicly owned utilities (POUs) may generate their own power, but more typically most POUs purchase power from joint action agencies formed to pool POUs to build bulk power generation facilities. POUs, typically departments in city governments, are well positioned to execute the goals of city government concerning decarbonization, electricity resilience, transportation and building electrification, etc.
POUs answer to the citizens of local governments, typically overseen by an independent board, city management or the local city council. Unlike Co-ops, POUs have dense, relatively compact service boundaries, which makes energy transition more economic and hopefully, more rapid. Unlike Investor Owned Utilities (IOUs), POUs have a light touch from state regulators and do not answer to private shareholder interests. That said, POUs may encounter conflict and risk when strategies and planning are not in alignment with those of the citizens they serve and their representative governments. They also face economic challenges to pay for grid modernization and decarbonization initiatives since they have to balance those costs with other city budget line items. With equitable federal funding, these local municipal POU territories are likely to be where the most impactful decarbonization innovation will occur. Innovation through the smaller POUs will scale up to support the larger IOUs more easily than IOU decarbonization innovation can scale down.
Federal Agencies Must Align with Federal Climate Change Policies and Set a Leadership Example
The following federal government agencies focus on electricity policy and generation, transmission and distribution:
- The US Department of Energy (US DOE) oversees research at 17 national labs, supports development and implementation of national energy policy, and has a critical role in dispensing grants and loans to drive innovation.
- The Federal Energy Regulatory Commission (FERC) is a federal agency with oversight over interstate wholesale power transmission. FERC's mission is to ensure economically efficient, safe, reliable, and secure energy and energy services for US consumers, at a reasonable cost through appropriate regulatory and market means, and collaborative efforts.
- Federal Power Marketing Administrations (PMAs), include Bonneville Power Administration (BPA), Western Area Power Administration (WAPA), Southwestern Power Administration (SWPA), and Southeastern Power Administration (SEPA), which market power to about 1,200 POUs and Co-ops. The cost-based hydroelectric is power produced at federal dams operated by the U.S. Army Corps of Engineers (Corps) and Bureau of Reclamation.
- Tennessee Valley Authority (TVA) was established by Congress in 1933 to provide rural electrification, flood control, and navigation along the Tennessee River. TVA has grown into a large generation and transmission monopoly that controls electricity policy in parts of seven states - Tennessee, Alabama, North Carolina, Kentucky, Virginia, Mississippi, and Georgia, serving ten million people in an 80,000 square-mile territory.
Focus: TVA and TVPPA distribution utilities
Tennessee Valley Public Power Association (TVPPA) member utilities purchase bulk electricity exclusively under the TVA’s monopoly rules. These member companies serve 10M customers, or about 3% of the total US population. They provide electricity services to seven out of 50 states! This is an enormous electricity-serving footprint. As climate change becomes undeniable even for the most dogmatic, the customers of these utilities look at their own carbon footprint and turn to their local utility to help them reduce their community’s Greenhouse Gas (GHG) impact. But current rules for TVPPA members limit what these mostly small, local utilities can do under the TVA monopoly power generation rules. In fact, TVA's long-term 2019 agreement with TVPPA members requires local utilities to purchase electricity exclusively from TVA for 20 years with a provision that calls for the contract to renew automatically each year. It also requires 20 years' notice for termination of the contract, which locks in local Public Power Utility companies in the agreement. In other words, TVPPA members have no choice other than to purchase TVA power and cannot implement their own climate-friendly generation sources.
These “never ending” contracts are currently under dispute by the Southern Environmental Law Center and TVA is petitioning Tennessee federal courts to simply dismiss the suit. To date, the federal courts have not dismissed the suit.
Many environmentally conscious customers in the TVA monopoly territory are very frustrated with the lack of progress made by TVA in embracing renewables and even in allowing its TVPPA members to provide local clean energy generation capabilities for their end customers. But we must recognize that these utility customers have alternatives and soon, in the face of utility inaction, some of them will begin to act on them. Business as usual (BAU) is no longer an option, but TVA actions indicate a resistance to change and continued reliance on fossil fuels and highly centralized power generation and control.
Figure 3: Current Generation Mix and Bulk Generation Unit Types for Tennessee Valley Authority (TVA)
A case in point is TVA resource planning. The current generation mix for TVA is shown in Figure 1. The bulk of generation stands at 45% coal and natural gas, 40% nuclear and 11% hydro (96% traditional sources). In 2021, Wind and Solar comprise only 3% and energy efficiency rounds out the total with 1%. TVA does not even separate data for wind from solar because it is such a miniscule part of their generation portfolio. Over half of TVA’s bulk generation units are fossil fuel-based. Stated TVA resource plans are limited to centralized generation, projecting 80% decarbonization by 2035 (this is based on TVA's highest carbon emission levels from 2005) primarily through conversion to natural gas plants to reduce methane emissions from today’s coal plants. Given the critical imperative to decarbonize as fast as possible in the face of the growing Climate Emergency, TVA’s decarbonization goals are inadequate. In short, TVA resource planning is simply not good enough for its customers or as a leadership response.
Our government, even quasi-government monopolies like TVA, should and must be held to a higher standard and aligned with federal climate change policies. Current TVA leadership simply does not take the Climate Emergency seriously, nor do they set an example for other monopoly utilities, nor do they allow their wholesale customers the freedom to lead in their absence. In fact, TVA chose its worst carbon-producing year in their history, 2005, as the metric in how it self-promotes its success in decarbonization to the public and its end users. Using this worst-case scenario, TVA claims that they have already reduced carbon emissions by 63% (in 2005, nearly all of its generation facilities were coal), and most of that reduction was due to an increase of 1,600 megawatts in new nuclear capacity. Again, using the same worst-case scenario, they recently set the goal to retire coal plants by 2035 and reduce emissions by 80% by 2035, which means their goal is to reduce emissions just 17% in the next 14 years. TVA’s “decarbonization plan” actually increases their natural gas bulk generation resources, has no significant plans for increased use of grid scale renewables, and neglects to even account for rapid customer DER growth.
This planning is not ambitious in the least, and according to the landmark IPCC report from August 9, 2021, it is simply too little too late. Also, given this vision, how does TVA even pretend to measure real progress in the 14 years leading up to its 2035 objectives? Where is a transparent transition plan? And, if they were to meet those goals set at such a low bar, would progress made even be attributable to their plan, or would it be based on TVPPA customers opting out and finding other sources of clean energy generation? The overwhelming and alarming conclusion is that the unfortunate reality is that TVA has set goals that are uninspiring, unambitious, unaligned, disingenuous, and opaque.
Focus: US DOE and Fossil Fuels
But TVA is not the only example of a government electricity organization out of alignment with stated US and global decarbonization policy objectives. US DOE continues to fund “Coal FIRST” research at over $80M year, spending over $28M annually on the National Energy Technology Lab, a facility that is totally focused on fossil fuel generation. Remarkably, the 2021 budget request for the Fossil Energy Research and Development Program (FER&D) is $931M in 2021. Even the DOE’s naming of the program, “Coal FIRST” is offensive. Why should the US taxpayer fund coal research, the dirtiest fuel on the planet and also not economically competitive with solar, wind, and natural gas?
The following is DOE’s FY2021 budget request focused on continued propping-up of the coal industry:
Advanced Coal Energy Systems & CCUS (FY 2021 Request: $546.15M) This program’s Budget Request is focused on solving the Nation’s most pressing fossil energy challenges: advancing the Coal FIRST (Flexible, Innovative, Resilient, Small, Transformative) initiative through R&D on technologies for coal plants of the future that are highly efficient and flexible, with zero to near-zero emissions; improving the performance, reliability, and efficiency of the existing coal-fired fleet; reducing the cost and risk of carbon capture for commercial deployment; and creating new market opportunities for coal. (Source: US DOE Fossil Energy FY 2021 Budget in Brief)
More remarkable still, a mere two days after the IPCC mandate to immediately act to eliminate our reliance on fossil fuels by stopping all burning & emissions, President Biden reached out to Saudi Arabia to encourage increased oil production, sending a very confusing message to the world just months before the COP26 IPCC round in Glasgow, Scotland. We still have a long way to go, but the message to US leaders on the Climate Emergency is abundantly clear: JUST STOP! As our parents used to say, “Get with the program!” The only money spent on fossil fuels should be on planning for immediate cessation of all activities, from development to distribution to combustion. In no uncertain terms, we should start by zeroing out this budget and shutting down DOE’s Office of Fossil Energy in order to stop wasting OUR federal tax dollars and align our national focus with our compelling objective.
