GSA brings its buying clout to green energy
Utility companies and state regulators were urged Wednesday to prepare for a likely increase in the number of companies switching to carbon pollution-free electricity after the U.S. General Services Administration (GSA) committed its massive real-estate portfolio to going carbon-free.
The GSA bills itself as the nation’s largest property manager with oversight of more than 8,000 buildings plus an impressive fleet of cars and other vehicles. It is also, in casino parlance, a whale that will add a significant push for the utility industry toward a carbon-free future, according to panelists at the National Association of Regulatory Utility Commissioners (NARUC) Winter Policy Summit.
“We have huge real estate holdings which also makes us one of the largest purchasers of power around,” GSA Administrator Robin Carnahan told the audience.
Last month, the GSA got the ball rolling in a big way with a formal request for information (RFI) on procuring large amounts of carbon-free energy (CFE) to operate its properties around the clock. The RFI was a response to President Joe Biden’s executive order directing the government to basically convert its buildings to 100 percent CFE by 2030 and achieve net-zero emissions by 2045.
The order was seen Wednesday as a significant step toward bringing in other major power customers with their own commitments to decarbonization, in part because CFE can include nuclear and power from fossil-fuel plants and is not strictly limited to renewables such as wind and solar.
“The government is sending a market signal with this,” said Kathleen Barrón, executive vice president and chief strategy officer of Constellation, a major producer and distributor of CFE. “It’s not picking winners or losers among particular technologies, it’s saying, ‘if you are producing green energy, we are listening.’”
Carnahan told the audience of industry executives and state utility regulators that the executive order and an accompanying funding bonanza through the new infrastructure and inflation-control bills had created ideal conditions for a great leap forward in clean energy development. She urged the energy industry and the regulatory community that will oversee its deployment to act fast on what she called a “once-in-a-generation upgrade” of federal buildings of all sizes and ages.
“This is not a pipe dream,” Carnahan said urged. “There is both money and momentum available.“
At the same time, however, 2024 is an election year that could see Biden and Carnahan replaced by a Republican administration that could revoke Biden’s executive order on CFE. Even so, the mood around the NARUC conference in Washington was one of confidence that the increasing commitment to CFE by the business community would not be easily derailed, and the commitment by the GSA and other major customers to take part would be unlikely to deal a significant setback to the growth of green energy.
“This is now a priority for us just like Administrator Carnahan says it is a priority for them,” said Laura Landreaux, president and CEO of Entergy Arkansas, who said the GSA’s commitment to CFE was part of a significant ongoing shift of the regulatory and business landscape.
“For many years, our contribution to economic development was rooted in providing reliable, affordable energy to our customers, but now there is a third component, and that is providing clean electricity,” said Landreaux. “It is becoming more evident that is table stakes for our customers to help them drive their business as part of their own sustainability plans.”
Entergy Arkansas is already preparing a tariff request for providing CFE power to the GSA and other large business customers that will likely be filed later this year. Included in the plan will be a unique annual emissions audit that will be provided to Entergy customers.
The NARUC attendees were cautioned that as scaled-up production leads to lower CFE prices, such deals could eventually place regulators in the uncomfortable position of approving rates for commercial customers that may be noticeably lower than the rates paid by residential customers. At the same time, supply agreements like the ones the GSA is committed to should be seen as a form of risk management that will eventually lead to lower rates for all.
“New stuff always costs more than the old stuff early on,” said Ted Thomas, a former chairman of the Arkansas Public Service Commission. “But as it scales up, that situation can flip.”
Putting the GSA’s purchasing power and influence on the table should help turn such a hopeful prediction into a winning bet for the utility industry.
