Last week, Energy Secretary Ernest Moniz presented the Obama administration’s final wish list to the incoming Trump administration, in the form of the second installment of its Quadrennial Energy Review. QER 1.2, as it’s called, is the highest-level public statement from the outgoing Obama administration on its energy priorities and policies, with 76 recommendations focused on securing and modernizing the electric grid.
Much of the news coverage has focused on the report’s cybersecurity warnings and calls to action -- specifically, its citation of Russian-orchestrated cyberattacks on a Ukrainian utility “as an indicator of what is possible" for the U.S. grid. It’s an important topic, given the reports by U.S. intelligence agencies of Russian hacking into the recently concluded election, and the ultimately false, though thought-provoking, reports this month of a hacked laptop at Vermont utility Burlington Electric.
But QER 1.2 also contains a long list of Energy Department ideas for modernizing the grid. Some of them come with big price tags -- $350 billion and $500 billion required to upgrade grid infrastructure nationwide, increased funding for nuclear power, or the tens of billions of dollars it’s seeking to invest from its loan guarantee program.
Others are cheaper, like programs to educate local and state utilities on technology and policy, or employment development programs to help replace the aging utility workforce.
Distributed energy is also an area of focus, with a proposal to “significantly expand existing programs to demonstrate the integration and optimization of distribution system technologies,” and extending cybersecurity planning and standards to include distribution and behind-the-meter assets.
The first version of the QER, released in April 2015, called for $3.5 billion in investment to modernize and strengthen the power grid, amidst a total of 63 proposals for the electricity, oil and gas, and transportation sectors. Of those, 21 were fully or partially enacted into law and 29 were implemented by the Obama administration. At Friday’s event, Secretary Moniz made the case for bipartisan support in Congress to push these new proposals forward.
It's unlikely that DOE’s new ideas can expect the same success rate with President-elect Donald Trump, incoming DOE secretary Rick Perry, a DOE transition team that’s already asking for the names of climate-change researchers, and a U.S. Congress controlled by the Republican Party.
In light of these realities, many of the suggestions coming from last week’s report are couched in terms of expanding existing DOE programs, or subtly altering others to gain support from industry partners, particularly utilities.
Take its concept for DOE’s Title XVII loan guarantee program, which has loaned about $32 billion to mostly successful renewable energy funding (but is best known publicly for its $535 million loan to failed solar panel maker Solyndra). The program, which recently reported that its portfolio has paid about $1.65 billion in interest payments to the U.S. Treasury, still has about $40 billion allocated for loans.
But it’s easy to see how the Trump administration might be opposed to supporting a program that loans money to solar companies. While Congress would have to act to end the program entirely, the Energy Secretary could simply stop signing off on new loans, effectively killing it.
This may be why the DOE’s latest suggestions for the Title XVII program ask for changes that would allow it to expand beyond generation projects secured by power-purchase agreements, and into “grid modernization financing by regulated entities,” that is, utilities. Here’s how the report described it:
“Some of the benefits of grid modernization are realized over time, as the electricity system itself is changed by technology and market innovations. Additional funding resources would bridge the gap between investment costs and realization of benefits and would enable utilities to invest in grid modernization. A relatively low-cost permanent Federal financing system could be established by setting up a revolving loan fund with one-time seed capital.”
Much of the need behind this change in loan program rules is driven by the anticipated need for new technologies at the transmission-grid level, the report said. “By their nature, transmission projects, especially big projects, involve many entities and jurisdictions,” adding that “statutory clarification is needed on indirect lending authorities to such entities.”
At the same time, DOE has already earmarked $1 billion in loans for programs that combine distributed energy assets and technologies, including one centered on advanced fossil fuels, as well as another focused on renewable energy and energy efficiency.
DOE is also running an important set of distributed energy and distribution grid projects, largely under the aegis of federal labs, including the National Renewable Energy Laboratory (NREL), and through its cutting-edge technology grant program, ARPA-E. As part of its QER process, DOE in early 2016 released a grid modernization multi-year plan that called for $220 million to support 80-plus projects of this type across the country.
These types of programs, unlike those focused on climate change or renewable energy, haven’t been specifically targeted for opposition from the Trump administration. Instead, they’re mostly grid-centric -- and under DOE’s latest proposal, they should be leveraged to help utilities “demonstrate advanced distribution system technologies at the community scale.”
The list of technologies included advanced voltage control/optimization systems; dynamic protection schemes to manage reverse power flows, communications, sensors, storage, switching and smart-inverter networks; and advanced distribution management systems, including automated substations.”
The program envisioned would support cost-share programs to “inform standards and regulations and increase regulatory and utility confidence in key technologies or technology systems.” Utilities would have to make a positive business case and obtain regulatory approvals, with preference for multi-utility partnerships with diverse customer profiles. And, of course, “Cybersecurity plans for all projects would be required and supported by programmatic review of plans and deployments.”