Make no mistake. The United States and a large part of the rest of the world are already moving rapidly to “electrify everything” by decarbonizing electricity generation and electrifying the transportation and building sectors. To its credit, the Biden Administration has challenged the auto industry to a goal of 50% of its fleet becoming electric vehicles (EV) by 2030. And, the auto industry has agreed, with several automotive companies planning even more aggressive timelines than the President has requested. Public transportation is rapidly becoming electrified.
There may be a transitional requirement for some vestigial amount of fossil fuel-based energy generation, but the fossil fuel-based energy sector’s glory days - where coal, oil and gas companies always got what they asked for from government agencies - are already over. Having moved past outright climate change denial, it’s now time for government to stop deferring and deflecting and to set ambitious but realistic goals and policy. The time for talk and mixed message policy and goals is over. The public wants real action on the Climate Emergency, and real action must begin with the Decarbonization Imperative for Public Power, with pressure on federal agencies and local utilities to accommodate an immediate transition.
If you haven’t already, we encourage you to read the IPCC’s latest report on climate change. It is truly a Code Red dire warning from over 100 international scientists and 130 authors. The vast majority of humans now believe that climate change exists and recognize that carbon GHG emissions from humans are the cause. With electric power and transportation making up more than half (54%) of emissions, those are the two target industries to focus on. Electrify everything and decarbonize the grid. It’s a simple idea (we are NOT saying it is a simple effort), but we need government, utilities, and the transportation industries all rowing in the same direction. And, we need it now.
Take Action! Sign our Petition!
If you are also frustrated with government’s mixed policy messages, take action by signing our petition to eliminate all taxpayer funded research for coal and eliminate DOE’s Fossil Energy Research and Development Program (FER&D).
Click on this link to sign the petition below: https://www.change.org/HaltCoalResearchFunding
Petition to House Committee on Energy and Commerce, Energy Secretary Jennifer Granholm, and U.S. Senate Committee on Energy and Natural Resources
Coal combustion produces more greenhouse gases (GHG) than the combustion of any other fossil fuel. Although natural gas is also a big contributor to GHG, it produces about half the emissions of coal. Yet our federal government spends over a billion dollars annually on coal research. In fact, there is a Department of Energy (DOE) national laboratory, National Energy Technology Laboratory (NETL) that is almost completely dedicated to coal research. The DOE funds a "Coal FIRST" initiative at over $80M per year. DOE's Fossil Energy Research and Development Program (FER&D) FY2021 budget request is $931M with $546M targeted for Advanced Coal Energy Systems.
Even if climate change was not an issue, coal is expensive when compared to other power generation sources. Solar photovoltaics and wind are now the cheapest form of energy generation with natural gas and geothermal a distant third and fourth cheapest. Both solar and wind costs are rapidly decreasing, making the argument for funding any fossil fuel, but especially coal, a ridiculous waste of taxpayer money.
This petition recommends the immediate defunding of all coal research. It further recommends the elimination of DOE's Fossil Energy Research and Development Program (FER&D) and repurposing of NETL to support retraining of coal industry workers with renewable energy and energy storage technologies. We recommend that NETL leads Public-Private partnerships to establish factories in historic coal producing regions to supply US manufacturers with parts and raw materials to make America the world leader in producing clean energy products and services.
This is a win-win for the American taxpayer, coal producing regions, the environment, and American industry. Please sign the petition if you agree.
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