[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
SOLVING THE CLIMATE CRISIS: RAMPING UP RENEWABLES
=======================================================================
HEARING
BEFORE THE
SELECT COMMITTEE ON THE
CLIMATE CRISIS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD
JUNE 13, 2019
__________
Serial No. 116-5
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SELECT COMMITTEE ON THE CLIMATE CRISIS
One Hundred Sixteenth Congress
KATHY CASTOR, Florida, Chair
BEN RAY LUJAN, New Mexico GARRET GRAVES, Louisiana,
SUZANNE BONAMICI, Oregon Ranking Member
JULIA BROWNLEY, California MORGAN GRIFFITH, Virginia
JARED HUFFMAN, California GARY PALMER, Alabama
A. DONALD McEACHIN, Virginia BUDDY CARTER, Georgia
MIKE LEVIN, California CAROL MILLER, West Virginia
SEAN CASTEN, Illinois KELLY ARMSTRONG, North Dakota
JOE NEGUSE, Colorado
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Ana Unruh Cohen, Majority Staff Director
Marty Hall, Minority Staff Director
climateacrisishouse.gov
C O N T E N T S
STATEMENTS OF MEMBERS OF CONGRESS
Page
Hon. Kathy Castor, a Representative in Congress from the State of
Florida, and Chair, Select Committee on the Climate Crisis:
Opening Statement.............................................. 1
Prepared Statement............................................. 3
Hon. Garrett Graves, a Representative in Congress from the State
of Louisiana, and Ranking Member, Select Committee on the
Climate Crisis:
Opening Statement.............................................. 4
WITNESSES
Abigail Ross Hopper, Esq., President and CEO, Solar Energy
Industries Association
Oral Statement................................................. 5
Prepared Statement............................................. 7
Tom Kiernan, President and CEO, American Wind Energy Association
Oral Statement................................................. 14
Prepared Statement............................................. 16
Christine Tezak, Managing Director, ClearView Energy Partners,
LLC
Oral Statement................................................. 19
Prepared Statement............................................. 21
Katherine Hamilton, Chair, 38 North Solutions
Oral Statement................................................. 30
Prepared Statement............................................. 32
APPENDIX
Question for the Record from Hon. Garret Graves to Christine
Tezak.......................................................... 56
Questions for the Record from Hon. Kathy Castor to Katherine
Hamilton....................................................... 58
SOLVING THE CLIMATE CRISIS: RAMPING UP RENEWABLES
----------
THURSDAY, JUNE 13, 2019
U.S. House of Representatives,
Select Committee on the Climate Crisis,
Washington, DC.
The committee met, pursuant to call, at 10:03 a.m., in Room
2318, Rayburn House Office Building, Hon. Kathy Castor
[chairwoman of the committee] presiding.
Present: Representatives Castor, Bonamici, Brownley,
McEachin, Levin, Casten, Graves, Griffith, Palmer, Carter,
Miller, and Armstrong.
Ms. Castor. The committee will come to order.
Without objection, the chair is authorized to declare a
recess of the committee at any time. Today we will discuss the
linchpin of any serious plan to address the climate crisis,
ramping up renewable energy in the electric power sector.
Good morning, everyone. Welcome to our outstanding
witnesses who are here with us this morning.
I now recognize myself for 5 minutes to give an opening
statement.
I am excited to talk about renewable energy this morning.
But before I start, I want to acknowledge what has been
happening with the climate crisis just since our last meeting.
The headline of my local newspaper back in Florida last
week read ``Florida Got Hot in May, like Record-Breaking Hot.''
According to the National Oceanic and Atmospheric
Administration, the State of Florida experienced its hottest
May in more than a century. And it wasn't just a little hotter.
The new record is nearly four degrees hotter than the previous
record. And while Florida was the only State to break the May
temperature record, Virginia had its third hottest May on
record, while North Carolina, South Carolina, and Georgia all
had their second hottest May ever.
Record-breaking heat in the Arctic also pushed temperatures
in Finland to levels never recorded before. In America's
Arctic, the abnormal heat has led to fatal accidents in
Alaska's rural villages. San Francisco, on Monday, hit 100
degrees. Yes.
In India, heat waves have driven temperatures higher than
120 degrees. And when it is hot, people can't go outside. When
it is that hot, they can't go outside anyway. They can't get to
work, they can't go to school, they can't go shopping or buy
food for their family.
Last week also saw the release of a new scientific study
examining the epidemic heat waves in 2018. The scientists
concluded that these heat waves would not have occurred without
human-induced climate change. They warn that we have entered a
new climate regime, featuring heat waves of a scope and
intensity not seen before.
And of course deadly heat isn't the only danger. Right now,
America's Midwest is still struggling with flooding, and
wildfires are burning in Northern California despite a wet
winter.
Scientists say that we can expect more extreme events. And
insurers say plan for greater risks. And as policymakers, we
know with greater risk comes greater costs for families we
represent back home. These are the stakes of the climate
crisis.
So I am glad we finally passed a disaster relief package
with climate resilience included last week. But we can't adapt
our way out of this crisis. We have to cut carbon pollution.
Carbon pollution is what is causing this problem in the first
place.
So today we are focusing on renewable energy because it is
such a big part of the puzzle. Renewables used to provide just
a fraction of our electricity, but now they are up to 17
percent and growing.
In the past 10 years, wind power has quadrupled and costs
have fallen by nearly 70 percent. Utility-scale solar has
increased 30 times over, and costs have fallen by 88 percent.
Now more than 350,000 people are working in the wind and solar
industries.
Renewable energy has flourished because we finally started
giving wind and solar some of the same support that the fossil
fuel industry has enjoyed for over a century.
States have also led with renewable energy standards.
California, Washington, Hawaii, Nevada, and New Mexico have
committed to an energy grid powered by 100 percent clean
energy. The new Governors of New Jersey, Minnesota, and
Illinois have called for similar levels of ambition.
South Carolina also passed the South Carolina Energy
Freedom Act to promote solar energy just a couple months ago.
It was bipartisan and unanimous and a pro-jobs and pro-economic
growth bill.
States have been in the lead, but we know here in the
Congress we need to do more. The time is now.
And we heard in our second hearing, we need to achieve net-
zero carbon pollution across our entire economy by the year
2050. We have to do that to avoid catastrophic harm from the
climate crisis.
When scientists do the math, it is clear that the United
States will have to generate much of its electricity from
renewables to get there. Many experts see a continued role for
nuclear power and fossil fuel plants with carbon capture, but
renewable sources are crucial. Clean, renewable energy is the
linchpin for solving the climate crisis.
We need to move more quickly, to put more wind, solar and
other renewables online. That means making sure that everyone
has access to clean energy in their communities, whether they
own a rooftop or not. And it means making sure that more jobs
in clean energy are good, family-sustaining jobs, and it means
providing good careers for young people who want to solve the
climate crisis.
This crisis is daunting. But the opportunities we have in
front of us for good jobs, clean air, and a just future are
boundless. So it is time for resolve, and it is a time for
hope. We have the tools and the technology we need to succeed.
We just need to decide to do it.
With that, I will recognize the ranking member for 5
minutes.
[The statement of Ms. Castor follows:]
__________
Opening Statement (As Prepared for Delivery), Rep. Kathy Castor (D-FL),
U.S. House Select Committee on the Climate Crisis
Solving the Climate Crisis: Ramping Up Renewables, June 13, 2019
I'm excited to talk about renewable energy today, but before we
start, I want to acknowledge what's been happening with the climate
crisis since our last hearing.
The headline of my local newspaper last week read: ``Florida Got
Hot in May--Like Record-Breaking Hot.'' According the National Oceanic
and Atmospheric Administration, the State of Florida experienced its
hottest May in more than a century. And it wasn't just a little hotter.
The new record is nearly four degrees hotter than the previous record.
While Florida was the only state to break its May temperature record,
Virginia had its third-hottest May on record, while North Carolina,
South Carolina and Georgia all had their second hottest May ever.
Record-breaking heat in the Arctic also pushed temperatures in
Finland to levels never recorded before. In America's Arctic, the
abnormal heat has led to fatal accidents in Alaska's rural villages.
And San Francisco hit a record-breaking 100 degrees on Monday.
In India, heat waves have driven temperatures higher than 120
degrees. When it's that hot, people can't go outside. They can't get to
work. They can't go to school. They can't go shopping and buy food for
their family.
Last week also saw the release of a new scientific study examining
the epidemic of heat waves in 2018. The scientists concluded that these
heat waves ``would not have occurred without human-induced climate
change.'' They warned that we've entered a ``new climate regime''
featuring heat waves of a scope and intensity not seen before.
And of course deadly heat isn't the only danger. Right now,
America's Midwest is still struggling with flooding, and wildfires are
burning in Northern California despite a wet winter. Scientists say we
can expect more extreme events. Insurers say plan for greater risk. As
policymakers, we know greater risk comes with greater costs for
families we represent back home. These are the stakes of the climate
crisis.
So I'm glad we finally passed disaster relief with climate
resilience last week. But we can't just adapt our way out of this
crisis. We have to cut the carbon pollution that is causing the problem
in the first place.
Today we're focusing on renewable energy because it is such a big
part of the puzzle. Renewables used to provide just a fraction of our
electricity. But now they're up to 17 percent and growing. In the past
ten years, wind power has quadrupled and costs have fallen by nearly 70
percent. Utility-scale solar has increased 30 times over and costs have
fallen by 88 percent. Now more than 350,000 people are working in the
wind and solar industries.
Renewable energy has flourished because we finally started giving
wind and solar some of the same support the fossil fuel industry has
enjoyed for more than a century. States have also led with renewable
energy standards. California, Washington, Hawaii, Nevada, and New
Mexico have committed to an electricity grid powered by 100 percent
clean energy. The new governors of New Jersey, Minnesota and Illinois
have called for similar levels of ambition. South Carolina also passed
the South Carolina Energy Freedom Act to promote solar energy. It was
bipartisan and unanimous and a pro-jobs and economic growth bill.
States have been in the lead. But we know here in Congress we need
to do more. As we heard in our second hearing, we need to achieve net-
zero carbon pollution across our entire economy by at least 2050 to
avoid catastrophic harm from the climate crisis. When scientists do the
math, it's clear that the United States will have to generate much of
its electricity from renewables to get there. Many experts see a
continued role for nuclear power and fossil-fuel plants with carbon
capture, but renewable sources are crucial. Clean renewable energy is
the linchpin for solving the climate crisis.
We need to move quickly to put more wind, solar and other
renewables online. That means making sure everyone has access to clean
energy in their communities, whether they own a rooftop or not. And it
means making sure that more of the jobs in clean energy are good,
family-sustaining jobs. And it means providing good careers for young
people who want to solve the climate crisis.
The climate crisis is daunting. But the opportunities we have in
front of us for good jobs, clean air and a just future are boundless.
So, it is a time for resolve and it is a time for hope. We have the
tools and technology we need to succeed. We just need to decide to do
it.
Mr. Graves. Thank you, Madam Chair. And I want to thank you
for your statement.
I think it is important for us to point out that certainly
the climate change and the temperature changes are very
concerning. And it is exciting to look back at the United
States' record of being the Nation that has had the greatest
reduction in emissions of any country in the world.
And it is also important, as we continue to move forward to
address this challenge, important to recognize that during that
same period of time, that China has increased their emissions
by 4 billion tons, so quadrupling the reduction in emissions
that we have reduced. And so we must continue to look at this
as the global challenge that it is.
Madam Chair, there is no question that renewable energy
sources are--have and will continue to play a very important
role in our energy future. It is important for us to recognize
that there are challenges with achieving this energy future
that many of us do envision, challenges associated with the
regulatory structure, the challenge associated with updating
our grid system in order to facilitate this expansion of clean
energy solutions.
And many of the witnesses here today have--have run into
these challenges of trying to get through this regulatory
process, to bolster or to increase the role that renewables
play. Making sure that we fully understand what role energy
storage technology plays in an objective to expand the
utilization of energy--renewable energy technologies. Some of
the challenges associated there--certainly we have seen some of
the rare earth news stories in recent weeks and what challenges
those pose, some of the limits of battery storage technology
and the role--the complementary role that natural gas and other
energy streams will play and recognizing that solar energy
isn't an option perhaps at night, Ms. Hopper, as we can talk
about a bit more.
And understanding how these interplay, understanding some
of the challenges associated with a renewable energy strategy
that has been pushed in the Northeast that actually resulted in
dependence upon Russian energy being imported to address some
of the issues there.
We need to ensure that as we move forward with this--this
all-of-the-above energy strategy, as we move forward in
improving the role that renewable energies play, that we are
looking to ensure that we can balance all of these resources
properly, that we don't just have energy available to us when
the wind blows, when the sun is out, and that we are ensuring
that the investments we are making in science and technology
are truly complementary to the assets and the opportunities and
the innovation in the United States.
My home State of Louisiana, it has been fascinating, we
have one of greatest coastal land-loss challenges in the
Nation. We have lost about 2,000 square miles of our coast. We
have a very aggressive plan to come in and restore our coastal
wetlands. One of the biggest impediments to that plan, believe
it or not--it is not the money, it is not the sediment, it is
not the fresh water--it is the regulatory process. The very
process that is designed to protect our environment is actually
impeding our efforts to restore the environment.
And I think that we are seeing similar challenges here with
some of efforts that you are working on, some of the efforts to
continue to build upon our emissions reduction successes by
increasing the transition to natural gas in some areas, and our
ability to transport the natural gas and ability to relay the
electricity from renewable sources to the areas where it is
needed.
So looking forward to having this discussion today, looking
forward to future discussions on nuclear power, on energy
storage, on carbon capture storage and utilization and other
tools that I think are going to be a really important part of
our overall recommendations from this committee.
So with that, I will yield back.
Ms. Castor. Good, and I thank my friend for his statement.
Without objection, members who wish to enter opening
statements into the record have 5 business days to do so.
At this time I would like to introduce our outstanding
witnesses who are with us today.
Abigail Ross Hopper is president and CEO of the Solar
Energy Industries Association. Before joining SEIA, Ms. Ross
Hopper was the director of the Department of the Interior's
Bureau of Ocean Energy Management, where she led the agency
that oversaw the leasing and development of all offshore
energy, including wind. She served formerly as the director of
the Maryland Energy Administration.
Tom Kiernan, president and CEO of the American Wind Energy
Association. Prior to joining AWEA, Mr. Kiernan was president
of the National Parks Conservation Association for 15 years.
Christine Tezak is managing director at ClearView Energy
Partners. Prior to joining the firm, Ms. Tezak was a senior
research analyst at Robert W. Baird and Company and a senior
vice president with the Washington Research Group.
Katherine Hamilton is chair of 38 North Solutions, a
consulting firm. Ms. Hamilton is co-chair of the World Economic
Forum's Future Advanced Energy Technology Global Future Council
and immediate past president of GRID Alternatives Mid-Atlantic.
Without objection, the witnesses' written statements will
be made part of the record.
And with that, Ms. Ross Harper, you are now recognized to
give a 5-minute statement.
STATEMENTS OF ABIGAIL ROSS HOPPER, ESQ., PRESIDENT AND CEO,
SOLAR ENERGY INDUSTRIES ASSOCIATION; TOM KIERNAN, PRESIDENT AND
CEO, AMERICAN WIND ENERGY ASSOCIATION; CHRISTINE TEZAK,
MANAGING DIRECTOR, CLEARVIEW ENERGY PARTNERS, LLC; AND
KATHERINE HAMILTON, CHAIR, 38 NORTH SOLUTIONS
STATEMENT OF ABIGAIL ROSS HOPPER, ESQ.
Ms. Ross Hopper. Great. Thank you very much. Good morning.
Thank you, Chairwoman Castor, Ranking Member Graves, and
all of the other members of the committee.
I am so happy to be here. Thank you for inviting me, thank
you for your interest in solar energy, and most importantly,
thank you for your interest in addressing the climate crisis
that we face.
As you just heard, I am Abigail Ross Hopper, the president
and CEO of the Solar Energy Industries Association, or SEIA. We
really like acronyms in the energy world.
Before I begin to talk about solar, I just want to sort of
address one thing that Ranking Member Graves said. I think we
all are committed to clean, reliable, and affordable energy
system, right? That is what consumers want, that is what they
demand, that is what they expect, and I think what you will
hear today is that is what we can deliver.
So I am so proud to represent the solar industry. We
represent about 250,000 Americans who work in the solar energy
industry, about $17 billion that we invest in this Nation.
We recently celebrated the two millionth U.S. solar
installation in May. And while that is all exciting, I would
invite you to buckle up, because we are about to enter the
Solar + Decade. Solar generation currently provides about 2.3
percent of the Nation's electricity generation, but by 2030, we
think that will be 20 percent. And while that is certainly an
aggressive goal, I think it is certainly doable, and we
certainly cannot afford to wait.
Today the solar industry reduces carbon emissions by 73.3
million metric tons per year, which is equivalent to taking
15.6 million vehicles off the road.
So if we achieve this 20 percent in the next decade, we
will add more than $345 billion to our economy and 350,000
additional solar jobs, proving that a clean economy is a strong
economy.
So what makes me so confident about our ability to do this?
Well, it is based partly on what we have accomplished to date.
At the Federal level, I am going to talk a little bit about
what has worked.
The investment tax credit has created hundreds of thousands
of jobs literally and spurred billions of dollars in economic
growth. As 2019 ends, the ITC--again another acronym that we
like--the ITC will begin an annual stepdown that will lead to
an eventual phase-out of the credit for residential solar and a
much-reduced credit for commercial and industrial and utility-
scale solar.
So until Congress passes a carbon tax or comes to some
consensus on how we address climate change, the ITC is
literally the most effective policy to deploy clean energy and
solar energy. So it is not just a pro-solar policy, but it is
literally a pro-planet policy, and we think it should be
extended.
Solar has benefitted from other Federal policies as well,
including the Public Utility Regulatory Policies Act, or PURPA,
which encourages the deployment of small-scale renewable and
cogen. And in addition, Federal solar research plays an
important role in solar development and continued deployment.
So at the State level, as the Chairwoman said, there are
lots of examples. I would point you to my written testimony.
But I would--I just can't help but also highlight South
Carolina, because I think it is so illustrative of the
bipartisan nature of solar energy and renewables in general.
But just in May, Governor McMaster signed the law that clears
obstacles, clears away some of the red tape that we have talked
about, to greater adoption of rooftop solar and also allows
more large-scale solar. We think it will create jobs and
encourage investments for all South Carolinians.
So what are some of the things I would ask you to take a
look at to help further the deployment? I am going to name
four, but there is clearly more in my written testimony.
One, as I said, extend the investment tax credit as we seek
consensus on a larger carbon policy. We think that is one clear
thing that Congress can do. Two, I would echo the interest in
energy storage. That is such a transformative part of this
transformation to a clean energy economy. And so we think that
passing support for storage is a critical act that Congress can
do.
Third, I would suggest that we invest additionally in our
electric infrastructure. Our Nation's grid is in dire need of
upgrade, specifically around transmission and so we can make
sure we can get the electrons to the folks that need it, and
then as we think about distributed generation and ensuring that
our grid is equipped to handle that two-way traffic.
And then fourth, I would suggest that we need to invest in
workforce development. Solar does provide well-paying careers,
and we are going to literally need hundreds of thousands of
workers in the next decade. We must work deliberatively to
build an industry that is diverse and inclusive, reaching into
communities that have not yet benefitted from renewable energy.
We must ensure that every American has the opportunity to enter
this sector. And we also support programs that allow veterans
to transition from military service into solar jobs.
So I would suggest that the benefits of deploying renewable
energy and solar specifically are enormous. And as we create
this clean energy vision, this solar plus vision, solar plus
wind, solar plus storage, solar plus grid modernization, that
it will lead to investment, jobs and opportunities.
So thank you very much for asking me to be here.
[The statement of Ms. Ross Hopper follows:]
----------
Testimony of Abigail Ross Hopper, Esquire, President & CEO, Solar
Energy Industries Association
U.S. House of Representatives Select Committee on the Climate Crisis,
June 13, 2019
introduction
Chairwoman Castor, Ranking Member Graves, and members of the Select
Committee, thank you for inviting me here today and for your interest
in solar energy.
