Industry groups highlight what’s needed to meet growing energy demands
Chief executives from the nation’s leading energy trade associations agree that surging demands on America’s electric grid require both a modernized and expanded electric infrastructure and natural gas supply infrastructure to meet the needs of an increasingly electrified economy.
“We have an exciting opportunity to develop infrastructure that we need to ensure that power flows across the country very efficiently,” said Edison Electric Institute (EEI) President and CEO Dan Brouillette on Jan. 23 during the United States Energy Association’s (USEA’s) 20th Annual State of the Energy Industry Forum (SOTEI). “That’s something that’s both exciting but incredibly challenging. Not only from a technology standpoint, but from a regulatory and legal standpoint, as well.
“We want to get these things right; we have to get these things right,” Brouillette said during the first panel discussion, which focused on the increasing electrification of the nation’s economy and the growing interdependence of natural gas supply, electric and gas transmission, and growth of inverter-based resources on the grid.
Abigail Hopper, president and CEO of the Solar Energy Industries Association, thinks that in the context of interdependency and optionality, all of the trade CEOs also agree that things like transmission buildout, interconnection reform, clarity on pricing and regulatory policy and the legal framework is critical.
“It doesn’t matter what flavor your electron is — we need certainty,” said Hopper.
Indeed, said EEI’s Brouillette, the industry wants optionality in moving energy around.
“Optionality for consumers ultimately will lead to affordability. We also want it for national security reasons,” he said. “We want to ensure that not only is the infrastructure resilient and reliable, we want to make sure it’s secure. The way you do that is to provide optionality and allow electrons to move, regardless of what may be happening to the grid itself — be it from a kinetic attack or a cyberattack or a natural catastrophe like a hurricane.”
Maria Korsnick, president and CEO of the Nuclear Energy Institute, encouraged her peers to think globally and not just about what’s going on in the United States.
“I think one thing that the war in the Ukraine has taught all of us is that this is very much a global, interconnected market and nuclear is no different,” said Korsnick, adding that Russia is 70 percent of the export market for nuclear plants, while China is building 20 reactors right now.
“What that means is that China’s supply chain is up and running to support itself right now,” Korsnick said. “But it’s not going to take much for both of those actors to be even more aggressive in the export market. If you take a step back and look at what we want to look like in 30, 40, 50 years from now, the United States simply has to be relevant in the commercial nuclear market.”
According to Pulitzer Prize-winning author and renowned energy expert Daniel Yergin, vice chairman of S&P Global, there is and should be more concern about geopolitics.
“Thinking has to catch up with the realities of energy and the energy transition,” said Yergin during the event’s opening keynote conversation with USEA President Mark Menezes.
Yergin mentioned the phrase “multidimensional energy transition,” which he said “means in terms of different fuels, in terms of technology, it means different paces in different parts of the world and different approaches to it.”
Menezes agreed, noting that it takes every type of fuel and developing technology to be able to modernize the nation’s energy systems, which are becoming much more interrelated.
Regarding gas, for instance, Yergin said there’s some controversy about LG exports from the United States. However, without LG exports, Ukraine would have been lost because Russian President Vladimir Putin cut off the gas supply.
“Putin thought he could fracture the coalition supporting Ukraine and it failed,” he said. “It failed because of LNG and 40 percent of that LG came from the United States.”
This “huge geopolitical impact,” Yergin said, continues to be absolutely critical globally from a political position because “Putin hates U.S. shale for this reason while for Europe, it’s been really positive and has kept their economy afloat.”
If the U.S. stopped exporting LG, then Yergin said it would be a huge shock to the world economy and to America’s credibility as a partner.
“LG has now become part of the arsenal of NATO, so I think it would be deeply alarming for the Japanese and for the Koreans,” he said.
During the second panel discussion, Karen Harbert, president and CEO of the American Gas Association, said that on the natural gas side of things, the nation has record supply, record production, record consumption, and record exports.
“We grew more last year than we have in the previous 12; we added 733,000 new customers. Why? Because natural gas is an incredibly popular fuel. Why? Because it’s the most affordable way to heat your house or cook your food by a factor of three,” said Harbert. “And we’ve been able to maintain that low price even with the exports we’re seeing because of the abundant supply and our efficient transmission and distribution network — which as everybody has already pointed out, we need more of.”
The larger conversation, she said, is that all energy stakeholders are enabling the economy of the future.
“If we look at and take what the Biden administration has told us repeatedly, that China is our biggest competitor, then we need to enable a much quicker advanced manufacturing revolution in this country,” she said. “We need to make more here and natural gas plays a role, whether it’s a chip manufacturer or a data center, you can’t accomplish the nation’s economic ambitions or energy security needs without natural gas.”
Each energy industry representative seemed to think the same about their particular sector. They also agreed that a beneficial regulatory environment is paramount to success.
“What am I worried about? Prescriptive regulation,” said Harbert. “We need permitting reform and we need to meet the needs of our customers, who want choice.” There are currently 25 states that have passed legislation preserving that energy choice, she added.
Jim Matheson, CEO of the National Rural Electric Cooperative Association, pointed to the most-recent periodic risk assessment by the North American Electric Reliability Corporation that for the first time ever names public policy as a primary risk.
“Public policy is now the primary risk in terms of electric reliability,” Matheson said, “and we’re seeing it play out in front of us right now.”
For example, look at the power plant greenhouse gases rule, he said, which is based on two technologies that aren’t proven today but may be mandated to make happen by 2031.
“I think that’s bad policy,” said Matheson. “I think it’s illegal. I don’t think it meets the need nor meets the standards of the Clean Air Act and we’ll see where the final rule lands in terms of if it’s changed at all from the draft rule.”
Matheson called it an example of policy going in the wrong direction with a one-size-fits-all mandate that would rely on technologies that aren’t yet mature, with the hope that somehow they’re going to be in place in time.
“So, we have a positive good-news story to pursue here, but we’ve got to also acknowledge the risks to meeting that need,” he said. “We’ll continue to be a voice advocating for rational policy.”
