EEI outlook: Electric power industry continues leading clean energy transition
The Edison Electric Institute (EEI) and its member companies, which are the nation’s investor-owned electric companies, stand at a global inflection point as they work to quickly provide clean energy that is affordable, reliable, secure, and resilient, said EEI executive team members during their annual Wall Street briefing held Tuesday.
Since passage of the EEI-supported 2021 Bipartisan Infrastructure Law, federal funds are being awarded to support significant research, development, demonstration, and deployment for new clean energy technologies and the infrastructure that will be needed for IOUs to achieve their net-zero goals.
“We continue to lead implementation efforts to ensure that electric companies and state governments are coordinating and are ready to take advantage of this once-in-a-generation investment in America’s infrastructure,” said EEI President Tom Kuhn during the Feb. 21 event. “As important as it was to get this historic legislation across the finish line, there was — and still is — more work to be done.”
For instance, EEI cites siting and permitting reform as necessary to facilitate investment in critical energy infrastructure, such as transmission, renewable energy facilities, and natural gas pipelines and facilities.
In fact, studies show that to achieve a net-zero economy by 2050, the amount of transmission infrastructure in the United States will have to expand by two — if not three — times to support greater electrification and the integration of an increasing amount of clean energy, according to EEI.
But there’s one persistent challenge to deploying more clean energy: an inefficient siting and permitting process for critical energy infrastructure, said Brian Wolff, EEI chief strategy officer and executive vice president of public policy and external affairs.
“We don’t really have a coordinated system that is clear and transparent,” Wolff said, noting that EEI plans to continue working on the situation throughout the year and supports environmental and regulatory processes that are also clear, coordinated, transparent, consistent, efficient, and meet environmental requirements.
Specifically, according to Phil Moeller, EEI executive vice president of the Business Operations Group and regulatory affairs, EEI supports reforms in transmission planning, cost allocation, permitting, siting, and generator interconnection.
EEI has been working closely with the Federal Energy Regulatory Commission (FERC) on several of its rulemakings focused on such topics in the hopes of providing the industry with increased certainty, Moeller said.
“The siting and permitting process should become more efficient, more accountable, and more predictable given the nature of the investments involved,” said Moeller. “To meet the clean energy transition that we aspire to, if we don’t have the wires… and pipes to move it forward, then it’s all for naught.”
“So, we’re actually trying to promote a more holistic approach to transmission, not only in the local projects, but in most of the inter-regional projects that bring resources from where they’re produced to where they’re consumed,” he said.
EEI also wants to advance other key regulatory policies, such as the development and refinement of critical reliability standards; clear and stable policies for cost-recovery of unforeseen emergencies; and broader recognition of the importance and customer benefits of the regulatory compact.
For example, smart investments in adaptation, hardening, and resilience (AHR) allow electric companies, communities, and customers to operate throughout challenging conditions, said Moeller, who added that in a higher-cost inflationary environment, it’s critical that electric companies are able to make needed investments now that will help them deliver a resilient clean energy future tomorrow.
“While investments in AHR have increased significantly over the past decade,” he said, “more investments are needed to meet the challenges of climate change and to enhance the overall reliability and resilience of the energy grid.”
“Despite these challenges and others, we are focused on the opportunities before us — and we are certain that our industry’s future is bright,” Kuhn said.
In addition to regulatory efforts, EEI member companies will continue their #Committed2Clean efforts, including around new and emerging clean energy technologies that can ramp up their progress in the clean energy transition, according to Emily Fisher, EEI executive vice president of clean energy and general counsel.
“Recent innovative technology developments,” such as the design and certification for a small modular nuclear reactor and those around nuclear fusion, “really underscore how our research, development, demonstration, and deployment efforts can further revolutionize our clean energy landscape,” Fisher said.
As part of EEI’s efforts to accelerate these efforts, Fisher yesterday also told Wall Street analysts, bankers, and investors during the EEI briefing that the Edison Foundation this year is launching the Institute for the Energy Transition (IET), which will work on the demonstration and deployment of key energy technologies, including hydrogen, battery electric storage, carbon capture storage, and advanced nuclear technologies, among others.
The IET specifically will focus on related economics and aims to provide accessible qualitative summaries of key carbon-free technologies, identify deployment barriers, summarize key demonstration projects, and develop materials to educate stakeholders.
In discussing other 2023 industry priorities, EEI executives outlined work around clean energy and environmental, social, and corporate governance (ESG); energy grid reliability, resilience and security; electric transportation; storm response and wildfire mitigation; and diversity, equity, and inclusion (DEI) and workforce development.
EEI executives also highlighted the role of new and developing carbon-free technologies; federal and state regulations; financial performance; and ongoing efforts to meet customer expectations and to support customers in need.
Richard McMahon, EEI senior vice president of energy supply and finance and chief ESG officer, reported that the industry remains the most capital-intensive industry in America.
For the eleventh consecutive year, “we expect another industry record, with total capital expenditures projected at $154.7 billion in 2022,” McMahon said. “And the industry’s average credit rating remained at BBB+ for a ninth straight year in 2022.”
And according to EEI’s 2022 Industry Financial Highlights report, the EEI Index returned 8.8 percent in the fourth quarter and 1.2 percent for the full year, while “electric utilities gave investors a relative safe haven and positive return in 2022’s market weakness.”
“The full-year 2022 picture shows utilities far ahead of major indices on a relative basis,” according to the Feb. 21 report.