I am Abigail Ross Hopper, president and CEO of the Solar Energy
Industries Association (SEIA). SEIA is the national trade group for
America's solar energy industry with 1,000 member companies.
Approximately 250,000 Americans work in the $17 billion solar industry.
We recently celebrated the two millionth U.S. solar installation in
May. It took us 40 years to reach the first million installations in
2016 and only three years to double that number. And buckle up because
we are about to enter the Solar+ Decade. What do I mean by that? Solar
generation currently provides 2.3% of our electricity in the United
States; by 2030, we aim for solar energy to be 20% of the electricity
generation mix. To get there, SEIA has designated the 2020s the Solar+
Decade, recognizing the fact that the industry will need to both
aggressively pursue policies to facilitate solar deployment while also
collaborating with other technologies to make it happen.
Our target is aggressive, but we cannot afford to wait to address
the climate crisis. That 20%, or something close to it, is what we as
an industry need to achieve if we are to meaningfully address climate
change and fulfill our role in keeping global temperature rise below 2
degrees Celsius. Climate scientists are clear that electricity
generation plays a large part in carbon emissions. Solar deployment can
help reduce emissions, support local economies and good jobs, reduce
air pollution, and provide low-cost energy to American families and
businesses. The solar industry today, at just 2.3 percent of our
nation's electricity production, reduces carbon emissions by 73.3
million metric tons per year. That is the equivalent of taking 15.6
million vehicles off the road or planting 1.2 billion trees. The carbon
reduction attributes of solar are significant.
To reach our aggressive 20% by 2030, we will need to install an
average of 39 gigawatts (GW) each year through the 2020s. That's up
from 10.6 GW last year. We'll need an average annual growth rate of 18%
and cost reductions across all market segments of nearly 50%.
If we achieve this goal, we will create 350,000 additional jobs and
build more systems annually than we have installed to date. That means
there will be a total of 600,000 solar jobs in 2030. That's more
workers than every single U.S. company except for Walmart, more than
the utility industry, and more than the mining and oil and gas
extraction industries combined. And when we grow this workforce, it
will be with an eye toward diversity and inclusion.
In this scenario, our industry will add more than $345 billion into
the U.S. economy over the next ten years, reaching $53 billion
annually. Our success will prove that climate solutions don't hurt the
economy, but instead, are some of the strongest economic growth engines
we've seen in decades.
Your Committee is charged with a special task--to advise Congress
on opportunities and policies that exist to help address the climate
crisis. That's why I'm pleased to be here today representing this
vibrant industry. Solar offers Americans options and answers on climate
change, as well as tremendous opportunity for economic growth and job
creation across the country.
what has worked
How has solar grown so rapidly and successfully? What makes me so
confident about the Solar+ Decade? Let me share with you a few examples
of policies that have made a real difference, at both the federal and
state levels.
Federal
At the federal level, the leading policy that has led to the
deployment of solar nationwide is the Investment Tax Credit. To put it
simply, the ITC has worked and worked well. The ITC has helped to
create hundreds of thousands of jobs and spurred billions of dollars in
economic growth. As we come to the end of 2019, we approach an annual
step-down in the ITC which will lead to an eventual phaseout of the
credit for residential and a much-reduced credit for commercial and
utility-scale solar.\1\
---------------------------------------------------------------------------
\1\ The ITC for both commercial and residential is 30% until Dec.
31, 2019. Thereafter it steps down to 26 percent in 2020 and 22 percent
in 2021. After 2021, the residential credit will drop to zero while the
commercial and utility credit will drop to a permanent 10 percent.
---------------------------------------------------------------------------
With the solar industry facing cost increases from tariffs and the
most recent Intergovernmental Panel on Climate Change report indicating
that rapid decarbonization is necessary to mitigate some of the worst
effects of climate change, the timing is not right for a stepdown or
phaseout of this extremely valuable tax credit that spurs increased
development of renewable energy. Until Congress passes a carbon tax or
other comprehensive legislation that addresses climate change, the ITC
is the most effective policy we have to deploy clean energy. In short,
the ITC is more than just a pro solar policy. It is a pro planet
policy.
Solar has also benefitted from other federal policies, including
the Public Utility Regulatory Policies Act, which encourages the
development of small-scale renewable and cogeneration facilities.
Additionally, federal investments in energy research through the
Department of Energy have long paved the way for commercialization of
technologies. Federal solar research has made the United States a
global leader in solar technology development. This includes research
on battery storage, which is absolutely part of the future of
additional renewable deployment.
State
At the state level, there are numerous examples of state policy
that has accelerated the deployment of solar energy. States like
Arizona, Texas, Nevada, California, North Carolina, New Jersey and
Massachusetts have had enormous growth in solar energy deployment,
largely because of policy incentives and programs that support the new
development of solar projects.
One example of effective state policy is renewable portfolio
standards. In Maryland, for example, the Clean Energy Jobs Act passed
in 2017, enacting a 25% renewable electricity standard by 2020. This
legislation was a broad success, prompting the creation of thousands of
solar jobs. Earlier this year, Maryland doubled down on its commitment,
raising Maryland's requirement for renewable energy to 50% by 2030,
including a 14.5% requirement for in-state solar by 2030. This
legislation had bipartisan support and will continue to catalyze job
growth and solar development across the state.
In South Carolina, Governor McMaster signed legislation in May that
lifted caps on the amount of rooftop solar allowed in certain areas and
eliminated restrictions on solar-leasing programs. The Energy Freedom
Act, passed unanimously by the Republican-led South Carolina House and
Senate, also improves opportunities for utility-scale solar developers,
including provisions to require the Public Service Commission to review
and approve rates and terms provided to utility-scale solar facilities
which will ensure contract terms are reasonable for such projects. In
addition, the new law will allow large energy customers to negotiate
directly with renewable energy suppliers and provide for more
transparency and competition in long-term utility-generation planning.
In the Midwest, Illinois passed the Future Energy Jobs Act (FEJA)
in 2016 which aimed to grow the solar workforce in the state. FEJA
authorized a total of $30 million to develop three clean energy job
training programs. The Act established a solar installation training
pipeline. Despite a national trend of contracted solar job growth in
2018 due in part to solar tariffs, Illinois added over 1,300 solar jobs
in 2018, and is projected to continue growing.
California also made headlines last year with its enactment of a
requirement for newly constructed homes to either have solar panels on
the home or be connected to a shared solar system that serves multiple
homes. This code will allow homeowners to experience lower energy bills
and a projected overall savings when factoring in the cost of the solar
array. This standard was groundbreaking and will provide immense
benefits to California and its residents when it goes into effect next
year.
Two other policies that have supported residential and small
commercial solar are net metering and rate design. Net metering, which
provides a credit to a system owner for power sent to her neighbors,
has been critical in fostering rooftop markets in many states.
Similarly, rate design that does not unfairly burden solar owners with
unwarranted fees and charges simply because they installed solar, will
be critical to this sector as the industry moves forward. Although
states with high levels of rooftop solar are rightly beginning to
explore successors to net metering, we have unfortunately seen actions
in states with very small rooftop markets that attempt to use rate
design to stymie a growing industry before it takes hold.
challenges to faster deployment of solar and policies that can help
Despite these shining examples of federal and state policies, we
must acknowledge that our industry still faces major challenges as we
drive towards 20% of generation. Despite the solar industry's growth,
future deployment still faces challenges. While the cost of solar has
dropped dramatically in recent years, added costs from tariffs,
extended and unpredictable timelines for permitting and
interconnection, uncertainty about the future of tax policy, slower
than needed deployment of storage resources, the need for
infrastructure investment, and workforce needs pose potential
roadblocks to solar growth across the country. There's a lot at stake
in getting renewable energy deployment right and facilitating it as
rapidly as possible. As the Committee considers options to include in
its report, we recommend your attention to the following:
Extend the ITC as We Seek Consensus on Broader Carbon Policy
As I mentioned earlier in my testimony, the federal solar ITC has
been an outstanding success and continues to drive major growth in our
industry. It has created hundreds of thousands of jobs and, at last
count, $140 billion dollars of investment. And yet, just as Americans
demand action on climate change and new markets in areas like the
Midwest are opening up and growing, the ITC is scheduled to begin to
step down in its value at the end of 2019, phasing out entirely for
residential solar by 2022, and falling to just 10 percent for
commercial and utility-scale solar. This is a challenge for our
industry and for our climate.
One thing that Congress can do now that will absolutely help deploy
renewables faster is to extend the Investment Tax Credit. It's that
simple. Solar comprises only 2.3% of generation nationwide and we are
at an inflection point where strong and proven tax policy can make a
difference in the clean energy economy. In order to get where we need
to be, and meaningfully cut emissions, the ITC extension is a must.
Given the focus of Congress on new sources of economic growth and jobs,
as well as renewed spirit in genuinely addressing climate change, now
is not the time to diminish support for a core part of U.S. climate
policy. SEIA is also participating in ongoing conversations in Congress
about broader climate policies through the tax code--from next
generation tax credits, such as a technology neutral tax credit, which
we have endorsed, to thinking critically about a carbon tax that
appropriately prices the externalities of energy generation. As an
organization, we are generally supportive of these approaches and think
they would comprise a wholistic approach to carbon policy.
However, until there is bipartisan consensus on what comes next to
tackle our climate challenges, we urge Congress to use the proven tools
it has available. The stakes are far too grave. Tax credits like the
solar ITC work and will continue to work if extended. Let's put it in
perspective--as mentioned earlier, the solar industry today, at just
2.3 percent of our nation's electricity production, reduces carbon
emissions by 73.3 million metric tons per year. That is the equivalent
of taking 15.6 million vehicles off the road or planting 1.2 billion
trees. Just imagine the impact solar energy can have in the future if
we reach our goal of 20 percent of electricity generation by 2030.
Invest in Energy Storage
Energy storage coupled with solar will be a critical part of
achieving 20% solar by 2030. Solar + storage is the future of our
industry and vitally important for getting more solar on the grid.
Storage can ensure that the solar resource can be optimized and provide
the reliability required on the grid. Already, solar + storage projects
are being built across the country in residential, commercial and
utility-scale contexts. In fact, major corporations like Target and
Wal-Mart have made significant investments in solar + storage in recent
years.\2\
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\2\ Solar Means Business, Solar Energy Industries Association.
Available at https://www.seia.org/solar-means-business-report.
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The Energy Storage Association forecasts that we will reach 35 GW
of new storage by 2025.\3\ That has far-reaching implications for solar
and other renewables. However, energy storage needs support to grow and
deploy as rapidly as we need.
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\3\ 35X25: A Vision for Energy Storage, Energy Storage Association.
Available at http://energystorage.org/vision2025.
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Congress can help by facilitating energy storage research and
deployment through research funding, infrastructure, and tax policies,
like the current bipartisan legislation that will codify storage within
the Investment Tax Credit. As our nation becomes more energy
independent, eliminating the 70% cliff for storage under the solar ITC
or full ITC treatment for storage will help integrate renewable energy
resources into the larger utility network. Infrastructure legislation
can incentivize integrating storage on the grid. Federal research
dollars can also help support the development of the next generation of
energy storage technology we will need to continue to deploy more
renewables.
Foster Trade Policies that Support Renewable Energy
Americans now pay more for solar panels than the rest of the world.
Last year, President Trump imposed tariffs on most imported solar
modules and cells. These tariffs raised prices of panels by 30% in
2018, and, despite the rate of tariff stepping down annually, will
remain an added cost of panels and cells for developers of solar
projects across the United States.
This policy was a major challenge for SEIA's member companies and
the industry. Not surprisingly, the industry saw a contraction in
deployment, investment, and hiring as a result of the price uncertainty
and increases that the Section 201 trade case imposed over 2017 and
2018. As a result of the tariffs, solar lost 8,000 jobs as well as
potentially 10,000 more jobs that were never created. We deployed 2 GW
fewer than we had expected, and the American economy lost out on
billions of dollars of potential investment. Trade policies must
support deployment of clean energy and not create roadblocks.
Maintain and Expand Competition in Electricity Markets
Congress and regulatory agencies need to maintain and expand
opportunities for competition in electricity markets. In places still
served by vertically integrated utilities, discriminatory
interconnection practices and other anti-competitive behavior must not
be tolerated. Congress should maintain the regime established by PURPA,
under which qualifying facilities bring competitive pressure when they
can serve load for less than the utility's avoided costs. Attacks on
PURPA are attacks on competition; any changes made to PURPA should
enhance competition, not stifle it. The Federal Energy Regulatory
Commission (FERC), with strong oversight from Congress, should ensure
that PURPA is implemented in a transparent and non-discriminatory
manner, and that adequate enforcement follows any improper action on
the part of utilities or their state regulators.
In regions with wholesale electricity markets, competition must
expand to include storage assets and distributed energy resources to
bid into and fully participate in those electricity markets. FERC has
taken some initial steps with Order No. 841, which addresses storage
assets, but we are still waiting for similar action to establish the
participation rules by distributed energy resources.
Overall, we must have wholesale market rules that value all the
services that solar--whether connected to the transmission or
distribution grid--can provide, from energy to frequency regulation,
and that anticipate a future with solar + storage resources. Of note,
FERC's recently finalized storage rule does not require regional
transmission organizations (RTOs) to identify how they will
interconnect and accommodate bids from solar + storage resources. This
gap must be remedied soon, as the private sector is already deploying
assets in this configuration. Capacity market rules must fairly account
for solar and solar + storage assets. FERC and RTOs should resist calls
to support aging, uneconomic generation resources with out-of-market
payments. Even the rules that govern who is allowed to participate in
RTO stakeholder processes merit review. In a recent decision, FERC
rightly concluded that certain rules for stakeholder participation
constitute a barrier to entry for generators and small load-serving
entities, and are therefore unjust and unreasonable and must be
changed.\4\ Congress and FERC must continue to ensure robust
competition in all wholesale markets, as we know competition delivers
lower costs to end-use consumers.
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\4\ See American Wind Energy Association and The Wind Coalition v.
Southwest Power Pool, Inc., 167 FERC para. 61,033 (April 18, 2019).
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Finally, there is room for more competition at the retail level,
too. We see corporate buyers and homeowners choosing more solar every
year; it is critical that customer demands can be easily met by solar
generation.
Invest in Electric Infrastructure
Our nation's electric grid is in dire need of upgrades, and a push
to electrify the economy necessitates additional investments in
generation, transmission, and distribution lines. The United States
needs massive infrastructure investment to update the grid, improve
resilience, and expand transmission. We need to modernize the grid to
allow for distributed energy assets to be better integrated and we need
to build more transmission infrastructure to allow for more utility-
scale solar to be delivered. Moving clean electricity from remote areas
onto the grid is a key component of our ability to deploy more
renewable energy. One of the primary barriers to solar is the lack of
transmission capacity serving areas with quality utility-scale solar
resources which are often located in remote rural areas. As demand for
electricity grows, transmission will become a more critical issue.
Leadership is required to create coordinated and cooperative planning
efforts to ensure transmission capacity for renewable energy generation
resources like solar. The federal government can also develop guidance
and information-sharing portals that make it easier for solar to
connect to the distribution grid and reduce interconnection wait times.
As the transportation sector is further electrified, federal
policies should also support using renewable energy to power surface
transportation infrastructure like the many new charging stations that
will be required. These stations must be in every community and take
into consideration existing community assets and accessibility.
Analyze Renewable Portfolio Standards
As we have seen in the states, renewable portfolio standards help
to spur considerable investment in renewable energy. More than half of
all U.S. states have some type of renewable portfolio standard or goal
in place. Most state targets are between 10% and 45%, but a growing
number, including California, New York, and New Jersey, to name just
three, have requirements of 50% or greater. Several pieces of
legislation exist to create Renewable Portfolio Standards at the
federal level. If Congress chooses to consider a federal standard, we
know solar energy will be an important part of any proposed solution.
Cut Red Tape
In some states, installing solar is becoming as common as getting a
new air conditioner. While installing solar is routine, safe and
simple, the process of getting permits, inspections and permission to
interconnect a solar system can often stretch into months. These delays
drastically increase the cost of solar deployment compared to other
developed countries such as Australia and Germany.
We can do better and are working to improve these processes in the
United States, but it is a big challenge that needs support from the
federal government. The United States has about 15,000 different
permitting jurisdictions and about 3,000 electric utilities that all
have their own processes, leading to a highly fragmented and
inefficient business environment. To meet our climate goals, we need to
drastically streamline these permitting processes to cut as much as 40%
off the cost of rooftop solar energy systems. Congress can assist by
funding research and initiatives that create voluntary streamlined
permitting for solar.
Modernize Policies around Federal Property and Lands Management
The federal government must also look at policies to improve
permitting for solar projects on federal lands and make additional
opportunities available for solar investment in areas that may be
challenging. One of the great things about solar is that it can be
installed in a variety of places--rooftops, in fields, and even on
previously-developed property known as brownfields. EPA has a
Brownfields Program that provides grants and technical assistance to
sustainably reuse contaminated property, and several states have
similar offerings, including Massachusetts, New Jersey, New York.
Federal buildings can also benefit from solar and save taxpayers
money. But additional reform is needed for federal contracting
practices that often prevent federal buildings from installing solar.
An unintended consequence of the current federal acquisition law is the
limited authority of the executive branch to enter into long-term clean
energy contracts. For example, most federal agencies cannot enter into
Power Purchase Agreements (PPA) with terms longer than 10 years.
Unfortunately, this truncated timeline hinders the financial viability
of projects that could reduce federal energy costs, meet clean energy
requirements, create jobs and promote energy security for the country's
most important missions.
Invest in Workforce Development
Solar is also limited by the ability to attract, train and retain a
skilled workforce that can meet the industry's growing demands. In the
future this issue will become even more dire. For example, rural areas
have available land needed to develop utility-scale solar projects. But
these companies have challenges building the robust workforce needed to
construct a large solar array, making it difficult to expand solar to
new areas or markets.
Solar jobs are well-paying careers. In fact, eight states such as
Florida, California, and New Mexico list solar installer as their
fastest growing job, according to the Bureau of Labor Statistics.
Construction workers, project managers, electricians, and engineers are
in high demand and labor requirements for a solar project can vary
state to state.
Both solar-specific job training and the workforce itself are
needed to build the solar needed to reduce emissions from the energy
sector and spread the economic benefits of solar to communities across
the country. SEIA is also leading work to make sure that as the solar
industry grows, we deliberately reach into communities that have not
benefitted from renewable energy in the past, to train workers, and
bring jobs, economic investment, and clean solar energy opportunities
to every zip code. SEIA recently co-published with The Solar Foundation
the 2019 Solar Industry Diversity Study as well as a companion guide on
diversity best practices.\5\
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\5\ The Solar Foundation and SEIA, U.S. Solar Industry Diversity
Study. Available at: https://www.thesolarfoundation.org/diversity/.
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Congress should support policies that make training for renewable
energy jobs more accessible to a wide range of people and communities.
SEIA is also working on a diversity initiative through Historically
Black Colleges and Universities to ensure there's a pipeline of strong
candidates in a range of disciplines that are ready to join the solar
workforce. Workforce policies can also build on the skills of veterans,
many of whom have grown familiar with solar through their service in
the military. Additional policies and programs, like Solar Ready Vets,
can help facilitate the transition from military service to clean
energy jobs.
Incentivize Solar on New Construction
Building codes have made new homes and buildings safer, more
comfortable and efficient. The next step in building evolution is
solar. Solar can help meet the energy needs of new homes and make home
ownership more affordable. Including solar on new construction may be
the most cost-effective way to build residential solar and can cost
less than a dormer window or granite countertops. Including solar on
new construction saves homebuyers the extra costs associated with
retrofitting solar after construction. Unfortunately, the most recent
model building energy codes penalize the use of solar as a compliance
measure. This imposes unnecessary costs for homebuyers. Congress can
explore ways to eliminate barriers and incentivize solar on new
construction to save energy and costs down the line.
Support Clean Energy for All Communities
Too often, renewable energy has not been available to help every
community, particularly those that are low-income, urban or rural.
Leadership and investment are necessary to make sure that every
community is included in the clean energy economy. The benefits in
terms of cleaner air, jobs, economic investment and resilience will far
outweigh any initial cost.
