Balancing Reliability, Affordability, and Renewability in the Energy Transition

Spilman Thomas & Battle, PLLC
Contact

Spilman Thomas & Battle, PLLC

Throughout the United States and globally there is an undisputed trend towards renewable energy as much of the world seeks to decarbonize in response to the risks of climate change. As the article, “Clean energy investment is now nearly 2x that of fossil fuels – here’s why,” from Electrek notes, as of 2023, for every $1 spent on fossil fuels globally, now more than $1.70 is spent investing in clean energy, a ratio that was 1:1 just five years ago. This spending is being driven in the United States, in large part, by federal policy, like the Inflation Reduction Act and environmental regulations that impose additional costs on fossil fuel generators, through legislation in some states mandating that utilities achieve net zero carbon emissions by mid-century, and by utilities that have their own carbon reduction goals.

This “clean energy” transition raises two important questions: (1) what will this transition cost?; and (2) how do we ensure the power is available when people need it?

The answer to what it will cost generates conflicting responses. As Azeem Azhar notes in his article, “The remarkable cost of the energy transition,” there are a number of reports and publications estimating the costs of the transition to clean energy (battery storage and renewable resources, among other clean energy technologies), including a 2022 McKinsey Report estimating the transition will cost $275 trillion by 2050. In direct contravention of the McKinsey Report is the paper, “Empirically grounded technology forecasts and the energy transition,” that concludes “compared to continuing with a fossil fuel-based system, a rapid green energy transition is likely to result in trillions of net savings.” Electricity bills will rise over the next 20-30 years, whether due to higher costs to maintain fossil fuel or to transition to renewable energy, which is a concern to customers, individuals and businesses alike, particularly during a time of increased costs and the risk of inflation. The transition to clean energy must remain mindful of its cost, otherwise opposition, as outlined “Business owners knock escalating costs amid renewable energy transition” may derail the transition entirely.

Only time will truly tell whether the transition to clean energy is cheaper in the long run than maintaining fossil fuel generation. What we know for certain is that to replace the base load fossil fuel generators, much higher levels of renewable generation will need to come online. Indeed, PJM, the nation’s largest wholesale electricity market that covers much of the Mid-Atlantic, recently told the U.S. Senate Energy and Natural Resources Committee that 100,000 megawatts of renewable generation is needed to replace the 40,000 megawatts of (primarily base load generation) slated to retire by 2030. And although the article notes that there are nearly 250,000 megawatts waiting to interconnect in PJM, bringing resources online in the United States and globally has been a challenge.

Efforts are underway to clear the backlog, but even if successful, the question that must be answered is how to ensure enough power is available and able to produce when needed, i.e., is the system sufficiently reliable. From outages stemming from Winter Storm Elliott in December 2022 and Winter Storm Uri in 2021, reliability has been forefront on people’s minds. Indeed, reliability concerns have also prompted people to question whether fossil fuel resources are being moved to retirement too quickly. As discussed in this podcast transcript produced by the UPenn Kleinman Center for Energy Policy, PJM and other entities trying to respond to address the potential pitfalls and reliability concerns associated with the transition to clean energy, particularly during this period where there are bottlenecks in bringing new generation online at sufficient levels to replace scheduled and anticipated retirements.

The only conclusion these various articles support is that the transition to a carbon-free future raises substantial questions of affordability, reliability, and renewability. These questions are inter-related, and the answers are competing at times.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Spilman Thomas & Battle, PLLC | Attorney Advertising

Written by:

Spilman Thomas & Battle, PLLC
Contact
more
less

Spilman Thomas & Battle, PLLC on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide