EEI: Clean energy dominates annual power industry outlook for hard-working IOUs
America’s investor-owned utilities (IOUs) face numerous opportunities this year as they continue working to bring the nation closer to its clean energy future, according to experts at the Edison Electric Institute (EEI), which represents the industry on Capitol HIll and on Wall Street.
“As we look to 2021 and to all that we hope to accomplish this year, we will continue to center our efforts on maintaining the steady and strong transition to clean energy; modernizing the energy grid to make it more dynamic, more resilient, and more secure; and developing the innovative solutions our customers expect and deserve,” said EEI President Tom Kuhn.
Joining members of EEI’s executive team Wednesday afternoon, Kuhn led them in providing a virtual briefing on the state of the U.S. electric power industry, focusing specifically on EEI’s member electric companies.
Today, nearly 40 percent of the nation’s electricity comes from carbon-free sources, including nuclear, hydropower, wind, and solar energy, and carbon emissions from the U.S. power sector are at their lowest level in more than 30 years and continue to fall, according to EEI.
And since 2010, IOUs have invested more than $1 trillion to build smarter energy infrastructure and to integrate new generation, said Phil Moeller, executive vice president of EEI’s business operations group and regulatory affairs.
Collectively, IOUs are slated to reduce their carbon emissions at least 80 percent by 2050 compared to 2005 levels, with many pledging to reduce emissions even further and faster while retaining affordability, reliability and keeping rates steady, said Brian Wolff, EEI’s executive vice president of public policy and external affairs.
“At the same time, we really need to lean in and accelerate these efforts,” Wolff said. “It’s important for us to lead on clean energy.” And to provide all the options, IOUs still need to be able to use natural gas, wind, solar, and energy storage, as well as keeping nuclear and natural gas in the mix to help hasten their clean energy progress, he said.
“Achieving deep carbon reductions will require new, affordable, 24/7 carbon-free technologies,” said Wolff. He added that IOUs this year will focus on advanced, dispatchable renewables like superhot geothermal, and advanced power electronics; zero-carbon fuels, such as hydrogen or ammonia, that are produced by a variety of sources; advanced nuclear energy; carbon capture, utilization and sequestration, especially for natural gas facilities; and advanced demand efficiency and long-duration storage.
Clean energy policies are also a priority for IOUs this year, according to EEI executives, who said the institute is advocating for policies that support the clean energy transition, including getting critical transmission and energy grid infrastructure built more quickly, and that recognize the key role that electrification can play in helping to reduce emissions cost-effectively in other sectors of the economy, particularly the industrial and transportation sectors.
IOUs will need to invest even more than they already have to speed up the transition to carbon-free emissions that are needed to build the clean energy infrastructure that will hasten clean energy deployment, Wolff said. And to meet long-term clean energy and climate goals, for instance, IOUs need policies that advance carbon-free technologies through appropriations, authorizations and tax policy.
Additionally, lawmakers must support rapid investment in clean energy resources and the infrastructure needed to integrate it, while also supporting investments in the electric transmission system to integrate more renewables, new technologies and more clean energy into the energy grid both affordably and reliably, according to EEI.
Policies also should promote transportation and facilitate the buildout of electric vehicle (EV) infrastructure, added Wolff, noting that it reduces CO2 emissions and brings immediate improvements to air quality, while also leveraging the ongoing reductions in power-sector emissions.
“We need to take an economy-wide approach, including increasing vehicle electrification, and we are going to need nine-and-a-half million charging stations to support EVs,” Wolff said, pointing out that IOUs to date have invested more than $2 billion to build such infrastructure. “Our members are leading by example and gaining critical experience along the way that will help customers design and implement their own clean energy plans,” he added.
On the regulatory side, Moeller said that key issues for IOUs this year include: energy storage, middle-mile broadband, transmission planning and policy, environmental policy, resilience investments, and streamlined infrastructure siting and permitting. The industry also will closely watch actions taken by the Federal Energy Regulatory Commission (FERC) on several of these priorities, he said.
For example, EEI plans to advocate for regulatory policies that ensure electric companies are eligible and incentivized to participate in federal broadband grant programs, and are allowed to provide middle-mile broadband infrastructure. “EEI’s member companies are well-positioned to help close the digital divide by providing middle-mile broadband networks,” said Moeller. “This is a win for customers, particularly in underserved and rural communities.”
“In 2021 and beyond, EEI and our member companies will continue to advocate for policies that support progress, accelerate innovation, and benefit our customers,” said Kuhn. “We will work with the new administration, and with policymakers on both sides of the political aisle in Congress and in the states, to identify common positions, to build consensus, and to advance the policies needed to deliver a clean energy future.”
In addition to highlighting the policy priorities and clean energy transformation that IOUs are leading, EEI’s executive team outlined the industry’s COVID-19 response and recovery efforts; financial performance; and energy grid security and resilience.
And as part of the institute’s financial performance information, Richard McMahon, EEI’s senior vice president of energy supply and finance, said that EEI is creating value through enhanced sustainability reporting.
He highlighted plans by EEI to add new components to its environmental, social, and corporate governance (ESG) scorecard that will be released later this year to its member companies. Specifically, EEI will add cybersecurity components, as well as diversity, equity and inclusion metrics.
EEI created its model, industrywide ESG/Sustainability Reporting Template in 2018 to provide an annual report card for its member companies to highlight their progress on clean ESG and other areas that increasingly influence shareholder actions, McMahon said.
“We now are working with our member companies and the financial community to enhance the diversity, equity, and inclusion metrics and information that can be reported in the template,” he said, adding that EEI is “on track to release Version 3 of the template this year for our member companies to report 2020 ESG data and information.”
Additionally, EEI and the American Gas Association have worked with investors, natural gas suppliers throughout the value chain, and other stakeholders to develop the Natural Gas Sustainability Initiative, a methane-intensity reporting protocol designed to provide greater consistency, transparency and comparability.
“This reporting protocol is in no way meant to replace strong and cost-effective federal regulations on methane from new and existing sources throughout the natural gas supply chain, which we support,” said McMahon. “Instead, it is designed to complement regulations and to provide a meaningful tool to increase transparency and to facilitate improvements.”
This year, McMahon added, EEI is expanding its effort by engaging natural gas producers and midstream natural gas companies on a reporting platform that encompasses the entire value chain and calls for using consistent protocols to report their methane intensity.
If there was one main takeaway from the annual outlook, Kuhn summarized, it’s that “EEI and our member companies are committed to clean. The path forward is clean.”
