Distributed energy wins major political champion, a king

U.S. Senator Angus King, an independent from Maine, may just have changed the game in energy innovation. Senator King is reportedly planning to introduce legislation today called the Free Market Energy Act of 2015. A fact sheet outlining the major provisions of the legislation was provided to UtilityDive. The fact sheet explains the rationale behind the legislation, stating:

A lot has changed since the days of Thomas Edison , but if he were alive today, he’d likely recognize one thing: America’s electricity grid. Indeed, the grid has changed little over the past 100 years, and just as it did then, it continues to serve its purpose of moving electricity from power plants to consumers.
But today, innovative technologies are fundamentally changing the way that electricity is generated and delivered. Increasingly, cutting-edge energy assets are being deployed at the edge of the grid. Those assets, called distributed energy resources (DER) – like generation, storage (batteries), efficiency, and demand response – are creating a more secure, resilient, and independent electricity grid that holds enormous potential for America’s energy future.
However, government policies do not support the free market conditions that allow distributed energy to flourish. For example, expensive grid-connection fees discourage consumers from pursuing newer technologies while simplistic net metering formulas do not properly compensate grid owners. The result is a slowing in DER innovation at a time when our energy policies should promote appropriately-valued, consumer-based energy technologies.

The Free Market Energy Act of 2015 tackles the fundamental problem threatening to curtail future deployment of distributed energy technologies like rooftop solar: what are the benefits and costs of distributed generation and who captures them?

I worry that this issue could become an insurmountable barrier to entry for otherwise promising companies like SolarCity and compelling products like Tesla’s Powerwall. The problem is not that you cannot value distributed energy. You can, but only if you have the information you need to do so. As things stand, only the incumbent utilities have that information. Not surprisingly, the result is that the economics of distributed generation always or almost always appear inferior to solutions provided by incumbents. Would you expect AT&T to set prices for T-Mobile’s customers objectively and fairly? I would not.

Unlike the federal government, several states have already begun efforts to promote markets that recognize the value of distributed energy resources. In particular, New York State began the Reforming the Energy Vision proceeding to investigate the use of markets rather than regulation to drive energy innovation.

“New York has spent a lot of money trying to drive energy efficiency and clean technology and what we have realized – and our studies have confirmed – is that the technology is there,” said Aubrey Zibelman, the chair of the New York State Public Service Commission. “What is not there is the market to animate those technologies. The real focus for us is not using ratepayer dollars but how to leverage capital markets. We realize that government is not going to do it and we’re taking the learnings of the wholesale market and unleashing the power of the market.”

I will have much more to say about this legislation as it unfolds. In the meantime, it is time for folks like me who support energy innovation to pop the bubbly! After all, it is not every day that Congress proposes legislation that could catalyze essential and long-overdue change in America’s energy economy.

http://www.forbes.com/sites/williampentland/2015/05/06/distributed-energy-wins-major-political-champion-a-king/?ss=energy