Community anchor institutions, such as schools, community centers,
libraries, post offices and other public buildings can play an
important role in meeting renewable energy goals. While some of these
institutions are already using solar, much more can be done. The
federal government can provide incentives for additional solar
installations on these buildings, which not only create an added layer
of resilience to communities, but also reduce costs to the local
taxpayer through energy savings.
We also urge the Committee to recommend support for community solar
deployment, which makes solar energy available to people who cannot put
solar on their own homes or who live in multi-unit dwellings. In
addition to streamlining interconnection processes and upgrading the
distribution system to allow for more deployment of distributed/
community solar (both of which are discussed above), the federal
government can incentivize states to develop their own community solar
programs by providing technical assistance and funding.
Low-income energy assistance programs to help families install
solar will also help ensure that every American has access to clean,
renewable energy. These programs can be vital for bridging gaps for
communities to benefit from clean solar energy. Investments that help
low-income communities benefit from solar help make sure that no
community is left behind in the clean energy economy. Such programs
also ensure we remedy the mistakes of the past, when low-income
communities too often bore the brunt of the environmental costs of more
traditional energy production and distribution.
Rural America and our nation's farmers also benefit from solar
energy. SEIA supports the Rural Energy for America Program (REAP)
within the Department of Agriculture. This program can help farmers
reduce input cost with a range of renewable energy options, including
wind and solar. At a time when many agricultural producers are
struggling, REAP creates additional revenue streams and helps support
farmer incomes. Some farmers have even begun to co-locate their solar
investments with other forms of agriculture production, including sheep
grazing and beekeeping.
The Committee must also be certain to consider the unique energy
needs of Native American tribes and people living on tribal lands.
Policies should be supported that center tribal members in the
development and execution of renewable energy projects and help tribes
benefit from the jobs and economic opportunities that come with them.
This is especially critical in communities that have historically
focused on fossil fuel extraction and where many jobs are at stake.
Solar projects already exist on tribal lands to provide solar jobs and
solar energy. Two such examples include a project Swinerton Renewable
Energy is working on with the Navajo Nation in Kayenta, Arizona, and
the work of a company called Native Renewables to both provide clean
electricity to the Navajo Nation and create sustainable energy
knowledge among all age groups. With additional support for hard and
soft costs, microgrid development, job training and technical
assistance, Congress can help speed deployment on Native lands across
the United States.
conclusion
The benefits of deploying additional renewable energy are enormous.
Together, our technologies will provide options for clean energy, offer
solutions on climate change, grow the economy, and create hundreds of
thousands of jobs.
Over the next 10 years, the Solar+ Decade will be about
collaboration and building the partnerships and expertise needed to
overcome systemic challenges preventing the widescale adoption of
solar. To achieve this goal, solar, wind and storage must work together
to transform a complex and interrelated world of markets, customers and
electricity systems.
It is incumbent upon renewable industries to create a shared clean
energy vision. It won't be just the Solar Decade, but the Solar+ Decade
where Solar + Storage, Solar + Grid Modernization, Solar + Wind, and
Solar + Overwhelming Public Support combine to define our nation's
clean energy future.
Renewable energy industries like solar, wind and storage must work
together to aggressively pursue policies to deploy more renewables on
the grid and increase access to consumers and businesses looking to
lower their energy costs across the country. Together, we'll write a
new story for American energy in the 2020s. We invite Congress to join
us in sharing this vision. I am confident that together we will provide
countless benefits to the American economy and the American people
while also creating a livable climate for future generations.
I thank you for this opportunity to testify before the Select
Committee on the Climate Crisis. I look forward to answering any
questions you may have.
Ms. Castor. Thank you very much.
Mr. Kiernan, you are recognized for 5 minutes.
STATEMENT OF TOM KIERNAN
Mr. Kiernan. Chairwoman Castor, Ranking Member Graves,
members of the committee, thank you very much for the
opportunity to testify.
Again, Tom Kiernan, CEO of AWEA, pleased to represent our
roughly 1,000 members in the full spectrum of the supply chain
of the wind industry.
In summary, wind energy is an American success story. We
have grown now to 114,000 jobs, and the wind turbine technician
is either number one or number two fastest growing profession
over the last three years. We are kind of dueling it with the
solar technician. So we are thrilled with the career growth
opportunities in our industries.
We are also pleased that we are helping to lower the cost
of electricity for consumers. Per Lazard, wind energy is the
cheapest source of new electricity, and in many parts of the
country, actually new wind is cheaper than the marginal cost of
existing generation.
We are also in all 50 States and in 70 percent of all of
the congressional districts, whether it is one of our 500
manufacturing facilities or one of our 54,000 turbines
throughout the country.
And lastly, as far as this American success story, we are
thrilled that we are reliably on the grid. There are six States
that have currently have over 20 percent of all of their
electricity provided by wind energy. SPP, one of the larger
regions, recently reported that last year 24 percent of all
their electricity was wind energy, and there are times of day
this last year where 50, 60, or 65 percent of all the
electricity in some States or regions was provided reliably by
wind energy.
What I want to do this morning is first share a couple of
the policies that have led to this American success story and
then share a couple of policies that we would suggest to add to
that list.
First policies that have succeeded, the production tax
credit. The PTC has been and is an important mechanism for the
wind industry to access capital. I am sure you well remember
the December 2015 5-year agreement, bipartisan agreement, to
phase down the PTC. And that 5-year, multi-year clarity and
certainty of policy is one of the key reasons that we have more
wind under construction now than we have ever had before,
because of that clarity in policy and certainty. So the PTC
first.
Second, renewable portfolio standards. There are currently
in 29 States and DC RPS policies, and eight additional States
have renewable energy goals. And both of those are important
drivers for our industry.
It is also important to note that an RPS does not handpick
a technology. Rather, all renewables are able to compete to
incentivize cost reductions and efficiency gains in homegrown
electric sources.
The third policy I want to point out that has been so
helpful, in addition to PTC and RPS, State procurement for
offshore wind. We have got world class wind resources onshore
and offshore, especially off the East Coast and very much
though in the Great Lakes and off the West Coast.
States like Maryland, Massachusetts, New Jersey, New York,
Rhode Island, and others have set procurement requirements, and
these are vital drivers for our blossoming offshore wind
industry.
Now, with those three, let me talk about some of the
barriers we have going forward and some of the policies that we
need to add to those first three.
First, we have an old and inadequate transmission system.
Electricity is the lifeblood of a modern U.S. economy, yet our
grid is old and in need of investment. Three quick datapoints
on that. Consumers currently are paying $6 billion every year
in, in essence, congestion costs, because they are not able to
get the inexpensive, affordable clean wind energy from where it
is generated to load, because we don't have sufficient
transmission. That is point one.
Point two, American Society of Civil Engineers gave our
grid a D-plus. That is not the grid you want to build the
future modern economy on a D-plus grid.
Lastly, SPP and MISO have both found that the benefits of
transmission are three times greater than the cost of those
upgrades.
So a solution for Congress is to direct FERC to create
workable policies in what we have referred to as the three Ps
of transmission: How to plan for it, how to pay for it, and the
permitting of transmission.
The second policy I want to talk about that we need to
address is creating an implicit or explicit price on carbon.
Currently different energy technologies receive varying levels
of support across different time periods without any unifying
policy rationale. A simple way to fix this barrier is for
Congress to put a price on carbon, whether explicitly or
implicitly, so that carbon is appropriately valued and so
electric generators have a level playing field to compete. And
one such example is a technology-neutral tax incentive, among
many ways of getting at that.
So to summarize, policies that have been beneficial, the
PTC, renewable portfolio standards, and procurement policies
for offshore wind. And we would add to that list, to address
these barriers, transmission policies and a price on carbon.
Thank you very much.
[The statement of Tom Kiernan follows:]
----------
House Select Committee on the Climate Crisis, Solving the Climate
Crisis: Ramping Up Renewables, June 13, 2019
Testimony from Tom Kiernan, President and CEO, American Wind Energy
Association
Chairwoman Castor, Ranking Member Graves, Members of the Select
Committee, good morning. It is my privilege to be here today on behalf
of the 114,000 men and women working in the U.S. wind industry. I look
forward to discussing the tremendous contributions American wind power
is making, and how we can continue growing as part of the solution to
the climate crisis. As the President and CEO of the American Wind
Energy Association, I am proud to represent our 1,000+ member companies
with a common interest in encouraging the expansion of wind energy in
the United States. Our members include wind turbine manufacturers,
component suppliers, project developers, project owners and operators,
financiers, researchers, utilities, marketers, customers, and their
advocates. Today wind energy is lowering the cost of electricity for
American families and businesses, enhancing rural economies, and
actively reducing U.S. emissions. Wind energy is an American success
story, providing jobs, investment, manufacturing and economic and
environmental benefits across the country. A few highlights:
Today a record 114,000 Americans spread across all
50 states have jobs supporting the wind industry.
Over 500 American factories in 42 states build many
of the 8,000 parts found in a modern wind turbine.
The industry is proud to hire America's veterans at
a rate 67 percent higher than the national average.
At least 69 percent of U.S. congressional districts
have either an operating wind farm or wind-related factory, or
both.
The U.S. now has 97,223 MW of installed wind
capacity, enough to power over 30 million homes. Wind supplied
6.5 percent of the country's electricity in 2018.
At the state level, six states now generate at least
20 percent of their electricity using wind.
In 2018, the U.S. wind industry invested $12 billion
in new projects and paid over $1 billion in state and local
taxes and landowners lease payments.
As wind technology advances we're experiencing
previously unseen levels of productivity. Wind farms built over
the last five years have seen average annual capacity factors
of 40 percent, with some individual projects in more recent
years achieving over 50 percent, on par with certain types of
conventional power plants.
The U.S. offshore wind industry is primed to scale
up. At the end of 2018, the U.S. had a potential offshore wind
pipeline of over 25,700 MW spanning 10 states in the Northeast,
Mid-Atlantic and Great Lakes regions.
policies that have helped deploy renewables
Federal and state policies--such as the production tax credit
(PTC), state renewables portfolio standards, state procurements for
offshore wind, and funding for Department of energy R&D--have helped to
spur wind energy development.
production tax credit
Just as tax treatment for other energy sources has enabled growth
and development, the PTC is an incentive that helped wind developers
access the capital needed to build new wind projects. This incentive is
phasing out this year. The PTC helped launch the wind industry as we
know it. However, at times a lack of policy certainty around the PTC
hampered the growth of American wind power. For many years, Congress
cycled through the tax credit in one or two-year stints and allowed it
to expire multiple times. This cyclical pattern resulted in boom-bust
cycles of development. In December 2015, with strong bipartisan
support, Congress agreed to an orderly phaseout of the PTC. This multi-
year policy certainty created a business environment primed for growth,
where investments in people, infrastructure, and manufacturing took
hold.
state renewable portfolio standards
State renewable portfolio standards (RPS), policies that require
electric utilities to gradually increase the amount of renewable energy
that they deliver to their customers, have also helped spur the
development of this robust industry. By design, an RPS does not hand
pick a technology; rather all renewables are able to compete,
incentivizing cost reductions and efficiency gains. As a result, RPS
policies encourage the growth of additional homegrown electricity
sources that diversify our energy portfolios, spur local economic
development and job creation, reduce pollution, cut water consumption,
and save consumers money.
Today, 29 states plus the District of Columbia have RPS policies in
place, while another eight states have non-binding renewable energy
goals. State RPS targets range widely from 10 percent to 100 percent
renewable energy. Many states have been expanding their targets in
recent years and several others are considering future increases,
showing the success of RPS programs to date. Historically, wind energy
has been the top renewable energy technology of choice to meet RPS
targets, accounting for 64 percent of all RPS-related renewable
capacity additions to date.
Most importantly, the impact of RPS policies on consumers has been
minimal, with many actually seeing lower electric bills because of
them. Because wind's costs have fallen by 69 percent since 2009, it's
the cheapest source of new electric generating capacity in many parts
of the country.
state procurement for offshore wind
The U.S. has a vast offshore wind energy resource, possessing a
power potential of more than 2,000 gigawatts (GW), nearly double the
nation's current electricity use. This potential presents an enormous
opportunity to deliver large amounts of clean and reliable electricity
to the country's largest population centers, where it's needed most.
With world-class wind resources on the East and West Coasts and in
the Great Lakes, infrastructure, and offshore energy expertise, the
U.S. is primed to scale up offshore wind power. The U.S. Department of
the Interior is charting a path forward for additional offshore wind
lease areas. That will transform offshore wind's enormous potential
into a concrete pillar of American energy dominance while spurring new
manufacturing and shipbuilding.
State policies that require the purchase of offshore wind in
Maryland, Massachusetts, New Jersey, New York, Rhode Island, and others
are vital drivers for the offshore wind industry. These policies will
help achieve scale and develop an American supply chain. With stable
policy in place, the Department of Energy found that the U.S. could
install a total of 22,000 megawatts (MW) of offshore wind projects by
2030 and 86,000 MW by 2050, creating thousands of well-paying jobs in
coastal communities. A recent study by the University of Delaware's
Special Initiative on Offshore Wind projects America's growing offshore
wind industry represents a $70 billion capital expenditure revenue
opportunity for businesses in the offshore wind power supply chain over
the course of the next decade. And according to a study from the
Workforce Development Institute, 74 different occupations are needed to
build, operate and maintain an offshore wind farm.
impediments to growth in wind energy industry
The difficulty in building transmission, the lack of a level
playing field for all renewables, and the introduction of tariffs on
the wind energy industry are impediments to the continuation of a
robust industry.
transmission
Electricity is the lifeblood of the modern U.S. economy. The
ability to get electrons from where they are generated to where they
are consumed is essential to virtually everything Americans do. Yet,
our electricity grid is aging and needs sustained attention and
investment in order to provide reliable, affordable service to families
and businesses. Consumers currently pay approximately $6 billion in
annual transmission congestion costs. In fact, the American Society of
Civil Engineers rates the country's electric grid an unacceptable D+.
Transmission provides dozens of quantifiable benefits, such as
facilitating access to lower-cost electricity generation, reducing the
need to build additional generation to hold in reserve, facilitating
robust electricity markets, providing economic development and jobs,
and helping meet public policy requirements, among other benefits. In
short, expanding transmission access provides consumers with lower cost
electricity while enhancing the reliability and resiliency of our power
system.
Fortunately, dozens of studies from across the country show that
transmission line investments pay for themselves many times over by
reducing electric bills, and real-world examples bear this out:
SPP found that the transmission upgrades it
installed between 2012 and 2014 created over $16 billion in
gross savings--3.5 times greater than the cost of the
transmission upgrades.
MISO found that recent transmission investments will
provide $12 to $53 billion in net benefits over the next 20 to
40 years, or between $250 and $1,000 for each person currently
served by MISO--2.2 to 3.4 times greater than the cost of the
transmission.
Wind energy continues to be the lowest-cost source of new
generation in many parts of the country, even compared to rooftop
solar. Wind is also one of the most cost-effective means to reduce
carbon emissions, and cut 43 million cars' worth of carbon emissions in
2018 alone. Transmission is critical to accessing this reliable, low-
cost, location-constrained zero-carbon resource. When congestion occurs
on the transmission system, wind generators are sometimes curtailed,
which means that more expensive and dirtier generation is dispatched to
meet customers' demand. With a robust transmission grid, regional grid
operators can cost-efficiently and reliably balance variable resources
across diverse geographic areas, allowing carbon reduction to be more
cost-effective.
The key to expanding and upgrading the transmission grid is
workable policies for how transmission is planned, paid for, and
permitted. In 2011, the Federal Energy Regulatory Commission (FERC)
took an important step in the right direction with Order No. 1000,
which established further requirements and principles related to how
transmission is planned and paid for on a regional and interregional
basis. While Order No. 1000 made some strides, more must be done to
ensure efficient and cost-effective transmission solutions are
available. Congress should encourage FERC to take steps to better
deliver on Order 1000's promise and ensure a regulatory environment
that incents transmission infrastructure, aligning it with the future
needs of the grid, such as meeting climate goals.
the cost of carbon emissions is not reflected in markets
The societal cost of emitting carbon is not currently captured in
today's markets. Pricing carbon dioxide, especially on the national
level, would remedy this market failure. Society faces a dual energy
challenge: we need to expand energy supplies to support economic growth
and improve living standards, and we must do so in a way that addresses
the clear risk posed by carbon emissions contributing to climate
change. Fortunately, these goals are not mutually exclusive because of
the rapid decline in zero-emitting technology's costs, in particular
renewable energy.
Strong and consistent policy signals at the national, regional and
state levels that internalize the cost posed by carbon emissions can
promote a smooth and affordable transition to a cleaner, more
sustainable, economy.
unlevel playing field
In absence of broad federal policy, the U.S. tax code has been a de
facto source of energy policy for the last century, but the numerous
energy-related incentives in the tax code have made the energy tax
landscape unnecessarily complex. Different energy technologies still
receive varying levels of support across divergent time periods without
a unifying public policy rationale and fairness across the
technologies. Congress should further simplify energy tax policy and
create a level playing field by providing a widely applicable,
transferable technology neutral tax incentive, based on carbon
emissions, that thereby puts an implicit or explicit price on carbon to
build our economy and lower prices for consumers. There are multiple
legal and regulatory approaches that can accomplish this goal. This
approach would create a more level playing field among energy
generation technologies. Further, the clear goal of greenhouse gas
reductions forming the basis of the credit would provide a stable
incentive that increases business certainty.
tariffs
The U.S. wind industry supports 114,000 high-paying jobs spread
across all 50 states, many at more than 500 factories that build wind-
related parts. While AWEA appreciates the administration's actions to
remedy unfair trade practices and increase American competitiveness,
the enacted high and sweeping tariffs on products and component parts
used in wind energy development will substantially increase the cost of
doing business for U.S. wind energy developers. This hurts U.S.
manufacturers and makes energy less affordable for the millions of
Americans who rely on wind power to provide affordable energy. It also
hampers the administration's progress on goals concerning U.S. economic
development, energy dominance, infrastructure improvements, job
creation, and support for rural communities. The potential increase in
wind energy's costs and, in turn, the potential reduction of future
wind deployment, if the Section 301 and Section 232 steel and aluminum
tariffs are not soon lifted, will:
1. Eliminate thousands of American jobs, mostly in rural America
where these jobs are desperately needed; including the loss of domestic
manufacturing jobs as the wind industry reduces U.S. manufacturing of
wind components in states like Colorado, Texas, and Ohio; and
2. Devastate already struggling farming and ranching families in
states like Iowa, Kansas, Oklahoma, North Dakota, and South Dakota, who
count on turbine land-lease payments as a drought-resistant cash crop.
I appreciate the opportunity to participate in the conversation on
how to continue the growth of wind energy and contribute to addressing
the climate crisis.
Ms. Castor. Thank you.
Ms. Tezak, you are recognized for 5 minutes.
STATEMENT OF CHRISTINE TEZAK
Ms. Tezak. Thank you, Chairman Castor, Ranking Member
Graves, and distinguished members of the committee.
My name is Christine Tezak, and I lead the power,
pipelines, and environmental policy practice at ClearView
Energy Partners, LLC. We are an independent research firm here
in Washington that serves institutional investors and corporate
strategists.
Thank you for inviting me here to contribute to your
important discussion regarding the growth of renewables in the
U.S. power portfolio. I am grateful for your diligent
consideration of climate issues on behalf the Nation's
citizens, corporations and stakeholders.
As mentioned earlier by Ranking Member Graves, USEIA
calculates that U.S. electric power sector carbon dioxide
emissions declined 28 percent since 2005 due to a slower
electricity demand and changes in the mix of fuels used to
generate power. This occurred for a variety of reasons.
Our resource base has limited nuclear and hydropower
capability relative to the other G20 nations, as we showed in
figure 1. So building renewable capability that nature didn't
provide can help us make further improvement.
Second, as mentioned already, State renewable portfolio
standards support and accelerate renewable deployment.
Individual States establish targets and mandates directing
their utilities to procure renewable energy resources based on
a percentage of energy delivered over the course of a year.
We summarize these programs in figure 2. Structuring these
programs as targets to meet overall needs is important, as
power requirements often differ on an hourly, daily, and
seasonal basis.
