Renewing public policy on renewables

The unpredictability of wind energy will become more problematic as the country aims to deliver more remotely-sited generation to population centers on the east and west coasts. The U.S. Department of Energy and others have argued that geographically dispersing wind turbines nationwide might help to dampen the broad swings in available wind energy, but this provides no assurances that the energy will be where we need it, when needed.

Massive new infrastructure at astronomical costs would be required. The US DOE envisions transforming millions of square miles of land into a massive wind energy facility with 19,000 miles of new 765 kv transmission lines criss-crossing the country to deliver the power. Up to 275,000 MW of redundant conventional-fuel generation would also be needed to ensure reliable dispatchable electricity.

Last week, Lisa Linowes of WindAction presented this dilemma and offered a solution at the Indiana State Bar Association's Fall Utility Law Seminar. (A copy of her presentation can be seen here).

It is well established that the power market responds to market signals. Current policies which encourage renewable generation at the State level (renewable portfolio standards "RPS") and at the Federal level (production tax credit) reward all renewables equally for placing a megawatt of energy on the grid. There is no adjustment to the subsidy based on time of day or seasonal demand requirements nor is there an adjustment for location of the power facility.

This has created artificial and unsustainable market pressures. These policies are creating the very problems which system planners are scrambling to solve through more transmission and fast-tracking of projects they do not need.

If renewable subsidies discriminated between those renewables that produced close to load and during the time of day and year when the energy was most needed (i.e. capacity rather than energy), energy experts report the response in the market would be almost immediate. The need for expansive transmission would drop off. More renewables would be proposed for sites closer to our population centers and that can service our peak demand periods. Very likely, the market would dictate less wind turbines in remote areas, with a larger emphasis on urban towers and offshore wind.

This consumer-centric approach is aimed at meeting load needs. The market will decide which renewable solutions best meet the goal. Rather than seeing 125 MW of unpredictable wind built we might get 25 MW of reliable biomass; rather than remote solar generation in the Mojave desert requiring 100's of miles of new transmission, we may see a greater effort to build rooftop solar in California's cities. Reliable generation would mean less need for storage, less redundant generation, and a better opportunity for replacing fossil fuel generation with renewables rather than merely displacing some fuel.

While public policy regarding renewables has helped this emerging market, it's time these policies were amended to better suit the public's needs. It is time to abandon nebulous plans to reinvent our existing system to accommodate a bias towards unrealistic renewable sources, and adopt consumer-centric, market based policies that will move us towards real world, reliable solutions.