COVID-19 won’t stall growth of green energy, NARUC panelists say
The rapid expansion of renewable energy in the United States has enough momentum behind it to overcome any headwinds caused by the COVID-19 pandemic, panelists at the National Association of Regulatory Utility Commissioners (NARUC) Summer Policy Summit said on Tuesday.
Optimism that the U.S. economy will bounce back relatively soon once the novel coronavirus finally does fade away means that states and utilities will not have to alter their goals of replacing fossil fuels with clean renewables beyond a few delays and possibly some regulatory tweaks. Renewables, in fact, could even get a boost from policymakers who see green energy as a job-creating priority.
“When asked about the three-year trajectory, we see strong confidence going forward,” said Gregory Wetstone, president and chief executive officer of American Council on Renewable Energy (ACORE). “There are headwinds now, but we will get past them.”
Utility companies have taken a blow from the pandemic that appears to be glancing, although noticeable. Electricity demand is down due to the closure of businesses, schools and other public buildings, some of which will not be reopening. At the same time, the sudden surge of laid-off and cash-strapped customers are endangering utility cash flows.
Renewable energy projects also have experienced some loss of traction as manufacturing of turbines and other equipment has slowed down due to scattered plant closures and as the permitting process becomes even slower as litigation and agency meetings were postponed.
NARUC said that around 600,000 jobs in renewable energy had disappeared amid the COVID-19 crisis after employment had been growing at a 10.4 percent clip since 2015.
“It’s fair to say COIVD has had an impact on us,” said Ben Fowke, chairman and CEO of Xcel Energy, and the current chairman of the Edison Electric Institute.
At the same time, demand for renewable energy remains firm, thanks to customer demand and goals for carbon-emission reductions that remain in place. According to NARUC, 23 states and 50 electric utilities have committed to ambitious carbon-reduction targets with 15 utilities on track to meet rapidly approaching milestones by 2025. In addition, employment in the renewable energy sector enjoyed brisk growth prior to the COVID onslaught and will likely be looked upon favorably as legislators in Washington and state capitals look for ways to get people back to work as quickly as possible.
The input from the members of the virtual panel indicated that COVID would not result in much new heavy lifting on the part of regulators, although it will be important for them to keep the growth of renewables on track. “We are dealing with climate change as well as with COVID and we can’t forget the climate change part,” said Commissioner Sarah Hofmann of the Vermont Public Utility Commission.
Hofmann and the other panelists put forward some ideas and also some caveats that would keep the ball rolling on renewables amid the murky COVID situation:
• Monetizing tax credits are a key to financing renewables projects. Direct tax credits for projects would eliminate the need to negotiate deals with Wall Street firms that specialize in tax-equity deals.
• Don’t squeeze out other fuels. Natural gas remains a “bridge fuel” and may be more important in some parts of the country than in others.
• Maintain reliability. “If we don’t keep our eye on reliability, the transformation could come to a screeching halt,” said Fowke.
• Now may be a propitious time for innovative pilot programs that assist residential customers with making the most of rooftop solar and net metering.
• Streamline the regulatory process. “If it’s a seven-to-12-month litigated process, then it kind of misses the mark of what we are trying to do now,” said Jeffrey Ackermann, chairman of the Colorado Public Utilities Commission. “But sitting here in July 2020, we aren’t going to entirely transform the regulatory process.”
• Continue to work on reducing transmission bottlenecks. “Right now, it’s more a question of will rather than economics,” said Fowke.
Above all, the panelists concluded, regulators need to maintain a steady hand on the expansion of renewables and not be tempted to throw their weight behind any one group priority.
“It is important to not offer one set of customers a subsidy at the expense of another set of customers,” Fowke said. “Make sure the economics are fair to all of our customers.”