Third, solar contributed 14 percent of California's needs
in 2018, leading the Nation's organized markets as we showed in
figure 3. But natural gas has been important in balancing
renewable power variations. Non-hydro renewables provided 26.6
percent of the gigawatt hours consumed in the Golden State last
year. However, the top 50 demand hours, California continued to
rely heavily on in-State natural gas resources, even as
renewable resources shouldered a larger share of demand at peak
times.
In 2018, 48 percent of California's top 50 peak hour needs
were met by in-State gas plants. That is down from the 53
percent average over 2015 to 2017, yet natural gas is still
needed to keep the lights on, as we illustrated in figure 4.
So far in 2019, wind is up to 25 percent of daily power
needs in SPP. Wind output over the last 12 months is--moves
over a range, though, from a low of 148 megawatts to a high of
16-and-a-half gigawatts. The maximum one-hour ramp observed to
date is 3.7 gigawatts, and the largest swing in production was
a drop of 14.8 gigawatts over 18 hours. Natural gas and coal
resources ramped up and down to meet the shifts in wind
production. Both markets have a significant number of new
renewable projects planned.
To meet State level climate objectives, we expect electric
storage technologies to help provide the balancing needs that
natural gas plants currently provide. Natural gas sector
participants continue to explore carbon capture and
sequestration or beneficial reuse technologies. Currently,
storage alternatives are more expensive than installed and new
natural gas units but are growing swiftly off a small base.
Last week, former Mayor Bloomberg called for closure of the
Nation's remaining coal plants by 2030 and opposes construction
of new natural gas plants in an effort to address climate
change on an even shorter timeline envisioned by the State
programs that Chairman Castor already mentioned.
We built a cursory estimate of generation plant costs alone
required to replace the 1.15 terawatt hours of electricity
provided by coal facilities in 2018. Our assumptions are
detailed in my testimony.
But assuming equal shares of wind, solar, and biomass, with
storage to complement wind and solar only, our rough estimate
implies as much as a $941 billion in plant-related CapEx alone
to meet this objective at today's prices.
To fund such a broad societal goal, we looked at the
potential impact of increasing electricity rates through the
addition of a one cent per kilowatt hour surcharge. This
approach could provide a modest level of funding but would have
disparate rate impacts. That means bill increases of 3 to 11
percent, given differences in underlying costs of power in each
State and differences in average consumption, as we show in
figure 6. Therefore, reducing the cost of the transition
appears very worthy of policymaker consideration.
Continued use of natural gas and progress on current State-
identified timelines could meet power needs while delivering
substantial emissions improvements, potentially at a lower
cost.
Our firm sometimes frames energy security in three
dimensions: Adequacy, attributes, and affordability. Our
experience is that affordability can be a real-world constraint
when it comes to policy formation. Put it another way, focusing
on attributes to the exclusion of affordability can undermine
security and program durability. We suggest that natural gas
may still have a key role to play as the Nation deploys an
increasing number of low-emitting resources to our portfolio.
I have also put in our testimony a 10-year analysis of the
fuel mixes in each State for the members of the committee.
Madam Chair, this concludes my summary, and I look forward
to your questions.
[The statement of Ms. Tezak follows:]
----------
Testimony of Christine L. Tezak, Managing Director, ClearView Energy
Partners, LLC, Before the U.S. House of Representatives Select
Committee on the Climate Crisis
Good morning, Chairman Castor, Ranking Member Graves and
distinguished Members of this Committee. My name is Christine Tezak,
and I lead the power, pipelines and environmental policy practice at
ClearView Energy Partners, LLC. ClearView is an independent research
firm here in Washington, D.C. that serves institutional investors and
corporate strategists. Thank you for inviting me today to contribute to
your important discussion regarding the growth of renewables in the
U.S. power portfolio. I am grateful for your diligent deliberation of
climate issues on behalf of the nation's citizens, corporations and
stakeholders.
My testimony today makes three points, which I will detail in the
paragraphs that follow. First, the nation's electric generation fleet
has seen a significant drop in its emissions intensity since 2005 as
new generation resources entered and older units retired. Second,
renewable energy resources are growing quickly, if unevenly, throughout
the U.S., thanks in large part to state initiatives. Third, I discuss
how the highly flexible operating characteristics of natural gas plants
have complemented renewables' growth by playing a balancing role.
Specifically, they have done so by ramping up and down to accommodate
the variation in renewable resource production, whether hourly,
seasonally or annually. Finally, I offer a few thoughts on natural gas'
potential to economically facilitate the shift to a lower-emitting
national power portfolio.
The U.S. Energy Information Administration explains that U.S.
electric power sector carbon dioxide emissions (CO2)
declined 28% since 2005 because of slower electricity demand growth and
changes in the mix of fuels used to generate electricity. In 2017, EIA
calculated that CO2 emissions from the electric power sector
totaled 1,744 million metric tons (MM MtCO2) in 2017, the
lowest level since 1987. In 2018, they rose slightly to 1,762 MM
MtCO2.
In CY 2017, the world's ten cleanest power mixes accounted for 9.5%
of power generation and averaged 84.3% emissions-free on a generation-
weighted basis. On the same basis, however, they averaged 25.6%
nuclear-powered and 48.1% hydro powered, and only 10.6% non-hydro
renewable powered (the U.S. was 10.1% in CY 2018, according to our
Firm's analysis of EIA data). In other words, most of the ``green''
power is blue. We're not all fortunate enough to have volcanoes and
glaciers, so many nations--including the United States--find themselves
installing the renewables that nature didn't provide.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
mid-century ``max-outs''
Under the Federal Power Act, states have the authority over
electric generation adequacy within their borders. This means that
siting and fuel mix decisions are under state authority. The federal
Environmental Protection Agency (EPA) sets emissions standards for
plants of different fuel types and all plants are required to meet
them. Emissions standards have been put in place since the 1970s. EPA
plans to finalize its Affordable Clean Energy program to address power
sector greenhouse gas (GHG) emissions this month.
Individual states, at their discretion, have established targets or
mandates directing their utilities to procure renewable energy
resources based on the percentage of energy delivered over the course
of a year. These programs differ significantly, some states are very
ambitious; others do not have any program in place at all. We summarize
these programs below in Figure 2.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
The details of these state-led programs differ, both in scope and
in stringency. Washington, D.C. and Hawaii have requirements for their
utilities to deliver 100% renewable energy by 2032 and 2045,
respectively. The state of Washington and New Mexico also have binding
requirements, but these programs require 100% ``zero carbon''
generation by 2045 and 2050, respectively. California and Nevada have
established non-binding goals to procure 100% of electric power needs
from zero carbon resources by 2050.
complex market dynamics and operational challenges
In many areas of the country, renewable energy growth has been
modest, and it has not presented significant challenges to the regional
transmission operators (RTOs) that manage multi-state markets. However,
some markets are seeing significant operational impacts and growing
queues of new projects seeking interconnection.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
We offer two examples. California and the Southwest Power Pool. The
first has a high penetration of solar, the latter, of wind. California
has seen significant changes in its market, as both its behind-the-
meter (a.k.a., distributed, or ``rooftop'') and utility-scale solar
deployments have grown. Solar power production has contributed to a
``duck curve'' phenomenon,\1\ where net load (demand) in this market
falls in the middle of the day, only to ramp up strongly in the late
afternoon and evening. This differs from the prior load curve, which
reflected a ramp up in the morning, fairly stable daytime demand, an
incremental evening ramp and then a tapering off as most folks retired
for the evening. Solar has been making strong contributions to
California's electricity needs over the last several years, meeting 14%
of annual demand needs in 2018. Even though renewables contributed
26.6% of the gigawatt hours (GWh) needed to serve California over the
course of last year, the provision of peak service still relies heavily
on natural gas facilities (see Figure 4).
---------------------------------------------------------------------------
\1\ For further information on the ``duck curve,'' see https://
www.nrel.gov/news/program/2018/10-years-duck-curve.html.
---------------------------------------------------------------------------
California's natural gas fleet is becoming smaller, in part through
retirements associated with age and a state-level regulation governing
once-through cooling systems. We expect natural gas facilities to
continue to play a key role going forward in the California market,
even as the Golden State closes in on its 60%/2030 RPS goal. Modest
natural gas prices, efficient production and flexible response time
remain key operational characteristics relied on by the grid operator.
During its top 50 demand hours, California continues to rely heavily on
in-state natural gas resources, even as renewable resources shoulder a
larger share of demand at peak times, as Figure 4 illustrates.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Over time, we expect electric storage technologies--including
batteries and pumped storage--to seek to fill the balancing role that
natural gas currently plays in markets such as California. Natural gas
sector participants also continue to explore carbon capture and
sequestration or beneficial reuse technologies. Batteries offer great
promise in terms of meeting predictable system shifts (such as the
increase in demand in the morning and evenings (morning and evening
ramp), as the four-hour duration of many batteries could complement
this need well.
Six states have storage adoption targets in place, and the Federal
Energy Regulatory Commission (FERC) and the regional wholesale market
operators are implementing a 2018 rule to facilitate the participation
of storage resources in the wholesale markets that it oversees.
Nationally, battery costs remain high relative to the operating profile
of installed and new natural gas units. Rare earth mining for the key
elements of battery technologies has environmental consequences of its
own. It is also an industry that currently relies on foreign supply
chains and could be unsettled during periods of trade tensions.
Longer-duration storage (around eight hours) such as pumped hydro,
has also been eying this balancing role. The FERC has seen an uptick in
preliminary permit applications for pumped hydro storage projects.
However, like other large-scale industrial efforts, stakeholders have
concerns about potential adverse environmental consequences and local
community impacts. Such projects also require significant upfront
capital investment. While the new applications are promising, it's not
yet clear how quickly new projects will come online given that they are
all still in the preliminary permitting stage. Eleven preliminary
applications, representing nearly 11 GW of installed capability, have
been filed at FERC in calendar 2019.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Natural gas assets can also fill in long-term supply gaps such as
supporting hydropower-dependent areas particularly in the event of
multi-year drought. Many hydropower resources lack pumped storage
capability and are dependent on winter precipitation to refill their
reservoirs.
Wind energy growth has challenged system operators in the Midwest
in a different way. For example, wind production meets an average of
25% of daily power needs in the Southwest Power Pool (SPP). Wind served
48% of load on the morning of December 20, 2018. Twenty-four hours
later, wind's contribution at the same time of day had eased to 17% of
load, and the difference was accommodated with a doubling of natural
gas generation and a 60% increase in coal-fired dispatch. Minimum wind
output over the last 12 months in the SPP territory clocks in at 148 MW
(August 2018) compared to a high of 16.5 GW on May 19. The maximum one-
hour ramp (increase) observed to date is 3.7 GW, and the largest swing
in production was a drop of 14.8 GW over 18 hours).
SPP has a significant number of new wind projects in its queue.
These high penetration regions illustrate that operational challenges
are likely to remain as renewables expand their participation in the
organized regional markets. Balancing significant changes to wind loads
currently is met by dispatchable natural gas (and other resources,
including coal) while other options are developed and become more
affordable.
considering affordability
Last week, former New York City Mayor Michael Bloomberg announced a
$500 MM commitment to advocate for the closure of the nation's
remaining coal plants by 2030 and to work to prevent construction of
new natural gas plants in an effort to address climate change on a
shorter timeline envisioned by most existing state programs (and the
judicially stayed Clean Power Plan).
We built a cursory estimate of hardware costs required to replace
1.15 TWh of electricity provided by coal facilities in 2018. This
simplified pro forma estimate considered only power plant substitution
(i.e., exclusive of financing, transmission interconnection, etc., but
inclusive of storage capability for solar and wind). We also did not
account for residual asset values assigned to retired fleet. Assuming
equal-shares of wind, solar, and biomass, with storage to complement
wind and solar (but not biomass) at 4Wh/W, our back-of-the-envelope
estimate implies that plant facilities alone--at today's prices--could
require as much as $941 B in capital expenditures.
Policymakers here at the federal level and in the states are
cognizant of the impact higher electricity rates can have on consumers,
whether individuals or businesses. In our analytical work, our Firm
sometimes frames energy security in three dimensions: adequacy,
attributes and affordability. Our experience is that affordability can
be a real-world constraint when it comes to policy formulation. Put
another way, focusing on attributes to the exclusion of affordability
can undermine security. Natural gas may still have a key role to play
as the nation deploys an increasing number of low-emitting resources in
our portfolio.
Our annual Energy Policy by the Numbers report, due to be released
this month, estimates state-level, average gasoline, home heating and
electricity expenses as a percentage of per capita disposable personal
income (DPI), a proprietary statistic we call ``consumer energy
leverage'' (CEL). In preparing our CEL estimates, we rely on EIA's
state-level, residential retail electricity rate data.
Applying those data to this discussion, we looked at the potential
impact of increasing electricity rates through the addition of a $0.01/
kilowatt hour (kWh) surcharge on our estimated average residential bill
for each state. A surcharge of this sort might notionally be used to
fund the replacement of existing generation assets such as the plan
proposed by former Mayor Bloomberg. Our analysis shows that this
uniform charge has disparate rate impacts (bill increases of 3-11%),
given differences in the underlying cost of power in each state and
differences in average consumption, as we illustrate in Figure 6. In
other words, a uniform surcharge could exert disparate economic impacts
on different regions.
Taking advantage of the geographic diversity here on this
Committee, I also included data summarizing the resources and
technologies that comprise the power generation mixes in each of your
home states (Figures 7-17).
Madam Chair, this concludes my written testimony. I look forward to
any questions you or your colleagues might have at the appropriate
time.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Ms. Castor. Thank you very much.
Ms. Hamilton, you are recognized for 5 minutes.
STATEMENT OF KATHERINE HAMILTON
Ms. Hamilton. Good morning. My name is Katherine Hamilton,
and I am the chair of the firm 38 North Solutions and the
nonprofit Project on Clean Energy and Innovation.
Thank you to Chairwoman Castor, Ranking Member Graves, and
the entire Select Committee for inviting me to testify before
you today.
You have heard from the solar and wind industries, and I
would offer that other renewable resources--hydropower,
geothermal, ocean and tidal, and biomass--should also be
considered part of the equation to provide clean energy.
Today I am here to talk to you about the flexible
technologies and applications that will connect all of these
resources, getting more value out of every kilowatt hour we
generate, while allowing us to fully reach 100 percent clean
energy deployment and enabling all Americans to benefit from
this energy transition.
I started my career designing grids for a utility, an
experience that taught me how our grid works and that more than
generation and wires are needed to make it function at its full
capacity.
In the decades since that time, innovation that has
originally been limited to the utility has been democratized
such that entrepreneurs throughout this country have developed
technologies that change the way we participate in the electric
grid. We now need all of these technologies to work together to
mitigate climate change. And the good news is that we have most
of those today.
On the transmission side, flexible grid technologies, such
as phaser measurement units, dynamic line ratings, capacitor
banks, and volt/VAR optimization, allow for more efficient and
effective sensing control and management of the power flowing
through our transmission lines. Even broadband, to which many
of our rural communities still do not have access, can serve as
an enabler for renewable energy and energy efficiency
technologies.
Grid scale storage, from batteries to flywheels to pumped
hydro, enable renewable energy to be stored preventing
overbuilding of these resources and allowing them to function
as baseload generation.
Within the decade, we will see long-duration chemical
storage plants able to drop into the footprint of and replace
coal and gas fleets with inexpensive, nontoxic, and nonemitting
grid scale solutions.
On the customer side, consumers from industrial plants to
commercial businesses to homeowners can choose what kind of
energy they consume while controlling their costs. Flexible
distributed energy resources such as demand response, energy
efficiencies, smart inverters, batteries, thermal storage, fuel
cells, combined heat and power, microgrids, electric vehicles,
and geothermal heat pumps, there are a lot of them, can all
contribute to the customer not just being a load on the system
but becoming part of resource, allowing the supply and demand
sides to become interchangeable.
In other words, while we think of grid-side resources as
being the only source of generation, customer resources can
also provide electricity to themselves, to each other, and to
the greater grid.
In addition to integrating renewables and providing more
choices, these technologies save customers on their bills and
enable a more resilient system.
But turning now to the policies that will allow these
flexible resources to do their job and make the grid 100
percent clean.
Abby and Tom talked about tax credits, and it is extremely
important that we enable energy storage to take advantage of a
tax credit separate and apart from other generation sources.
Financial instruments, like bonds or a green bank, will be
important for directing capital toward clean energy investment,
funding low carbon infrastructure projects, supporting
community development, and providing a path like securitization
to retire coal plants.
For lower-income communities, grants in lieu of tax credits
and raising the cap on weatherization funds to install solar
and other distributed resources could provide a financial means
for these customers to access clean energy.
A Federal clean energy standard that allows flexible
resources to participate and receive credit for integrating
renewables would not only allow for full implementation of
renewables but also would create economic benefits, enabling
participation by customers of all types.
Research and development continues to be important, not
only to test and demonstrate new technologies, but also to
support modelling, analysis, planning, and technical assistance
to regulators, utilities, customers, and solutions providers.
It is crucial that our Federal Energy Regulatory Commission
issue a final rule on the distributed energy resource
rulemaking to give these resources access to competitive
markets.
Federal policy does not have to conflict with State goals,
and in many cases distributed energy resources can provide
services to both the utility on a local level while also
delivering valuable services to the wholesale market.
Finally, and perhaps most importantly, we need to be
thoughtful in designing our energy transition, ensuring that
workers and the communities in which they live, and on whose
shoulders our industrialized Nation was built, are taken into
consideration.
My purpose here has not been to debate whether we can or
cannot get to 100 percent, but instead to raise the possibility
that we have the tools to do so and that by deploying flexible
resources throughout the grid, we can fully integrate renewable
energy.
Whether we combine demand response with wind turbines or
energy storage with solar power, or whether we give consumers
the ability to manage and use their electricity as they see
fit, it is all part of the electricity system that can and
should be 100 percent emission free.
Thank you for your interest in climate change solutions and
the opportunity to present this testimony.
[The statement of Ms. Hamilton follows:]
----------
Testimony of Katherine Hamilton before the House of Representatives
Select Committee on the Climate Crisis, June 13, 2019
Good morning. My name is Katherine Hamilton. I am the Chair of the
firm 38 North Solutions and the non-profit Project on Clean Energy and
Innovation. Thank you to the Chair, Ranking Member, and the entire
Select Committee for inviting me to testify before you today regarding
the deployment of renewable energy in the United States.
Whether your goal is to mitigate climate change, increase
resilience, improve the economy, or lower consumer costs, clean and
renewable energy resources provide those solutions. You have heard from
the solar and wind industries and I would note that other renewable
resources--hydropower, geothermal, ocean and tidal, and biomass--should
also be considered part of the equation to provide clean generation
sources.
Today I am here to talk about the flexible technologies and
applications that will connect all of these resources, getting more
value out of every kilowatt-hour we generate, while allowing us to
fully reach 100% clean energy deployment and enabling all Americans to
benefit from this energy transition. I started my career with a decade
designing grids for a utility, was a Certified Energy Manager and
directed energy and water efficiency programs at the National Renewable
Energy Laboratory, and later ran the GridWise Alliance, focused on
deploying smart grid technologies. Those experiences taught me how our
grid works and that more than generation sources and wires are needed
to make it function at its full capacity. During those same decades,
innovation that had originally been limited to the utility has been
democratized such that entrepreneurs throughout this country have
developed new technologies and applications that can change the way we
participate in the electric grid. We now need all of these technologies
to work together to mitigate climate change, and the good news is that
we have most of those technologies today.
Let us look first on the grid side of the system. Flexible grid
technologies such as phaser measurement units, dynamic line ratings,
capacitor banks, and Volt/VAR Optimization allow for more efficient and
effective sensing, control, and management of the power flowing through
our transmission lines. Even broadband, to which many of our rural
communities still do not have access, can serve as an enabler for
renewable energy and other energy technologies. Grid scale energy
storage--from batteries of all chemistries, to flywheels, to flow
batteries and longer duration pumped hydro and chemical storage--will
enable the storage of vast quantities of renewable energy generation,
preventing overbuilding these resources and essentially allowing them
to function as what we think of as ``baseload'' generation. Already,
energy storage batteries have been installed to replace natural gas
peaker plants in California,\1\ proving the cost-effectiveness of a
technology that produces no greenhouse gases. Within the decade we will
see long duration chemical storage plants able to drop into the
footprint of and replace entire coal and gas fleets with inexpensive,
non-toxic, and non-emitting grid scale solutions.
