John Carrington is CEO and director of Stem.
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Not even 100 days into his administration, President Biden's sense of urgency in tackling climate issues and driving a clean energy revolution is clear. Here is a look at how key recent trends in energy and climate — including remarkable clean energy progress under dire circumstances — will lead to real and sustainable breakthroughs in 2021 and beyond.
Climate: Undeniably, inescapably a top-tier concern
Wildfires devastated the Western U.S. last year and broke records in California, where Bay Area residents awoke to darkened, smoke-filled orange skies last September. On the East Coast, millions sat in darkness in the wake of Hurricane Isaias some eight years after Superstorm Sandy’s supposed wake-up call.
Events like these make it increasingly difficult for policymakers, regulators and electric utilities to avoid developing and implementing suitable responses. People want answers, accountability and a reliable grid, particularly in California, where longstanding reliability fears have manifested in rolling blackouts. In New York, customers expected resilience benefits and improvements that failed to materialize since Superstorm Sandy, even with billions of dollars in ratepayer investment.
Despite consumer outcry, states have failed almost entirely in crafting plans to produce a more resilient grid. California regulators have significant climate and resilience ambitions, and they continue to lead other states but still have room to improve on policy proposals that are largely dependent on fossil fuels.
We need to do better in 2021. Clean resilience solutions exist and are already protecting communities across the nation, with solar-plus-storage providing safe, reliable backup power and delivering year-round benefits.
It is time for policymakers to bring these threads together, declare an affirmative, proactive vision for their state’s electricity system, and issue a roadmap to achieve this objective.
A federal government ready for action
Nowhere is the opportunity to shift from talk to action more evident than at the federal level. President Biden entered office with unexpected Democratic majorities in both houses of Congress. The U.S. does not have a national energy policy, but a couple of key decisions at a federal level will accelerate state actions and interests.
Time and experience have validated Biden’s message on clean energy — it creates jobs and addresses the climate crisis — while the costs of climate inaction have only become clearer.
Clean energy infrastructure investment is therefore central to Biden’s plan to boost the economy through smart energy storage, renewables and electric vehicles (EVs), neglected by Washington in recent years.
A Biden administration could also use its influence to further another of 2020’s breakthrough ideas: time-matched renewable energy credits (discussed below).
Regarding federal regulation of wholesale energy markets, the rationale behind FERC Order 2222, arguably last year’s biggest policy development, was refreshingly economic and apolitical: excluding distributed energy resources (DERs) from wholesale markets artificially limits competition and raises prices. Going forward, Order 2222 will enable DERs to bring new renewable capacity online quickly when and where they out-compete traditional fossil generation.
Expect favorable Order 2222 implementation under new FERC leadership and perhaps renewed interest in issues, including carbon pricing, that have previously encountered headwinds.
At the very least, the extension of the federal solar Investment Tax Credit and new research and development funding for energy storage, recently signed into law under the omnibus spending bill, portend greater things to come. Prioritization of a federal standalone storage ITC can drive significant progress in the renewable energy transformation.
Building on rapid, unpredictable state progress
Last year also showed that change can happen rapidly, especially at the state level. California’s new EV mandate — all new passenger cars and trucks, and over half of medium- and heavy-duty vehicles, must be emissions-free by 2035 — will catalyze vast EV infrastructure investment starting now to enable interim targets in just three years.
Virginia enacted sweeping legislation requiring 100% zero-carbon electricity by 2050, joining a half-dozen other states with similar targets. If this can happen practically overnight in a state where barriers to clean energy were extensive, it can happen anywhere. Arizona looks to be setting its own 100% target, and other states will no doubt follow.
But as important as goals are it really needs to be about execution. Virginia’s draft regulations on its energy storage target, for example, fall short of the ambition and urgency contained in the legislation, and the state’s focus on large-scale, front-of-meter installations ignores the need to provide customers with clean energy options and resilience solutions that strengthen the distribution system.
The continued evolution of corporate clean energy leadership
Policy helps drive markets, but business needs will always outpace the grid infrastructure and the regulatory environment.
Google’s announcement last fall that it would begin sourcing 24/7 carbon-free energy is the latest step in the evolution of corporate clean energy demand that has long provided innovative, decisive support for renewables projects beyond policies and mandates.
Conversely, complying with California’s new EV order will require logistics and other companies to develop new strategies for charging infrastructure and fleet management well beyond any support regulation could provide but within the timeframe of vehicle leases they are signing today.
The solution set for these companies, which both are driving grid transformation, want to save money on energy and participate in markets, is intelligent energy infrastructure. It’s not just about renewables, energy storage or having resilient, reliable power; it’s about all of the above, and developing a durable, adaptable corporate energy strategy.
Corporate leaders can draw from successful experience in the technology industry. At the dawn of the ‘90s, tech was fragmented, with inexperienced users relying on disparate, single-purpose applications and uninformed buyers making huge purchasing decisions in a silo. Recognizing the extravagant waste of all this, companies created the chief information officer role, and the networking revolution was born.
Energy has begun a similar transformation, with elements of a networked, intelligent infrastructure coming into view and companies developing an incipient awareness of the cost of project-by-project thinking. Mindful of CIOs’ impact, companies have started creating the roles of chief energy officer or chief sustainability officer to foster a common energy strategy and drive comprehensive, integrated solutions across the enterprise.
The drivers transforming our energy system — compelling economic benefits from new technologies, consumer demand for clean energy and broad concern about impacts from extreme weather events, to name a few — are here to stay. Despite a difficult year, we made great progress in 2020. And with an incoming administration determined to stimulate the economy and create jobs leveraging clean energy investment, the momentum will only increase.
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As CEO and director, John Carrington leads the energy storage and analytics movement at Stem. He came to Stem from MiaSolé, the world’s largest CIGS-based thin-film solar company, where he was CEO and director, and he previously held leadership positions and First Solar and General Electric.