Policy, Technology Accelerate Innovation in the Energy Sector

In 21st-century America, technology and innovation are inseparably linked. Revolutionary technical advances raise expectations and, often enough, result in products and services that meet or exceed those expectations. Think of how smartphones have changed our lives.

In similar fashion, innovation and technology are driving disruption into the electricity sector in ways that could never have been predicted just a short time ago. This is happening both in the sourcing of energy away from coal and in the integrated operation of a renewable-energy-based smart grid.

But unlike innovation driven by private-sector interests -- as with Uber and Airbnb -- the ongoing transformation of the energy system has largely been spurred by government policy and regulations. These policies have been designed not only to address environmental issues (air pollution, climate change, resilience) but also to take advantage of local resources (sun, wind, technical expertise).

Now, after decades of government support, new energy technologies are finally ready to largely displace coal in our power-generation system. That may seem a bold statement, but the underlying economic question of whether to move from coal to a system more reliant on renewables has been answered. And in perhaps the biggest news, much of this change is emerging from the utilities themselves.

First, a little backstory. Last year, the Obama administration proposed its Clean Power Plan (CPP), a set of regulations aiming to move local utilities away from coal-fired electricity generation and toward cleaner natural gas and renewable energy. More than two dozen states joined energy companies to litigate against the CPP. After a rather swift ascent through the federal court system, earlier this month the Supreme Court put the CPP on hold, blocking implementation and enforcement until the high court could hear the opponents' case. It seemed an ominous sign that the Obama initiative might meet soon meet a judicially administered death. CPP supporters decried the decision, saying it could result in stopping or at least hindering a vital restructuring of America' power sector.

 
Then, quite unexpectedly, the largest trade association of electricity providers weighed in, saying that the decision wouldn't slow restructuring at all. A Washington Post article described the response as "a collective shrug" by the major utility companies. Edison Electric Institute officials said the court's decision "doesn't really change anything" for the industry, in which nearly all new electricity generation is coming from wind or solar or from hyper-efficient generators that burn natural gas. As Quin Shea, the institute's vice president for environment, put it, "You can't simply put the genie back in the bottle when it comes to major strategic investments that the captains of industry are making,"

But the electricity innovation story isn't only about replacing coal-burning power plants. It's the unfolding story of how technology, along with the soft infrastructure of government policy and the hard infrastructure of power generation, transmission and distribution, is being employed to create an entirely new energy system. Much of the innovation involves ways of integrating large volumes of renewable electricity into the grid. Currently only about 13 percent of our energy comes from renewable sources. But change is also coming rapidly to this sector, and government policy is likely to be a major driver of that change as well.

Last fall, for example, California Gov. Jerry Brown signed bipartisan legislation calling for half of the energy consumed in the state to come from renewable sources by 2030 -- a goal based on an integrated policy framework driving the development of new technology while reducing environmental impacts and supporting economic development. California's goal may seem unrealistic, but a recent study by the National Renewable Energy Laboratory found that reaching 50 percent renewables by 2030 is not only achievable but can be reached with minimal rate impact and without compromising reliability.

None of this is to say that this transition will be easy. And, on numerous fronts the changes will continue to be vigorously contested. But, taken in context, it's very clear that we've crossed the threshold to an exciting new energy era.

This story was originally published on Governing.