---------------------------------------------------------------------------
\1\ Article on peaker plant replacement projects can be found here:
https://www.utilitydive.com/news/storage-will-replace-3-california-gas-
plants-as-pge-nabs-approval-for-worl/541870/.
---------------------------------------------------------------------------
On the customer side of the meter, consumers--from industrial
plants to commercial businesses to homeowners--can choose the type of
energy they consume while controlling their costs. Flexible distributed
energy resources such as demand response, energy efficiency, smart
inverters, batteries, thermal storage (from hot water heaters, for
example), fuel cells, combined heat and power, microgrids, electric
vehicles, and geothermal heat pumps can all contribute to the customer
not just being a load on the system, but actually becoming part of the
resource, allowing the supply and demand sides to become
interchangeable. In other words, while we think of grid side resources
as being the only source of generation, customer resources--whether by
reducing demand or by actually generating energy--can also provide
electricity to themselves, each other, and the greater grid.
These flexible resources on both the grid side and the consumer
side of the system can be seen as ``Non-Wires Alternatives,'' meaning
that they can be installed to defer capital outlay of new lines and
substations, saving utility investment and in turn customers money on
their bills.\2\ For example, in the Brooklyn-Queens Demand Management
project, the utility, ConEdison avoided a $1.2 B substation upgrade by
deploying demand response, energy efficiency, and distributed
resources.\3\ On the transmission side, under FERC Order 1000, in the
transmission planning process, flexible technologies that can avoid
build-out of transmission should be considered.\4\
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\2\ A collection of case studies of Non-Wires Alternatives projects
can be found here: https://e4thefuture.org/wp-content/uploads/2018/11/
2018 Non-Wires-Alternatives-Report_FINAL.pdf.
\3\ Article about BQDM program can be found here: https://
www.utilitydive.com/news/despite-failures-coned-targets-more-energy-
savings-from-non-wires-pioneer/547725/.
\4\ Summary of Order 100 can be found here: https://www.ferc.gov/
industries/electric/indus-act/trans-plan.asp.
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Customers have seen tremendous economic benefits from flexible
demand-side resources. On the PJM grid in the mid-Atlantic, customers
collectively saved $11.8 billion in one year alone through demand
response.\5\ In another example, in its Distributed Energy Resource
Roadmap, the New York Independent System Operator stated it ``believes
that providing resources with the flexibility to meet wholesale and
distribution system needs will deliver the maximum benefit to New York
electricity consumers.'' \6\ Baltimore Gas and Electric's SmartEnergy
Rewards program, in which Maryland customers lowered their energy usage
in response to signals from the utility, is estimated to have avoided
$93 million in transmission capital expenditures and $72 million in
distribution capital expenditures--savings that are then passed along
to the customers.\7\
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\5\ Link to PJM Market Monitor report can be found here: https://
aem-alliance.org/aema-reacts-strongly-market-monitor-report/.
\6\ ``DER Energy Market Design: Dual Participation''. New York
Independent System Operator, Feb 2018, 2019. https://www.nyiso.com/
documents/20142/5256593/DER%20Energy%20Market
%20Design%20Dual%20Participation%20022819.pdf/cfaf3647-4b77-a706-b86d-
24129d460ecf.
\7\ Report on this program can be found here: https://
www.utilitydive.com/news/behavioral-demand-response-gives-baltimore-
gas-and-electric-a-business-reas/546895/.
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Resilience is a key component of a flexible clean energy future.
The ability to fail fast, and then recover fast, is particularly suited
to distributed energy resources. As far back as Hurricane Sandy,
microgrids in New York and New Jersey enabled university campus
facilities to continue operation in the face of massive power
outages.\8\ When hurricanes hit Texas, Florida and North Carolina,
distributed solar and demand response were able to stabilize the grid
and prevent surges when power was restored. During heat waves in
California, hundreds of energy storage facilities at office buildings
in San Francisco were called to operate collectively as a ``virtual
power plant,'' reducing demand on an over-taxed grid. During the solar
eclipse in 2017, over 750,000 programmable thermostats were lowered by
their consumers to reduce demand by 700 MW as solar systems across the
country were displaced in the temporary darkness.\9\ Those thermostats
alone provided as much grid service as seven gas peaker plants, often
the most inefficient and emitting resources. Given the start of
wildfire season in California and the calling of public safety outages,
microgrids and other distributed resources will only become more
important. Flexible distributed energy resources have proven to provide
resilience when the grid needs it the most.
---------------------------------------------------------------------------
\8\ Article on Princeton's microgrid can be found here: https://
www.princeton.edu/news/2014/10/23/two-years-after-hurricane-sandy-
recognition-princetons-microgrid-still-surges.
\9\ See blog from Nest thermostats: https://nest.com/blog/2017/08/
10/solar-eclipse-meet-the-nest-thermostat/.
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Now the question becomes, what can Congress do to support these
flexible technologies? We know from experience that tax policies like
the Investment Tax Credit and Production Tax credit have been
instrumental in deploying solar and wind energy, bringing down costs
through scale and allowing more consumers to have access to these
resources. In the same manner, clarifying the tax code such that energy
storage can have access to the Investment Tax Credit will be important
to driving down the cost of energy storage of all types, opening up new
markets in dozens of states and offsetting the cost of deployment in
states like California, New York, Massachusetts, and New Jersey that
already have energy storage targets in place.
In addition to tax policy, financial instruments will be important
to providing certainty and driving investment in U.S. grid innovation.
Those tools could include a federally-managed financial institution
like a Green Bank to provide capital for low carbon infrastructure
projects, supporting community development and providing a path like
securitization to retire coal plants.\10\ Public-private partnerships
and cost-sharing, originally required with the Recovery Act grants,
defrayed the cost of advanced metering and other smart grid
technologies to utilities and their consumers. Grants in lieu of tax
credits and raising the cap on Weatherization funds to install solar
and other distributed resources, could provide financial means for
lower income customers to access clean energy.
---------------------------------------------------------------------------
\10\ In Colorado, a bill was introduced in the state legislature to
securitize the closure of coal plants with a bond mechanism: https://
leg.colorado.gov/bills/hb19-1037.
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Goals for deployment of clean energy, such as with Renewable
Portfolio Standards and Clean Energy Standards, have been implemented
in 29 states, three territories, and the District of Columbia and have
spurred development of renewable energy.\11\ States like New Mexico,
Nevada, California, and Washington; mayors of 216 cities as diverse as
Madison, Wisconsin, Salt Lake City, Utah, and Orlando, Florida;
utilities like Xcel, Idaho Power and Green Mountain Power; and
corporations \12\ like Bank of America, Anhueser-Busch, and Walmart,
have all made commitments to transition to 100% clean energy. Based on
the Sierra Club's Ready for 100 campaign, one in five Americans lives
in a community that has committed to 100% clean energy.\13\ Targets for
energy storage in states like California have created tangible economic
opportunities--over 200 companies doing business in the state--
supporting good union jobs while lowering consumer bills from demand
charges. A federal clean energy standard that allows flexible
resources, such as energy storage and demand response, to participate
and receive credit for integrating renewables, will not only allow for
full implementation of renewables, but also will create economic
benefits and enable participation by customers of all types.
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\11\ Map of states with RPS goals can be found here: http://
ncsolarcen-prod.s3.amazonaws.com/wp-content/uploads/2018/10/Renewable-
Portfolio-Standards-2018.pdf.
\12\ Corporations with 100% renewable energy commitments can be
found here: http://there100.org/companies.
\13\ Ready for 100 website with list of mayors can be found here:
https://www.sierraclub.org/ready-for-100.
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Research and development programs at the Department of Energy
(``DOE'') and other federal agencies have been crucial to developing
renewable energy technologies. In my seven years at the National
Renewable Energy Laboratory, I worked with scientists and engineers
developing new chemistries and technologies, and then testing them in
partnership with innovators in the private sector. Programs like ARPA-E
have asked questions about big problems and supported start-ups with
solutions to these problems.\14\ The DOE Offices of Electricity and
Energy Efficiency and Renewable Energy and the national laboratories
still play an important role in testing and demonstrating new flexible
grid technologies. In addition to basic research and development, our
federal government has a role in programs that are cross-cutting and
that support modeling, analysis, planning, and technical assistance to
regulators, utilities, and solutions providers. ``Soft'' costs like
interconnection and permitting continue to be barriers and increase the
cost of integrating clean energy resources; the DOE can be instrumental
in providing assistance in those areas.
---------------------------------------------------------------------------
\14\ Testimony before Congress on success of ARPA-E can be found
here: https://science.house.gov/imo/media/doc/
Testimony%20to%20Subcommittee%20on%20Energy_Williams. pdf.
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The federal government is the nation's largest landlord and should
be positioned to lead by example in the energy transition. Ensuring
that the government's own facilities are deploying flexible resources
will increase their resilience to both natural disaster and physical
threat. The Federal Energy Management Program at DOE serves an
important role in developing best practices for federal buildings and
partnering with agencies, utilities, and the private sector to deploy
clean energy projects. The Department of Defense has several
initiatives, including the Strategic Environmental Research and
Development Program (SERDP) and Environmental Security Technology
Certification Program (ESTCP),\15\ that test technologies that will
allow their permanent bases as well as those in the field to become
more efficient, secure, and clean. All of these programs should be
supported to increase clean energy penetration while reducing emissions
at sites.
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\15\ For more on these programs, see: https://www.serdp-estcp.org.
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The electric grid--whether from the transmission level or on the
customer side--is part of our nation's physical and economic
infrastructure. Access to electricity is considered a right of the
citizens of the U.S. and it should be considered of national interest
to implement policies supporting the efficient, cost-effective, safe,
equitable, and clean build-out and use of the electric grid. Broadband
for all consumers should be a priority; Internet access allows
consumers to fully participate in renewable and all of these flexible
distributed resources. In addition to consumers needing information to
understand and control basic energy use, solar installers also prefer
to monitor systems via internet and automatic demand response cannot
operate without an on-line connection. Standards and codes are also
critical to moving industry forward, providing a baseline of certainty
and best practices for innovative and efficient products and solutions,
while lowering the cost of those products for consumers.
It is crucial that our Federal Energy Regulatory Commission
(``FERC'') issue a final rule on the Distributed Energy Resource
rulemaking to give flexible resources access to competitive markets.
Over the past decade, Orders on demand response (Order 745) and energy
storage (Orders 755, 784 and 841) have allowed resources that provide
specific services to the grid to be paid for those services. In the
case of demand response, states like Pennsylvania and Maryland have
been able to aggregate consumer load, offsetting the cost of peak power
while allowing consumers to directly benefit from lower prices. These
state-based programs do not have to conflict with federal policy; in
many cases distributed energy resources can provide services to both
the utility on a local level, while also delivering other or similar
services to the wholesale market. All of those flexible services should
receive appropriate compensation, no matter what part of the grid they
serve.
Finally, and perhaps most importantly, we will need to be
thoughtful in designing our energy transition, ensuring that workers
and the communities in which they live that were built around mines and
other fossil fuel facilities--and on whose shoulders our industrialized
nation was built--are taken into consideration. These talented and
motivated people of all ages and skill sets should be brought into the
future of our electricity grid with training programs and access to
these technologies.
For nearly a decade, the National Renewable Energy Laboratory has
been working collaboratively with other laboratories, universities,
industry, and non-governmental entities on the Renewable Electricity
Future Study to analyze high penetration of renewable energy on the
U.S. electric grid.\16\ In those publications, flexible resources such
as those I have been discussing are seen as key to getting close to
100% renewables. My purpose here has not been to debate whether we can
or cannot get to 100%, but to instead raise the possibility that we
have the tools to do so and that by deploying those flexible resources
throughout the grid, we can fully integrate renewable energy. Whether
we combine demand response with wind turbines or energy storage with
solar power, or whether we give consumers the ability to manage and use
their electricity as they see fit--it is all part of the electricity
system that can and should be 100% emission free.
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\16\ See more on the RE Futures Study and subsequent papers here:
https://www.nrel.gov/analysis/re-futures.html.
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As my friend and colleague Jigar Shah wrote in his book, Creating
Climate Wealth, climate change solutions pose the greatest wealth
creation opportunity of our time.\17\ By setting public policies that
incentivize both renewables as well as all the flexible resources that
connect those resources throughout the grid, we will be able to use
U.S. innovation to become 100% clean, manage our costs, allow for
consumer choice, increase resilience in the face of natural disaster--
all while providing certainty and stimulating economic growth for all.
I am an eternal optimist, but I fully believe that with smart policy
and political will, our nation has the ingenuity to make that
transition.
---------------------------------------------------------------------------
\17\ Shah, Jigar, Creating Climate Wealth: Unlocking the Impact
Economy, ICOSA Publishing, 2013.
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Thank you for your interest in climate change solutions and in the
opportunity to present this testimony. I look forward to your
questions.
Ms. Castor. Well, thank you all very much. Your testimony
was compelling. So I know the committee is going to have a lot
of terrific questions for you.
So I will recognize myself for 5 minutes to start the
questioning.
Modernizing and cleaning up the electricity grid by
deploying more renewables is important for a whole host of
reasons. The top two that come to mind first, the energy
sector, the electricity sector, even though emissions have
fallen somewhat, remains a significant part of the U.S. carbon
pollution problem.
And then when you turn to the transportation sector,
industrial sector, we are going to have to electrify those
industries that currently rely on burning fossil fuels.
Electrification will be a more potent climate solution with a
cleaner, more efficient grid.
Ms. Hamilton, in your testimony you just shared with us,
you described the potential benefits of flexible grid
technologies and distributed energy sources. How can these
flexible technologies lead to potential benefits for all of us
in the United States? How can we achieve our renewable goals on
a faster timeline?
Ms. Hamilton. Thank you for the question.
It is a really important question, because part of this is
about how do we really engage consumers in part of the solution
and give them a path forward on that. And I think that is all
part of the equation.
And as I said before, this is about allowing the supply and
demand side to work together and independently. That is going
to require a lot of planning. It is going to require tools that
allow us to manage these systems. But what it will do for
customers, it will lower their costs and it will allow for
greater resilience, because it will allow for technologies that
will, while failing fast, will also be able to recover fast.
Ms. Castor. Mr. Kiernan, I think I saw you nodding your
head when--when Ms. Hamilton said that the ITC has to include
energy storage. So talk to us about that. You agree with that?
And explain your position.
Mr. Kiernan. Yes, we do agree with that. There is a bill, I
believe in both chambers, the House and the Senate, supporting
a storage ITC. AWEA is supportive of that. We do believe that
wind, solar, and storage and natural gas can work very, very
effectively together. We do think storage costs have come down
dramatically. But it would benefit by a tax credit that would
further stimulate cost reductions and deployment of storage,
whether on the grid or with particular projects, particular
solar or wind projects or all of the above. But storage is very
much part of the solution, and ITC would help deploy it.
Ms. Castor. So wind energy is growing by leaps and bounds
now. But with the storage piece, you could accelerate
deployment and cleaner electricity across the country?
Mr. Kiernan. Absolutely. And I would add with transmission.
Yes, we need to storage on the grid, and we absolutely need
additional transmission, because it is transmission that allows
you to get clean wind energy or clean solar from where it is
generated to load. Storage is part of the answer; transmission
is the other very big part of the answer.
As I said earlier, our current grid is a D-plus. We have
got to get better if we are going to have an economy of the
future.
Ms. Castor. So, Ms. Hamilton, battery storage is a big part
of this as well. Everyone knows that we have got to do better.
How would you prioritize R&D in battery storage and
leverage public/private partnerships here?
Ms. Hamilton. All right so there are a couple of ways. One
is to continue on basic R&D for new technologies, new
chemistries. So ARPA-E is looking at long-duration storage, for
example.
Another piece is some of the issues around the cost of
storage are interconnection and permitting. And those are
costly. They are called soft costs. And being able to have some
assistance on that from the Department of Energy would be
incredible. As I had mentioned before, also modeling and
analysis.
But I think throughout the system, whether it is from basic
R&D, all the way to really providing tools to energy storage
and other developers to lower the costs of permitting an
interconnection will be really valuable.
Ms. Castor. And then how do we build in the growing clean
energy workforce, whether it is training initiatives that
create good jobs all across the country, but especially in
parts of the country that will need those good family-
sustaining jobs?
Ms. Hamilton. Yeah, absolutely. That is a super important
question, because there are a lot of parts of this country
right now that have not been able to take advantage of the
energy transition. And so we have to think about how to build
capacity very locally, to ensure that we are all able to
participate, whether it is in Appalachia, where I am from, or
whether it is in other parts of the country.
We have to think--and it doesn't necessarily mean you
convert everybody to a solar job. That may not be the skill
set. It may be some other type of job. But I do believe that we
can do that. We just have to be very purposeful about the way
we do it.
Ms. Castor. Okay. Thank you very much.
I recognize the ranking member now for 5 minutes.
Mr. Graves. Thank you, Madam Chair.
I think we are going to go to Mr. Armstrong first.
Mr. Armstrong. Thank you, Madam Chair.
And I appreciate everybody particularly talking--Ms.
Hamilton in talking about permitting and how we deal with this.
And I think that is something that runs industrywide, whether
dealing with all of those issues and fast-tracking this.
My question--and I also appreciate the conversation about
storage. And one of the reasons I think that is important and
we have to have this conversation.
So--and I am from North Dakota. We do--we have a tremendous
wind energy. We actually just permitted our first solar
panels--I don't know--solar farm? Solar farm. And so we are
excited about that, too.
But earlier this year, I had the opportunity to go on the
USS North Dakota, which is a Virginia-class sub. And Virginia-
class subs require over about 9,000 pounds of rare-earth
metals. And as we have this conversation and we are moving
forward, one of things I think we have to talk about is the
national security interests that are involved in how we produce
this energy and the fact that the United States is essentially
100 percent reliant on importing rare-earth metals. I think at
this point in time--well, Interior has found that we are 100
percent net importer of over 20 critical rare-earth metals.
And rare-earth metals are limited to a few countries. There
is some--obviously some of the world's biggest polluters are
where we import this stuff from, not to mention some human
rights issues. And, I mean, when we are participating in a
global economy, these are important.
But, you know, Mountain Pass is, I think, the only place we
have in the United States right now that does that. And it is
actually a consortium that is owned particularly by Chinese
importers, and we actually ship about 50,000 tons of the rare-
earth concentrate to China each year for processing.
So when we are having this conversation, we are talking
about grid, we are talking about batteries, we are talking
about all of this. Are we also including in that conversation
seriously talking about creating a situation where we are not
so dependent on other countries?
I mean, you mentioned tariffs in your opening testimony,
about increasing the cost on producing solar. Are we having a
conversation about making sure that we are, I mean, dealing
with these issues here? And I mean, how--how are we addressing
that?
And I will start over here. Thank you.
Ms. Ross Hopper. I am going to assume over here means--
because you are looking at me.
Well, thank you for the question. I agree with you
wholeheartedly that it is an important piece of the
conversation. I would suggest it is not limited, certainly, to
renewable technologies, but those rare-earths, right, we use
them in so many of our products.
Yes, we are having an honest--I think an honest
conversation as we think about what are the elements that are
important. And so one of the sort of facts or that--at least in
solar, in the solar/photovoltaic market, over 90 percent of the
material is silicon, which is the second most abundant resource
in the Earth's crust. So we are talking about small amounts.
I know there is legislation--the last time Tom and I
testified together, a part of that bill was looking at rare-
earths and doing an inventory and sort of understanding what
our assets are here, where we get them from, and other places
and how do we--how do we sort of increase our thoughtfulness
about that.
So that is what I would say.
Do you have an addition?
Mr. Kiernan. If I could just add, for the wind industry,
actually it is a very small percent of wind turbines need rare-
earths. It is only what are called direct-drive turbines. And
we can get you the number, but it is probably less than 5
percent of the deployed wind turbines in the U.S. are direct-
drive, have magnets, and need a small amount of rare-earths.
The vast, vast majority are geared and do not use rare-earths.
So not an issue, essentially, for wind energy.
Mr. Armstrong. And I am going to let Ms. Hamilton answer,
too. But I think the problem with all of this is--is that that
might be true, except whether you are moving towards electric
cars--I mean, a Tesla needs 7 pounds of lithium. And when we
are dealing with energy storage on the grid and--I agree our
grid needs updating, too--batteries are a part of that
conversation.
So whether it is a turbine or a battery or a battery in a
house for a solar panel, rare-earth metals are a part of that
conversation. And we don't produce them here.
So, Ms. Hamilton, you have--you wanted to answer.
Ms. Hamilton. Yeah, thank you so much for this question.
This is a really, really important issue.
And it is rare-earths and also critical materials, all of
those platinum group metals, lithium, cobalt, that is often
sourced from the Congo that does have terrible practices, human
rights practices.
So what we have to do is think holistically. And there is
an executive order that just came out with a report on critical
materials for the United States and where they are.
A big huge piece of this that we have not thought about yet
is recycling. And it can be done. There are six companies
around the globe that recycle critical minerals. They recycle
lithium and cobalt, yet they are not in the U.S. We need to
figure out how to develop policy both to mine in the U.S. but
also to develop recycling facilities for rare-earths and
critical materials.
Mr. Armstrong. And I just--I think that is a great point,
and I agree with that. I just don't think that conversation is
happening as fast as the other one is, and we have to be very,
very careful not to put ourselves in a situation where--we are
energy independent as a Nation right now and create a situation
where we are not, while we try and catch up.
So thank you-all for your answers.
Ms. Castor. Ms. Bonamici, you are recognized for 5 minutes.
Ms. Bonamici. Thank you, Chair Castor and Ranking Member
Graves. And thank you to the witnesses.
I represent Northwest Oregon. And certainly back at home,
but across the country, people are really calling for
comprehensive action to address the climate crisis. And I thank
Chair Castor and the committee for really talking about a
transition to a 100 percent clean energy economy.
And we know the importance of the investment, especially
the Federal investments, but the new technologies and the new
possibilities are there as well.
Just this week, Representative Deutch from Florida and I
introduced the Marine Energy Research and Development Act to
accelerate research and development like the work that is being
done by Oregon State University in the Pacific Marine Energy
Center. They are building a wave energy test facility off the
Oregon coast. It is very exciting. But it is--it is also going
to rely on--as we have discussed, we need a workforce as well.
And as someone who serves on the Education and Labor Committee,
that is something that we need to have this conversation along
with a transition.
So in Oregon, we are really leading the way to ramp up
renewables. Portland General Electric and NextEra Energy just
announced their efforts to develop the Nation's largest major
renewable energy facility that is going to be integrating wind
and solar generation and battery storage in a single location,
the Wheat Ridge Renewable Energy Facility. It is going to
create and store safe, low-cost, clean renewable energy to
power more than 100,000 homes. Kind of a trifecta--wind, solar
and battery storage--to help balance the load, especially--
efficiently transfer the energy.
And I know, Mr. Kiernan, you talked about the congestion
costs, and I am going to ask you about that.
But also, Ms. Hopper, you talked about a shared clean
energy vision in your testimony. So what are the current
opportunities and challenges of integrating when you have the
solar with wind or battery storage?
Ms. Ross Hopper. Thank you for the question.
Yes, we are very aware of that project in Oregon.
Congratulations.
Ms. Bonamici. It is exciting.
Ms. Ross Hopper. I think it is exciting. But it is also--it
is a proof that the vision is coming to fruition now, right?
And so this is--this is not just our clean energy future; it is
our clean energy reality, which I find so exciting.
What can we do to help accelerate that clean energy vision?
I think what sort of my fellow panelists have talked about,
(a), establishing the vision. It can't be understated, the
planning that Katherine talked about, to make sure that we are
intentional about what we are doing.
I think we have highlighted some Federal policy, so around
tax policy, around carbon policy certainly, around regulatory
certainty, and predictability that we all share, that challenge
both at the Federal level but also at the State level. You
talked a little bit about soft costs. Like permitting these
projects, whether it is on a roof or in a big field, it is
challenging. And so getting clarity around there.
I think for--certainly from the solar perspective, as we
think about new construction and we think about the fact that
as we are--you know, as we are building homes and new
buildings, we should have those equipped for solar already and
sort of have that just be--just like you get a front door or a
window, you also have solar on your roof. It will bring down
the affordability of home ownership if we have that.
Ms. Bonamici. We actually have in Northwest Oregon a 57-
unit affordable housing building that was built to passive
house standards in a multifamily dwelling, which is amazing.
The costs are very, very low, the energy costs.
Mr. Kiernan, when you talked about the congestion costs,
what are the barriers? Is it funding? Do we need more research?
How do we address that?
Mr. Kiernan. It is mostly enabling FERC, empowering or
directing FERC, to take the next steps in facilitating more
transmission. So I mentioned earlier, one direction that
Congress can give to FERC is for more interregional planning.
Right now we have got these different regions--PJM, MISO,
SPP--and they do planning independently and at different times,
as opposed to doing it at the same time where they can perhaps
figure out, oh, actually you have got a resource that can, if
we connect our grids over the seams, meet what we need over
here.
So, for example, a simple direction from Congress to FERC
to do more interregional planning or to give FERC back----
Ms. Bonamici. Thank you.
Mr. Kiernan [continuing]. Those are examples that help----
Ms. Bonamici. Thank you. Perfect. I am going to try to get
one more question in to Ms. Hamilton.
But I have to say, Ms. Tezak, I loved all of the data in
your testimony. Thank you. Those charts were really helpful.
There is another project up in the Columbia River Gorge. It
is a partnership of Federal agencies, industry, academia,
National Labs--including the Pacific Northwest National
Laboratory--working on the Wind Forecast Improvement Project to
improve the caliber of the forecasting, especially in
challenging terrain, if there are coastlines, mountains,
canyons.
So, Ms. Hamilton, how can assessments of this resource
potential help accelerate the deployment of clean energy? What
difference would that make to have better forecasting?
Ms. Hamilton. Forecasting is critical, and it is very
locational specific. So there are microsystems. They are not
just--you can't just do it from a broad area. You need to
really get down to a very localized level. So I think having a
National Lab involved and doing resource assessment is critical
to making sure that you know exactly what the resource is, when
it can be best used and deployed, and then how you are going to
go about doing it and bringing the private sector----
Ms. Bonamici. Do we need additional R&D in that area, or do
we just need funding to do it?
Ms. Hamilton. I think you can still have a program within
the Department of Energy, say in the Office of Energy
Efficiency and Renewable Energy or the Office of Electricity
that could help manage that.
So, yes, you would still--having funding going to the
National Labs to help with that is really important. I was at
the National Renewable Energy Lab, so I am biased that way, but
I still think that is really important.
Ms. Bonamici. Thank you. And I am out of time.
Thank you, Madam Chair. I yield back.
Ms. Castor. Thank you.
Mr. Carter, you are recognized for 5 minutes.
Mr. Carter. Thank you, Madam Chair.
And thank all of you for being here. A very important
subject, and we appreciate your participation.
I want to start with you, Ms. Tezak.
I am from Georgia. And as we say in Georgia, there are two
Georgias: There is Atlanta and then there is everywhere else.
And it is true. And we have a lot of rural areas.
Now, in your testimony, you told us that--or you stated
that renewable energy was growing, but you also said that it
was growing unevenly and that it was growing more in the urban
areas than it was in the rural areas. And I want to focus on
the rural areas, because we have got a lot of rural area in
Georgia, a lot of rural area in my district, in South Georgia,
in Southeast Georgia.
And I can tell you, I served in the Georgia State Senate
for many years. And during my time in the Georgia State Senate,
I was one of first ones pushing for solar energy. And I am very
proud of the fact that after having gone up against arguably
one of the strongest lobbying groups in the State, in Georgia
Power and Southern Company, that they have embraced it and that
Georgia is now one of the top 10 States in solar energy in our
Nation. And I think that is just phenomenal.
And kudos to Southern Company and Georgia Power for what
they have done. They have actually not only--not only embraced
solar power and other renewable energy, but even the CEO now,
his compensation is tied directly to how much renewable energy
they are using. And I just think that is a great step on their
part.
But I wanted to ask you, what--this uneven growth that you
talk about in renewable energy, particularly in solar energy,
is it--is it specific State by State, or is it just rural/
urban?
Ms. Tezak. I think it is State by State, and I think in
part it is because of the natural resources available.
If you look at the 10-year chart that we put together for
Georgia, you can see how the generation mix has shifted away
from coal to increased natural gas and the renewables and hydro
that have always--hydro, that has always been there, and the
renewables that are coming on.
It takes time to make that transition. And one of the
things that they have in SPP, for example, in the heartland of
the country, is great wind. And that is not as readily
available----
Mr. Carter. Right, right.
Ms. Tezak [continuing]. In Georgia as it is to----
Mr. Carter. A lot of hot air down there sometimes, anyway.
Ms. Tezak. Well, let's not get personal.
But I think that, you know, it--that is a clear
illustration of where some of the challenges are. I mean, when
you speak about wind energy, you know, you can speak in
gigawatts. And, you know, for residential solar, you are
talking about kilowatts.
And so, you know, each technology has a key role to play.
And when you are talking about distributed load, then
residential solar, I think, has a great opportunity to make a
difference, as you pointed out.
Mr. Carter. Right.
Ms. Tezak. And it also can help the utility manage growth
at the ends of the system, and that helps reduce the need for
massive transmission investments.
Mr. Carter. Well I want to mention--I don't mean to
interrupt you, but I want to mention one company in particular
in our district, Coastal Solar. And they have really found a
niche here. In fact, they have--they have really--been able to
really go into the rural areas, and particularly to the chicken
farmers.
And they have actually--actually got solar panels where
they have helped the chicken farmers. And a lot of the farmers
there in the rural communities are using this and using it to
great advantage. And it has helped us. They are one of the
reasons--Coastal Solar is one of the reasons why we are seeing
more--seeing Georgia as one of the top 10 States in solar
energy. And not only that, they are creating jobs, renewable
energy. All of this is just great.
I want to ask you about something else, and that is that
Georgia is a number one forestry State in the Nation, biomass.
This is something that we are producing a lot of in the first
congressional district as well.
It is a big market in the European Union but not so much in
America. And I am just wondering why it hasn't caught on more?
Because, you know, it essentially is--it is carbon neutral. And
not only that, but through sustainable forests, we are
replanting these trees, and this is--and obviously trees are
helping us in what we are trying to do here.
Any idea why this is something that the European Union uses
heavily but we in America don't seem to have adopted it as
much?
Ms. Tezak. Well, anecdotally, I think there has been a bit
of concern about the harvesting of mature trees and the change
you have from a carbon profile perspective, when you substitute
older trees for, you know, new trees and saplings.
And so I think that the----
Mr. Carter. But you have to do that anyway.
Ms. Tezak. Right. But I think that there has been an
evolution in thought that has biomass more agreeable here in
the U.S. than perhaps it was 10 years ago.
The wonderful thing about biomass that makes it competitive
as a renewable technology is that it often doesn't need the
same level of backup in terms of storage that solar and wind
would, because it is a more stable power generation resource.
And so I think that acknowledgment and the carbon
neutrality of it is becoming more accepted, but I think that
we--there was such a focus 10 years ago on being better than
carbon neutral, that I think it took a little while for things
to catch up. I mean, we have had an experience where, you know,
plastic bags were better than paper bags, and now we don't like
plastic bags. So I think that, you know, as we become more
informed as a society, we get better--you know, we get better
information.
Mr. Carter. Right. Well, my time is up. But I just want to
state for the record, Georgia is doing our part, and I am very
proud of that.
Ms. Tezak. Yes sir you are. I can assure you.
Mr. Carter. Very proud of our State. Thank you.
Ms. Castor. Yeah, Mr. Carter, Georgia may be outperforming
the Sunshine State, the State of Florida.
Mr. Levin, you--speaking of renewables, and exceeding
everyone's projections, Mr. Levin from California.
Mr. Levin. I will get to that. I am going to get to that.
Thank you, Chair Castor. Thank you to our witnesses.
Before coming to Congress, I cofounded a clean energy
nonprofit called CleanTech Orange County. Now, it is called
Sustain Southern California. And we have grown the clean tech
economy in Southern California tens of thousands of jobs in the
last decade. And we have put in place a number of policies that
have enabled that to be the case, many of which I heard
discussed on this panel.
I also have to brag about California for a second, Madam
Chair. And with all deference to Georgia and Florida, I
encourage everybody to download the Cal ISO app. It is called
``ISO Today.''
And as of right now, 45 percent of the current demand in
California is being served by renewable energy. And of that,
54.1 percent is solar. Good job, 29.1 percent is wind. Good
job. So 45 percent right now, currently, is being served by
renewables.
And we are the fifth largest economy in the world. And as
we have continued to increase the percentage of load being
served by renewables, our economy has improved. We have created
incredible clean energy jobs, not hurt the economy.
So I always try to dispute the false narrative that if you
protect the environment, if you take steps proactively to
combat the climate crisis, that somehow you will hurt the
economy. In fact, the exact opposite is true. It is the
greatest wealth creation opportunity of our time, if only we
would lead as a Nation as we do in California. So with that, I
will turn to questions.
Ms. Ross Hopper, I would like to see greater deployment of
distributed energy resources. With my colleague, Representative
Welch of Vermont, we have written to FERC, Federal Energy
Regulatory Commission, urging it to finalize its rulemaking
that will set rules for distributed energy resource
participation in the wholesale energy market--markets.
Ms. Ross Hopper, how do you expect that a final DER rule
would help you meet your solar deployment goals?
Ms. Ross Hopper. Thank you for that question. It is an
important one.
And yes, California definitely leads the way. I was
surprised you didn't talk about the solar mandate on new homes,
because I think that is one of the other ways in which
California is really leading. And it goes directly to your
question, right? Which is----
Mr. Levin. I only get 5 minutes.
Ms. Ross Hopper. Well, as you think about how do you
aggregate those distributed resources, right? And if we are
going to put solar in all new homes in the great State of
California, how do you use that--sort of to Katherine's point
earlier, how do you use that as an asset so it is not merely
benefiting the homeowner but it is benefiting the system?
And so how do I think the rule will help? I think the rule
will help because it will allow business models where you can
aggregate that demand, put it into the wholesale market, get
revenue back from it, so that customers can benefit but also
the grid can benefit. And once we have clarity on that, it will
drive deployment.
Mr. Levin. Thank you.
Ms. Hamilton, how do you think such rulemaking would help
consumers?
Ms. Hamilton. Well, this goes to the heart of--these are
all consumer-sided resources. So I will give you an example
of--15 percent of the spinning reserves in the Midwest ISO are
from one facility, Alcoa, the smelter, and they are doing
demand response. That is participating directly in the grid.
But right now customers with resources that are cited
behind the meter are not allowed to aggregate those resources
into the grid, whether it is energy storage or solar and
storage, whatever those resources are. This will directly
enable them to benefit financially, because they will be able
to actually provide resources that are then compensated. And
that is super important.
It is also going to be important to the grid. It will be
important to the utility on a very local level, but it will
also provide services to the greater grid that will enable more
penetration of all of these renewables.
Mr. Levin. Thank you. Yesterday, Chairman Chatterjee said
that the Commission hasn't finalized the rulemaking because of,
quote, ``complex legal questions.''
Ms. Ross Hopper, Ms. Hamilton, how would you respond to
that assertion?
Ms. Hamilton. So I am not an attorney, but I think a lot of
the questions are solvable. The technology questions, I think,
are solvable, and I think the market questions are solvable,
too.
I think you can allow States to have jurisdiction at the
same time and allow them to go forward with whatever goals they
have within the State, while allowing their consumers and
utilities to participate fully in the wholesale market in a
competitive way.
Ms. Ross Hopper. I am a lawyer, and I would agree with
Katherine.
Mr. Levin. I wanted to also echo my strong support of
energy storage and that the Federal Government should be doing
everything possible to get storage deployed across the country.
I am a cosponsor of Representative Doyle's bill to expand the
ITC to include storage.
Ms. Ross Hopper, how is the solar ITC driving storage
innovation today, and how would expanding the ITC to cover
storage help innovation in the future?
Ms. Ross Hopper. Sure. I will answer very quickly. The
solar ITC--when storage is paired with solar, they can take
advantage of it. So when we co-locate, that is permissible. And
it has clearly changed the marketplace, right? Because you
can--you can deploy these systems together and deal with a lot
of--sort of the intermittency or reliability--I never called it
reliability--the intermittency aspect of solar. The sun does
not shine at night, Representative Graves.
But if we disaggregate the two so that solar storage can
stand on its own and be deployed in ways that are separate from
a specific generation source, it just increases the options
that we have and increases the flexibility to--to locate
storage in different parts of our grid.
Mr. Levin. Thank you. And I am out of time. But I thank
you, again, for innovating and leading in this critical area.
Ms. Castor. Mrs. Miller, you are recognized for 5 minutes.
Mrs. Miller. Thank you, Chairwoman Castor, and Ranking
Member Graves.
Ms. Tezak, if the government right now mandated that we had
to shut down all coal plants to move to renewables, how much
would that cost?
Ms. Tezak. We haven't actually fully modelled that in its
entirety. We did take a look at the proposal that Mayor
Bloomberg had suggested with shutting down the coal plants by
2030. And on an equipment basis alone, not including
transmission upgrades, not including financing, just on
swapping out all of those coal assets for an even split of
solar, wind--and to Mr. Carter's interest, biomass--with the
necessary storage to balance intermittency, we got to $941
billion.
Mrs. Miller. Well, I have gotten to over a trillion.
Ms. Tezak. Yes. By the time you put financing and
transmission in and potentially residual cost for abandoned
assets, easily.
Mrs. Miller. How much do you think it would cost to finance
it?
Ms. Tezak. Well, in our theoretical, if you put a 1
percent--a 1 cent per kilowatt hour surcharge on every kilowatt
delivered in the U.S. last year, you would raise about $34
billion towards that.
Mrs. Miller. Given that the total spending in 2017 for
electricity in West Virginia, for residential, commercial,
industrial, and transportation, was only $2 billion, that would
be a huge cost burden to my constituents. Wouldn't you say?
Ms. Tezak. I would say that based on the analysis we
provided in our testimony, it would weigh most heavily on your
constituents.
Mrs. Miller. It would.
Could you elaborate on how transitioning to renewables
would impose further costs on consumers?
Ms. Tezak. Well, I think it is a matter of pace and, you
know, exactly what you want to achieve.
But more importantly, it is pace. You know, the more
accelerated the timeline, the more compressed and limited your
options are.
So to the extent that it took several years for cost
declines to materialize in solar and wind, which they did, in
no small part, because in spite of Federal support, natural gas
became cheap as well, and so the competitive nature forced the
cost direction down. That occurred over time.
And so very quick action can sometimes limit the ability to
make use of cost declines, you know, that appear over time. For
example, the R&D that Katherine has mentioned, that is going to
take a little time to develop. If we find chemical solutions
that take our reliance off rare-earth minerals so that we have
something else that is available domestically, that may not be
available on the same timeline that is foreseen, for example,
under Mayor Bloomberg's thing.
So I think that you lose some economic benefit. Plus you
have to reconcile the fact that you may have assets out there
that you are still paying for. For example, in PG&E's
bankruptcy, there is a question about whether or not they can
reject early-stage--you know, some of the first renewable
projects that were out there because simply on a cost basis.
So do you abandon those folks who brought you forward at
the beginning? It is a very difficult set of equities to
balance.
Mrs. Miller. It is a very difficult set.
In West Virginia, in 2017, coal-fired electric plants
accounted for 93 percent of my State's electricity. Renewables,
mostly hydroelectric and wind, accounted for 4.6 percent, and
natural gas provided the remaining 2.2.
This isn't just West Virginia. Nationwide, wind, solar,
geothermal, and hydroelectric power only constituted 6 percent
of the consumption of energy in 2017.
Do we need more renewable energy? Absolutely, yes.
Is it realistic that we will keep our homes, businesses,
schools, powered reliably without coal and natural gas?
Absolutely not.
We need to be focused on innovation, like real carbon
capture, that can make a real difference in protecting our
government--our environment. Excuse me.
Ms. Hamilton, I appreciated your reference to Appalachian
roots and the term ``thoughtful,'' because thoughtful is very,
very important. So is supply and demand.
We need to consider the economic consequences of what this
committee is considering. I want my colleagues to understand
that a few years ago my constituents were left with the results
of bad policy, of mandates which picked winners and losers
without letting the market decide.
There is a place for all forms of energy, but it cannot
come at the expense of jobs and livelihoods and entire
communities being wiped out.
Electricity bills skyrocketed, which left many people with
fixed incomes choosing between food, and medicine, and keeping
their heat and lights on.
My State and Mr. Palmer's State of Alabama are amongst the
top five energy exporters in the United States and have to
backfill all of the grids in States like California, which is
the number one energy importer, at nearly 90 million megawatt
hours per year. My State's total export of energy could power
every household and business in Orange and San Diego County for
the entire year.
Ms. Tezak, we have 50 States in this country with different
needs and different weather patterns. What is needed in Hawaii
won't necessarily be needed in Florida or New Hampshire. Can
you discuss the pitfalls of a top-down approach of applying
aggressive renewable schemes and mandates across all the 50
States?
Ms. Castor. I am sorry. The gentlewoman's time has expired,
but we are going to encourage you to answer that for the
record.
And at this time I will recognize Mr. Casten for 5 minutes.
Mr. Casten. Thank you, Chair Castor. Thank you so much to
the witnesses.
I want to respond a little bit to the last comment before I
start.
Our job here is to write the laws of the United States.
That is a pretty awesome job. We are at our best when we
respect the laws of economics and thermodynamics, because those
laws you can't really change.
Coal is dying because it is uneconomic, coal is dying
because it is not thermodynamic, and coal is dying in spite of
the fact that we do not charge coal for the full social cost of
carbon that it imposes on society. The health costs of coal
vastly exceed the revenue of any coal plant in this country,
and they are getting that for free right now.
If you don't believe me, all you have got to do is look
at--we have fantastic good news. Over the last two decades, we
have seen coal steadily lose market share to cleaner and
cheaper alternatives, not because of the laws of this country,
because of the laws of economics.
Combined cycle, renewable energy, every one of those plants
comes on and competes on the margin and is a better investment
as it comes on. And so we are making that transition. Now, that
is really good news.
There is a cost. Over the last--from 2005 to 2018, energy
related CO2 emissions dropped by 14 percent. The price of
energy has fallen by about 6 percent. As my friend Mr. Levin
pointed out, that is an opportunity we should embrace and
double down on, not run away from.
But it started going up last year. Last year the emissions
rose by 1.9 percent. And there was a--there was a February 2019
report from the EIA that suggests that a big part of the reason
for that is that we are now increasingly deploying much less
efficient natural gas power cycles to balance--to balance load
and deal with the swings, because we have to do something when
the wind isn't blowing and the sun isn't shining, and we don't
have the transmission that Mr. Kiernan pointed out about or the
storage capacity that was out there. Now, the only way, and I
would submit the best way, to deal with that intermittency is
not inefficient natural gas.
And so I would like to start with Ms. Hamilton. Can you
talk about how technologies like storage can change the story
and ensure that we continue to see the economic and
environmental gains of clean energy but also have the kind of
reliability we have come to expect?
Ms. Hamilton. Yeah, absolutely. And I will just say that
coal that is inefficient and uneconomic in operating out of
market is costing consumers a billion dollars a year. So it is
indeed a price.
In California, four peaker plants, natural gas peaker
plants, that were not clean have been replaced with energy
storage. And it wasn't more expensive. It was cheaper, quicker,
and cleaner to install energy storage than it was to continue
operating plants that were not economic. So I think that is one
of the big solutions.
Mr. Casten. So are there additional Federal policy support
so they can accelerate the deployment of energy storage?
Ms. Hamilton. Yeah. Certainly a tax credit would be really
helpful, because those were standalone projects that were not
coupled with any sort of other renewable resource.
Allowing for flexibility--if you do a Federal clean energy
standard of some sort, allowing for some credit for resources
that are flexible like that, that can both serve as load or
generation.
And load is important in California. To suck up the belly
of the duck, you need both load and generation at different
times. And so I think those two policies would be really
important.
Mr. Casten. I love that you and I and maybe a couple of
people in the room understand the belly of the duck joke. But
thank you.
So--so I agree obviously. And I was proud to introduce H.R.
2909, the Promoting Grid Storage Act of 2019, among other
things, that would authorize about a billion dollars for new
cost-cutting energy storage, R&D at DOE, provide technical
assistance. The effort is bipartisan, bicameral, would
encourage all of my colleagues to sign on.
I want to turn to the grid itself, because--and again, Ms.
Hamilton, in your comment to Mr. Levin, you mentioned allowing
load-sided resources to participate in FERC markets. You had me
at load-sided market participation.
However, one of the things that I think--I think we don't
talk about it enough, but I would welcome your thoughts on, is
that there are some ISOs, independent system operators, who
allow that; there are some that don't.
Can you just speak to the--the kind of market rules and
market access in different FERC markets in the country that--
whether for load-sided participation or other ancillary
services, where are the best practices that we should look to
that we can point around the country and rule out?
Ms. Hamilton. Well, everybody has a little work to do. I
would say New England ISO has finally allowed solar and storage
to start participating as a distributed energy resource.
PJM has been traditionally pretty forward-thinking. A lot
of the middle-of-the-country utilities and States opted out--
with Order 719, opted out of aggregation of demand response.
And what that did was it really--MISO is a tough market anyway,
because the prices are pretty low. But what it did was it just
did not enable aggregation of resources of all types.
But I have found working within States as diverse as
Indiana, Missouri, Louisiana, that working with utilities to
say let us--let innovators bring resources--all of these
customer-sided resources to you and then you be able to bid
those into the market, that that has been a really good
solution and that utilities are starting to see that because
they need solutions.
Mr. Casten. Thank you. I am out of time.
I would love to continue the conversation, because I think
a lot of those market access and how--we get what we reward.
Markets are really powerful. But if we don't send signals to
people to build the kind of generation we want in the right
place, we are not going to do it.
Thank you and I yield back.
Ms. Castor. Mr. Palmer, you are recognized for 5 minutes.
Mr. Palmer. Thank you, Madam Chairman.
Ms. Ross Hopper and Mr. Kiernan, how long have you all been
in the solar/wind power generation business? How long has
that----
Ms. Ross Hopper. I have been generally in the energy work
since 2000--my son was born in 2007--2008.
Mr. Palmer. Okay. So 11 years.
Ms. Ross Hopper. Yes, sir.
Mr. Kiernan. I have been with AWEA particularly the last
six years, but involved in energy and environmental policy for
30.
Mr. Palmer. For 30. Why is it----
Mr. Kiernan. Plus or minus.
Mr. Palmer. Why is it that wind and solar only represent
about 5 percent of our energy production if we have had that
industry around so long?
It is a simple answer.
Mr. Kiernan. Because of the dramatic, relatively recent
costs in the last 10 years--dramatic decline in the last 10
years, we are deploying more wind energy than ever, it is that
recent cost decline that is a leading to a dramatic increase in
wind deployment in the U.S.
Mr. Palmer. But even with the cost decline, the cost is
still extremely high.
You mentioned that you need natural gas. What do you need--
I mean, if you didn't have the subsidies, the market wouldn't
bear the cost. Why do you need natural gas?
Mr. Kiernan. If I can address the first, per Lazard, we are
the cheapest source of electricity unsubsidized.
We do need and appreciate natural gas. It is a very
important partner for wind energy. I would point out that the
cost to back up wind energy is less expensive than the cost to
back up conventional power plants, say coal or nuclear, because
they can trip off.
Mr. Palmer. But why do you need it?
Mr. Kiernan. Because wind is variable. But a traditional
power plant can trip off in an instant, and you need spinning
reserves, which are more expensive----
Mr. Palmer. No, the reason you need it is because our grid
is designed for a baseload, and it is not designed for
variations in that baseload.
And if you don't have the ability to maintain a baseload,
you are going to have disruptions in your--your output. That is
why you need a backup system.
Mr. Kiernan. The demand for electricity varies throughout
the day, increases and decreases. And grid operators have
learned how to manage that.
Actually the variability for wind energy is less than the
variability of demand of electricity. So grid operators talk
about actually wind energy as the new baseload, because our
variability is less than----
Mr. Palmer. If you--but, again, you get into the
engineering part of this, that--and this is from a report from
the Institute of Electrical and Electronic Engineers. If a
large enough share of the power grid flows through invertors,
which you have to have when you are using wind and solar, the
grid itself could collapse. Existing converter technologies
have faced serious software problems and prompted outages where
they have been deployed.
You know, when you talk about going to zero carbon output,
which, by the way, we had a hearing a couple of months ago, and
if we completely eliminated our carbon emissions, it wouldn't
stop climate change. We have got climate change that is
occurring--it is going to occur no matter what we do on the
carbon side.
But when we talk about, you know, completely going to a
renewable power grid, you are talking trillions and trillions
of dollars.
Mr. Kiernan. I will just mention, for wind energy, we are
currently 6-and-a-half percent of generation throughout the
entire United States, and we look forward to 10, 20, 30 percent
or more. There is all kinds of headroom with wind energy
currently.
Mr. Palmer. Are you aware of the problems they are having
in Spain and Germany right now with their renewables?
Mr. Kiernan. I am not an expert on international energy
issues.
Mr. Palmer. Well, I think you ought to take a look at it if
you want to have that as the primary source of power for the
United States.
Here is a New York Times article: Renewable Energy in Spain
is Taking a Beating. It is exorbitantly expensive.
There was a hearing before the--the House Select Committee
on Energy Independence and Global Warming back in September of
2009 where two professors from Spain testified that for every
one green job financed by the Spanish taxpayer, 2.2 jobs were
lost as an opportunity cost.
Here is another from a publication called Blue and Green:
Has Spain Learned its Renewable Lesson? Der Spiegel had an
article about the problems in Germany. And the thing is, I am
all for renewable power. I am fine with that. But there are
certain engineering realities that--that we are going to have
to face. And to tell the American public that we are going to
have a Green New Deal that makes us--puts us at all renewables
in 10 years, frankly I think is doing the public a great
disservice.
I yield back.
Ms. Castor. Thank you.
Ms. Brownley, you are recognized for 5 minutes.
Ms. Brownley. Thank you, Madam Chair.
And I want to thank you also for traveling to my district
over the Memorial Day recess. And I think we saw a lot in the
district in terms of impacts of the climate change and also
innovative ways to address it.
One of the places that we visited was Houwelings Tomatoes,
which is an innovator in sustainable agriculture. And they grow
tomatoes year-round in a greenhouse, which uses about a sixth
of the water, compared to field-grown tomato. They run their
whole facility from a 5-acre solar photovoltaic field. It is
quite innovative.
The CEO of Houwelings certainly pointed out to us in our
visit that unlike Europe, you know, one of the barriers that he
saw is there are not enough financial tools available to
provide capital for low carbon or no carbon projects.
And I think, Ms. Hamilton, you mentioned a green bank
concept. We have talked a lot about tax credits today, and I
think--I believe in tax credits and the incentives to move the
markets along.
What about, you know, this concept of a green bank?
Ms. Hamilton. Yeah, thank you very much for asking that
question.
Because there are a lot of projects that traditional
financing just won't cover and traditional banks won't come to
the table for, and a lot of those are energy efficiency
projects that are commercial, and they are projects that make
sense for customer savings, and yet no one is going to finance
them.
So having some kind of institution, whether it is quasi
Federal or a full Federal institution that really brings that
capital and does a lot of public/private partnerships--they
have done this in New York. They have one in Hawaii, Rhode
Island. There are several--Connecticut was another green bank--
Montgomery County, Maryland, has a green bank. This brings
capital and puts it toward projects that would not normally be
financed but that are still really viable commercially.
So I think it is a great thing--a concept to think about
and to think about how we can do something that consumers could
actually benefit from and also participate in.
Ms. Brownley. And so some of the green banks that you
mentioned have--are they--have they gone through full
lifecycles of investments of sorts?
Ms. Hamilton. Yes. Yes. So there are definite success
stories----
Ms. Brownley. And the returns have been stable?
Ms. Hamilton. Yeah, been great, absolutely.
Ms. Brownley. Thank you. Thank you for that.
Ms. Hopper, you talked--you know, in your testimony, you
talked about an aggressive goal of 20 percent of solar by 2030.
The breakdown on that is do you see it mainly coming from
rooftop--you know, residential rooftop solar, or is it, you
know--what is the breakdown between that and large utility-
scale deployments?
Ms. Ross Hopper. Thank you for the question. It is always
nice when people recognize that there is all different ways to
deploy solar.
So we think it--roughly track what the market is now. So
now it is about 60 percent utility-scale, so big solar farms;
about 20 percent commercial and industrial. So tops of--tops of
companies, tops of Walmarts, you know, community solar, and
then about 20 percent residential.
Ms. Brownley. And that--and as you said in your testimony,
in the first 10 years, it was--the growth was slow and then
very fast.
Ms. Ross Hopper. Right. It definitely hit an inflexion
point.
Ms. Brownley. And then once you hit that inflection point,
was there a shift in the breakdown of that, or was it because
of more residential solar?
Ms. Ross Hopper. That is a good question. I don't know
historically. I am happy to look back and get that to you.
Ms. Brownley. Okay. Okay.
And, Mr. Kiernan, Ms. Hopper talked about an aggressive
goal of 20 percent by 2030. In terms of wind energy, you talked
a lot about wind production. Just--if you could, can you put
what you said in your testimony and make it comparable to what
it would look like in a 2030 scenario?
Mr. Kiernan. Yes, I can. And I will harken back to a
document, a process called wind vision that DOE did under
President George W. Bush and then updated by Barack Obama. They
laid out a goal, so both Presidents--10 percent by 2020 and 20
percent of all electric generation in the U.S. is wind energy
by 2030, and then onto 35 percent by 2050, I believe, as wind
energy.
And I will just observe the head--the manager of operations
in SPP--a quick quote--he talks about 10 years ago we thought
hitting even 25 percent wind penetration would be extremely
challenging. Now we have the ability to reliably manage greater
than 50 percent penetration. It is not even our ceiling. That
is the gentleman that manages SPP. Sorry.
Ms. Brownley. And the technology for wind, how quickly is
that----
Ms. Castor. I am sorry. The gentlewoman's time has expired.
We have a vote call, so I am going to recognize the----
Ms. Brownley. Oh. I apologize.
Ms. Castor [continuing]. Ranking member for 5 minutes.
Mr. Graves. I am going to try and go very quickly here so
we can squeeze a bunch in.
Ms. Hopper and Mr. Kiernan--and I don't want to put words
in your mouth, Ms. Hamilton--but I believe there was a lot of
talk about kind of reimagining the grid or redesigning the grid
and transmission systems based upon this renewable technology
evolution that we are going through.
Is that fair somewhat?
Ms. Hamilton. Well, and we can use technologies that we
have today. We don't necessarily have to redesign, but
reimagine.
Mr. Graves. Okay. Reimagine.
The challenges that we are seeing right now in deploying
the transmission lines, it is--we are running into challenges
with the Endangered Species Act and 404 and National
Environmental Policy Act and all of these things. And we are
running into similar challenges with transmitting or
transporting natural gas, which is needed for some of the
balancing of your--of your resources.
What does this streamlined regulatory process look like
that helps to facilitate or deploy renewables in your mind?
What does that look like?
Mr. Kiernan. I think it is doable and manageable. We were
talking with Chairman Chatterjee at FERC this week--last week.
It is better planning, and it is giving FERC some backstop
authority so that decisions on transmission lines can get made.
We just need to move it more rapidly, but we have the tools and
technology with us today.
Ms. Ross Hopper. I will just add one additional piece of
that is once we have the transmission lines built--and I concur
with Tom--then we have to get the projects interconnected. And
so that is the other half that has to happen. And we have to
have sort of clear standards and expectations from utilities
about how quickly they have to plug in these systems.
Mr. Graves. Thank you.
Quickly, Ms. Tezak, there was a lot of discussion about
cost competitiveness of renewables. But I also heard in the
same breath, production tax credit, investment tax credit,
carbon tax, renewable portfolio standards, procurement
preferences, and other things that somewhat distort price.
You also referenced perhaps approaching a trillion-dollar
investment in order to achieve this objective of Mayor
Bloomberg.
Can you talk a little bit just about cost competitiveness
and what that looks like in terms of taxpayer investment
quickly, please?
Ms. Tezak. Sure. And I will describe the universe right
after that.
I think the challenge is, is that because natural gas has
been so modestly priced, it has been extremely competitive on
the margin. And while, you know, we have seen great advances
in, you know, for example, in SPP and, you know, wind is
absolutely kicking proverbial tail there and in Texas, those
are locational areas. That doesn't help Georgia. It certainly
doesn't help Georgia in the absence of transmission. It doesn't
help other parts of the country if it is trapped locally. It is
a great resource for those who have it.
So I think when you are--when you are hearing calls for,
you know, continued expansion of tax programs, there is two
things to think about. One, that means that the marginal cost
environment is still very competitive, in part because in many
places we have oversupply.
Mr. Graves. Ms. Tezak, just because I am going to try and
squeeze this in real quick, could I ask you to respond to that
in writing?
Ms. Tezak. Sure, absolutely.
Mr. Graves. Thank you. And I yield to Mr. Griffith.
Mr. Griffith. Thank you very much. I am going to try to do
this, because we have got votes going fairly quickly.
So let me start with coal, since we were just there. And my
colleague on the other side of the aisle said that, you know,
coal was hurt by financial circumstances, and that is true. But
regs hit our area first, because I have the Virginia section of
the coal fields that my colleague from West Virginia has on the
other side of the line.
And regs came in first to hurt coal and then fracking. And
what I found so fascinating is, most of the time people on my
left don't like fracking either. But what has made coal not
financially marketable for energy production or electric
production has been the fracking and the gas fields of
Marcellus and Utica. So you have got to have one or the other.
So that being said, I would also say that you can't make
good quality steel without using some of our metallurgical coal
from the coal fields.
Now, my friend Mr. Kelly has talked about rare-earth
earlier. And one of the great breakthroughs is we can actually
do two things, because apparently there is a greater amount of
the rare-earths in the area in central Appalachia where the
coal meets the rock. And if we can learn how to extract that,
we can do better.
And as this committee has heard me say before, that is
technology we can export, because what has--what has happened
is--is that that technology, although it is not fully refined
yet, is now being licensed to steel mills in India, because
they can lower the carbon footprint of the Indian coal. And
that is where I think we need to go, is with research.
Yesterday I had a meeting with--along with a number of
others--with Paul Dabbar, the DOE Under Secretary for Science,
and he was talking about that they have got a film that they
believe is just about ready for primetime--not quite, but just
about ready--that will take carbon dioxide out of our coal-
fired power plants and our natural gas-fired power plants.
Technology is going to help us break through. I am all for
research on renewables, but we need to do research on ways that
we can make our carbon-based forms of energy more affordable,
and we also have to make sure we look at hydro.
With that, I will yield back, because I know that we are
running out of time.
Ms. Castor. Thank you, Mr. Griffith.
Recognize Mr. McEachin for 5 minutes.
Mr. McEachin. Thank you, Madam Chair, and thank you for
this hearing.
You know, there is a myth going around that renewable
energy is bad for low-income communities and communities of
color. I want to explore that myth for a moment.
And, Ms. Hopper, you have spoken about what I think you
called community solar deployment as an option for folks. Can
you elaborate beyond what you put in your written testimony
about that?
Ms. Ross Hopper. Sure. So community solar projects are
projects where folks sort of buy a share of the--of the output
of the community solar. So it applies--you know, I live in a
house that has a lot of trees around it, so I can't put solar
on my house because there is no sunlight that comes. It is for
folks that live in multifamily buildings; it is sometimes for
folks of low and moderate income.
So it is a model that allows access to folks other than
simply homeowners. I think that--it is clearly--lots of States
have chosen to allow the regulatory construct to have that
happen. I think at the Federal level, there are opportunities
to help move community solar forward through sort of best
practices and perhaps some funding opportunities.
Mr. McEachin. You have also in your written testimony
outlined the need to build a robust workforce for solar energy,
and you note that solar installation, in terms of the number of
jobs, is among the fastest growing industries in the country.
Could you tell us what Congress should do to make these
solar jobs available to more people in diverse communities
around the country?
Ms. Ross Hopper. Absolutely. Thank you for that question.
I forget--one of the folks who sat down there talked about
this being one of the largest wealth-creating opportunities
available. And I believe that to my core. I think as we think
about how we are going to literally transform our energy
system, there is going to be so much opportunity for wealth
creation, ensuring that communities of all varieties have an
opportunity at wealth creation and not simply getting a job is
important.
What can the Federal Government to do so sort of help that?
I think there are workforce development--we have heard
consistently about the need for these workers, and at least in
the solar industry. Tom can talk about wind.
It is everything from construction workers to electricians
to financiers to sort of predict--you know, literally
forecasting sunlight. And so making sure that our--everything
from our high schools to our community colleges to our
universities have clear links to our industry and--so students
understand opportunities that are available to them is
important.
I think having some transparency around sort of where we
are getting our candidates from. So at SEIA we have developed
an MLU with historically black colleges and universities to
ensure that our pipelines are diverse as well for these jobs.
So I think there is lots of things--as I am sure you know,
Congressman Rush has a bill on workforce diversity that we are
fully supportive of.
Mr. McEachin. Very good. I thank you. I thank the
witnesses.
And, Madam Chair, I yield back.
Ms. Castor. Well, thank you, Mr. McEachin.
And thank you to our witnesses today for expert analysis
and participating in the Climate Crisis Committee and how we
ramp up renewables to solve the climate crisis.
Without objection, all members will have 10 business days
within which to submit additional written questions for the
witnesses. I ask our witnesses to please respond as promptly as
you can.
And I encourage the public to follow the work of the
committee at climatecrisis.house.gov and on
Twitter@climatecrisis.
The hearing is adjourned. Thank you.
[Whereupon, at 11:35 a.m., the committee was adjourned.]
__________
United States House of Representatives, Select Committee on the Climate
Crisis
Hearing on June 13, 2019, ``Solving the Climate Crisis: Ramping Up
Renewables''
Questions for the Record
Christine Tezak, Managing Director, ClearView Energy Partners, LLC
the honorable garret graves
1. There was a lot of discussion about cost competitiveness of
renewables. But I also heard in the same breath, production tax credit,
investment tax credit, carbon tax, renewable portfolio standards,
procurement preferences, and other things that somewhat distort price.
Can you talk a little bit just about cost competitiveness and what
that looks like in terms of taxpayer investment quickly, please?
Thank you for the question, Ranking Member Graves. First, electric
generation assets (power plants) are dispatched (given orders to
produce power) most economically when the grid operator or local
balancing authority/utility can follow ``security constrained economic
dispatch.'' That technique relies on two inputs, operating
characteristics and price. Power plants are ``stacked'' according to
these two attributes and then are given orders to produce power by the
grid operator based on the amount of demand that needs to be met. This
is would be dispatch ``in merit order.'' When grid operators deviate
from this efficient approach customers can face higher and more opaque
costs in the form of locally higher rates, uplift charges, and a higher
tax burden that does not necessarily fund power supplies they use.\1\
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\1\ https://www.sciencedirect.com/science/article/pii/
S0960148115300343.
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Some emissions--such as sulfur dioxide (SO2) \2\ and
nitrogen oxides (NOX) \3\--have trading and credit markets
with transparent prices that are readily incorporated into the power
plant's price. We would argue that these emissions-oriented policies do
not ``distort'' prices, but integrate those nationally applicable
policies into generation asset price profiles.
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\2\ https://www.epa.gov/airmarkets/acid-rain-program.
\3\ https://www.epa.gov/airmarkets/phase-ii-acid-rain-program.
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However, state-level and regional policies that focus on increasing
renewable energy deployments or non-price preferences for lower carbon
resources can ``distort'' prices when they operate outside the
electricity market algorithms that set dispatch merit order. This has
led to several iterations of price formation and market reform
proceedings at the Federal Energy Regulatory Commission to address
``out of market'' policies adopted by states who regulate the market
participants, primarily in New England the PJM Interconnection regions.
Renewable portfolio standards/procurement practices and production/
investment tax credits can make it more difficult for the market
operator to follow security constrained economic dispatch because the
costs of these policies isn't well reflected in market prices. For
example, RPS programs and renewable energy tax credits have fostered
the entry of power generation assets that do not follow dispatch.\4\
Wind farms produce power when the wind blows and solar when the sun
shines, not when the grid operator directs them. This means that the
grid operator often must accommodate those resources first, even though
they may not be the first to dispatch from an operational
characteristics basis, and deploys other assets to complement them.
---------------------------------------------------------------------------
\4\ https://blogs.ei.columbia.edu/2018/03/16/how-much-do-
renewables-actually-depend-on-tax-breaks/.
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Depending on the time of day, this accommodation may require that
the grid operator ask other generators to back down their production by
charging them to produce power instead of paying them for it (negative
pricing), or dispatching higher-priced, but more flexible capacity that
can provide power in small increments until the full capacity of a
larger (baseload) asset can be accommodated at its lower price. Wind's
production tax credit, worth as much as $23/MWh for many existing
facilities, means that these assets have $23/MWh of ``headroom''
relative to other generators, buffering them from the adverse impacts
of lower prices. Even as the tax credit has declined ahead of
expiration, deployments remain robust.5 6
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\5\ https://www.eia.gov/todayinenergy/detail.php?id=39472.
\6\ https://fas.org/sgp/crs/misc/R43453.pdf.
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To be clear, tax-preferred resources with no fuel costs (such as
wind/solar) can and do lead to lower wholesale prices in the hours when
they are plentiful, something that does benefit consumers. However,
these cost decreases can be offset by increases elsewhere on the
system. Structurally lower wholesale market prices, in particular for
baseload energy (often provided by coal and nuclear plants), can lead
to power plant retirements, and in some areas, may have adverse impact
on the ability to maintain system stability and power delivery at high
demand (peak) or emergency periods. Some of those retirements do not
adversely impact ratepayers financially, however some do. If an asset
is retired before it is fully recovered in retail rates, customers may
still be obligated to pay off most, if not all, of the remaining value
of the asset, if the plant's construction had been approved by
regulators. These costs could offset the savings from the lower prices
of the newer market entrants.\7\
---------------------------------------------------------------------------
\7\ https://www.economist.com/leaders/2017/02/25/wind-and-solar-
power-are-disrupting-electricity-systems, https://www.forbes.com/sites/
michaelshellenberger/2019/05/27/we-shouldnt-be-surprised-renewables-
make-energy-expensive-since-thats-always-been-the-greens-goal/
#45a506224e6d.
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In addition, incremental transmission and distribution system
investments may be required to handle retirements, shifts in power
flows. These are occasioned when renewable assets must be located where
nature provides the best opportunity, and that may not necessarily be
the most optimal location.\8\ Further, the power grid has been
substantially constructed to flow power one direction--from generation
resources to customers.\9\ However, when customers produce more energy
than they can use they become ``pro-sumers'' and power may flow the
other direction on the distribution system.
---------------------------------------------------------------------------
\8\ https://blog.friendsofscience.org/2018/03/22/examining-the-
claim-that-renewable-energy-will-soon-replace-fossil-fuels/.
\9\ https://pages.bv.com/SDR-SmartUtilities-Download.html.
---------------------------------------------------------------------------
Retooling the nation's grid to accommodate this new capability
won't happen without investment (in other words, money from
ratepayers). We would argue adoption of incrementally lower greenhouse
gas emitting resources are not neutral to ratepayers, and in some cases
may result in rate increases to cover investments ahead of potential
savings realized over the longer term.
Incremental investment in both the transmission and distribution
systems is generally socialized across all grid users, not paid for by
the owner of the renewable generation resource. We'd agree that these
investments in ``grid modernization'' do have benefits beyond
renewables integration, but the cost impact of renewables deployment
can be opaque to the consumer given that these investments are not
reflected in the wholesale prices offered by renewable energy assets to
the wholesale market.
This ratemaking reality can make the cost of new renewables assets
more opaque. Further, pro-sumers seek to be paid for ``excess'' energy
their systems may be able to produce relative to their load. Initial
rate designs in this area have been so beneficial to these pro-sumers
that many states have been making incremental reforms to their rate
design to reduce and eventually eliminate cross-subsidization between
customer classes.
In addition, the excess gross supply of power generation assets and
low market prices have undermined the ability of flexible units to make
reasonable returns to stay in the market (the experience of natural gas
plants in California provides an extreme example). This leads to calls
for incremental charges for reliability must run (RMR) contracts to be
struck (and paid by customers) or very high, and volatile peak pricing
schemes to prevent the closure of these power plants, too. These less
transparent costs can eat into the notional ``cost savings'' of lower
wholesale market prices, and potentially offset them altogether.
Therefore, at the end of the day, electricity customers pay for
power generated and delivered to them over the nation's grid. They pay
taxes, too. Customers can face higher electricity rates that support
procurements to preserve reliability arising from local or regional
needs--whether to retain coal-fired or nuclear baseload plants or
natural gas mid-merit and peaking facilities--and increased investment
in the grid to accommodate the renewables capability their taxes also
support.
A quick word about carbon taxes or carbon prices. While this policy
would not be without cost it has the potential to be more transparent
(much like SO2 and NOX credits) and easier to
integrate into restructured market algorithms.
Further, if adopted as part of a holistic, national policy
decision, Congress would have the opportunity to direct some of the
revenues raised from a greenhouse gas limitation program to the areas
of the country facing the largest transition challenges if needed. This
may be appropriate to reflect two important realities. First, some
areas of the country have more renewables or low carbon generation
resources available than others.\10\
---------------------------------------------------------------------------
\10\ http://archives.maproomblog.com/2008/03/
us_atlas_of_renewable_resources.php.
---------------------------------------------------------------------------
Second, the nation's environmental, energy and industrial policies
in place 40-50 years ago differ dramatically from those adopted over
the last decade and under discussion today. Many regions that are still
carbon-intensive in power generation are facing other economic
challenges, including de-industrialization as well as economic reliance
on the production of the natural resources a national policy that would
limit GHG emissions could constrain or eliminate altogether over time.
Policy proposals that reflect these two realities would appear to
be the most likely to be adopted nationally. Policy proposals that
advantage one region of the country at the expense of others
(particularly those that purport to ``reward'' areas that are deemed
``first movers'') and do not consider ameliorating the potential
adverse consequences of a rapid transitions have not succeeded to date,
and appear unlikely to in future.
Questions for the Record
Katherine Hamilton, Chair, 38 North Solutions
the honorable kathy castor
1. In some regions of the United States, it may be difficult to use
renewable energy during extreme weather, such as during extremely cold
weather in the northern part of the country. How could greater use of
flexible energy resources help address this challenge?
Interestingly, based on the evidence, the issue of resources unable
to operate in extreme weather situations is almost entirely limited to
traditional generation, not renewables and flexible resources. Several
examples of resilience provided by flexible resources were cited in my
testimony. In addition, I would refer the Committee to Hurricane
Florence news stories that discuss the nuclear and coal plants not only
having to shut down in preparation for the storm, but also coal ash
ponds being breached, causing collateral environmental damage to water
systems in North Carolina. The resources most quickly brought back on
line were solar farm, and, luckily, the state has many solar systems.
Another story to point to is natural gas in the Midwest this past
winter; in many parts of the country, there is a tension between
natural gas being used for home heating and the supply for generation.
Wind energy resources are hearty in hurricanes with self-managing
systems to ensure blades are locked and feathered to prevent damage. As
I mentioned in my testimony, demand response, microgrids, and
distributed generation (as long as it is able to disconnect from the
overarching grid) all prove to be the most resilient resources on the
system.
2. Conventional fossil fuels are often more energy dense than newer
technologies. How should Federal Research and Development (R&D)
investments be targeted to address this challenge?
Rather than thinking about energy density as the attribute we need,
I recommend instead focusing on end-states (parity of cost and
performance at the system level). Taking electric vehicles as an
example, rather than comparing the size of the battery to the size of
the gasoline tank, one would look at the mileage achieved in a similar
sized vehicle at a particular price--performance and service provided
rather than one specific measurement that may not translate (or be
relevant) between technologies. In recent testimony before House
Science Committee, I discuss this issue of attribute as well. I use the
example of energy storage to state that ``rather than identifying this
research as `grid-scale' or prescribing time durations for storage
technology operations, I recommend instead stating the problems that
should be solved or the services delivered, and allow new chemistries
and technologies--individually or as a system--be developed that can
fit those needs.'' The same should be true for other flexible
technologies: state the problem that needs solving and build the R&D
around possible solutions. Comparing fossil fuel to renewable plus
storage systems, the question might be whether we want leaded or
unleaded paint; one resource exacerbates climate change while the other
mitigates it.
3. Most decarbonization scenarios anticipate electrification of
transportation and industry and greater use of battery storage.
However, batteries require the use of precious metals that are mostly
imported. How should the Federal government drive the development of
battery recycling?
Precious metals (Rhodium, Platinum, Gold, Palladium, and Silver)
are used in electronics and catalytic convertors, but are not used in
lithium-ion batteries. Rather, metals such as Cobalt, Nickel, Lithium,
Aluminum, Manganese, and Iron are used in manufacturing those
batteries. The cathode of the battery is made from a Lithium-Cobalt-
Nickel oxide mixture on an Aluminum foil while the anode of the battery
is made from graphite on Copper foil. Recycling end of life lithium-ion
batteries in the U.S. should encourage processes that return those
elements to be reused in battery materials. Reuse of the recovered
elements only makes sense, of course, if there is a robust lithium-ion
battery manufacturing industry, accompanied by collection, dismantling
and pre-processing, and refining capability. While the U.S. has
established collectors and pre-processors, there is no lithium-ion
refining capacity in the U.S. By establishing federal policies--
establishing best practices for collection, requiring labeling and
responsibility from manufacturers, and ensuring the federal government
leads by example, as just a few ideas--we could create the certainty
and market scale for refiners to build recycling plants here in the
U.S.
4. What should Congress do to ensure that flexible demand-side
resources are integrated into wholesale power markets?
With jurisdiction over the Federal Energy Regulatory Commission,
Congress is able to exert pressure on that agency to make a final rule
on the Distributed Energy Resource rulemaking. Senators and Members of
the House (on both sides of the issue) have sent letters urging FERC to
act on the rulemaking. A more durable solution, of course, would be
legislation that clarifies flexible demand-side (consumer) resources in
the Federal Power Act as being able to serve as resources--just as
generators serve as resources--and have access to a participation model
in the wholesale market.
5. During the hearing, the challenges that European countries,
especially Spain and Germany, faced in the last decade as they have
increased their use of renewable energy were raised. Overall have Spain
and Germany succeeded in increasing their use of renewable energy in a
way that has benefited their economy? Are there any overarching lessons
that the United States can learn to inform the development of national
polices from these countries?
European countries have indeed experimented with renewable energy
policy and technology and felt some growing pains, although the result
has been that renewable energy is now the cheapest source of
electricity in those regions. Spain and Germany, in particular, each
put into place a Feed-In-Tariff (FIT), which set higher payments for
renewable energy, thus drawing investment from those industries. Over
time, this policy kept prices higher as the cost of renewables dropped.
Subsequently, adjustments have been made to ensure that consumers are
not paying more than market price for renewable energy. Today, Spain
and Germany have adjusted down or removed their FIT altogether and have
seen some of the highest penetration of renewable energy, while also
enjoying economic and environmental benefits. In fact, a quarter of the
start-up companies in Germany contribute to the green economy. A FIT
was also instituted in Ontario, Canada, setting high prices to
incentivize renewable energy deployment. While this policy worked to
scale renewables, over time it also kept prices higher than the market.
The U.S. has not instituted a FIT policy on the federal or state level,
but instead has used tax incentives, Renewable Portfolio Standards,
emissions trading schemes, and other procurement policies to scale
renewable deployment and lower prices for consumers. Today, thanks to
experimentation by countries in Europe as well as the U.S., solar and
wind are in many cases the cheapest sources of energy.
references
Question #1 references
Hurricane Florence and nuclear:
https://www.washingtonpost.com/news/powerpost/paloma/the-energy -
202/2018/09/18/the-energy-202-hurricane -florence-blows-hole-in-trump-
team-s-case-for-helping-coal-and-nuclear -power-critics-say/
5ba022621b326b 47ec9596b9/?utm_term=.a25d19c1e4f5.
Hurricane Florence and coal:
https://www.nytimes.com/2018/09/21/climate/florences-floodwaters-
breach-defenses-at-power-plant-prompting-shutdown.html
Hurricane Florence and solar:
https://insideclimatenews.org/news/20092018/hurricane-florence-
solar-panel-energy-resilience-extreme-weather-damage-wind-flooding
Nuclear and cold temperatures:
https://www.pressofatlanticcity.com/news/below-freezing-temps-shut-
down-salem-nuclear-reactor/article _X2fb9b5c7-931f-57be-b4a1-
0db516b7e439.html
Midwest natural gas story:
https://www.nepr.net/post/deep-freeze-puts-strain-midwest-gas-and-
electricity-grids#stream/0
DOE study on wind energy and natural disaster:
https://www.energy.gov/eere/articles/wind-turbines-extreme-weather-
solutions-hurricane-resiliency
Advanced Energy Management Comments to California Wildfire Strike
Force:
https://aem-alliance.org/aema-urges-consideration-of-der-in-
wildfire-mitigation/
Question #2 references
Link to Science Committee Testimony can be found here:
https://science.house.gov/hearings/the-future-of-electricity-
delivery -modernizing-and-securing-our-nations-electricity-grid
Question #3 references
See new DOE program on battery recycling: https://
americanmadechallenges.org/batteryrecycling/
Umicore, Inc. chart shows where facilities are located: https://
csm.umicore.com/en/recycling/battery-recycling/e-mobility/
Recycling in the EU is driven by the WEEE directive, which creates
certainty for industry: https://ec.europa.eu/environment/waste/weee/
legis _en.htm https://www.pv-magazine.com /2019/03/25/innovation-
boosts-lithium -ion-battery-recycling-rate-to-over-80/
Question #4 references
Letter to FERC on DER NOPR from House Members in support of DER
rulemaking: https://mikelevin.house.gov/sites/mikelevin.house.gov /
files/Letter%20to%20FERC%20re%20DER%20Rulemaking%20021119.pdf
Letter to FERC on DER NOPR from Senators in support of
participation model: https://www.whitehouse.senate.gov/imo/media/doc/
2019-02 -11%20FERC%20Letter.pdf
Letter to FERC on DER NOPR from Senators opposed to DER in
wholesale market: https://www.hoeven.senate.gov/imo/media/doc/
2019.05.07%20Hoeven%20
Letter%20to%20FERC%20on%20DER%20Aggregation%20by%20Third%20 Parties.pdf
Question #5 references
See analysis on current solar boom in Spain: https://
www.greentechmedia.com/articles/read/spanish-gold-rush-fuels-new-
european -solar-boom#gs.tz3kf7
Solar as engine for economic boom in Spain: https://
www.renewableenergymagazine.com/pv _solar/solar-power-is-engine-of-
spain-s-20190410
Germany has also seen a rise in solar installations as a result of
cutting back their FIT: https://www.pv-magazine.com/2019/08/01/germany-
installed-2-gw-of-solar-in-six-months/
Report on start-ups in Germany: https://www.cleanenergywire.org/
news/quarter-german-start-ups-contribute-green-economy-report
Blog from NRDC on economic benefit of climate policy to state of
California: https://www.nrdc.org/experts/ralph-cavanagh/new-report-
shows-how-climate-action-and-healthy-economy-wo
New York is taking much of its offshore wind strategy from what
Europe has learned: https://www.nypa.gov/news/press-releases/ 2019/
20190807-key-learnings-offshore-wind-transmission-models
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