Grid Reliability Through Clean Energy.

AuthorKlass, Alexandra

Table of Contents Introduction I. Climate Change, Grid Reliability, and Energy Policy A. Why a Decarbonized Grid Is a More Reliable Grid 1. Mitigating climate impacts on the U.S. energy system 2. Enhancing grid stability and energy equity through national interconnection and localized networks 3. Diversifying fuel supply B. How Siloed Grid Policy and Governance Impede a Clean, Reliable Grid II. The Promise and Peril of Silos A. Substantive Outcomes B. Agency Accountability C. Efficiency D. Political Economy E. An Overview of Our Reforms to Silos in Energy Governance III. Market Structure A. Resource Adequacy B. Principles for a Reliable, Clean Grid 1. Eliminating barriers to entry 2. Correctly pricing and parameterizing reliability services 3. Accommodating state and federal clean-energy policies IV. Transmission Planning, Financing, and Siting A. The Need for a Nationally Interconnected Transmission Grid B. Transmission Planning and Cost Allocation 1. Current transmission planning and cost-allocation policy 2. Problems with transmission planning and cost allocation: silos, exit, and coordination challenges a. Bottom-up planning b. Methodological differences c. Calculating the benefits of transmission d. Utility exit and cost allocation 3. Toward national planning and cost allocation C. Transmission Siting 1. Working within existing law to site interstate lines 2. Permitting and eminent domain reforms that can build a reliable, decarbonized grid V. Reliability Regulation: NERC Reforms A. Weaknesses of Current Reliability Regulation: The Case of Cold Weather B. Crossing Substantive Silos C. Leveraging Jurisdictional Silos D. Bridging Public-Private Values in Public-Private Energy Silos VI. Public-Private Regional Governance: Improving RTOs A. RTOs in Depth B. Non-organized Regions C. Regional-Governance Reforms to Support Reliability Through Renewables Conclusion Introduction

To avoid the most catastrophic effects of climate change, the United States must rapidly decrease fossil fuel dependence while keeping the lights, heat, and air conditioning on--an increasingly difficult task due to extreme weather events intensified by climate change. (1) Many have cast these dual imperatives as dueling imperatives, arguing that there is an inherent tension between climate policy and the regulations needed to keep the lights on. In 2011, for example, the North American Electric Reliability Corporation (NERC)--the U.S. agency responsible for electric-grid reliability--claimed that "[environmental regulations are shown to be the number one risk to reliability over the next one to five years." (2) More recently, in 2021, the same agency expressed concern that the shift to increased renewable energy resources had the potential to threaten grid reliability. (3)

One high-profile example that has drawn attention to the perceived conflict between a clean-energy transition and grid reliability took place in the aftermath of Winter Storm Uri. In mid-February of 2021, an unusual yet increasingly common type of storm pummeled the lower Midwest, causing a prolonged cold snap in Texas and neighboring states. In Texas alone, millions of people were without power and water for days. (4) Texans huddled in freezing homes, trying to stay warm and find backup power for essential medical equipment--all while water pipes burst and city water-delivery systems faltered. (5) This loss of electricity to 69% of Texans had cascading effects. (6) Many areas experienced cell phone-service disruptions, which made it more difficult for pipeline and power-plant workers to address rapidly developing emergencies. (7) The pumps and other electrical equipment needed to run natural gas wells, pipelines, and power plants to support the skyrocketing demand for home heating failed. (8) Residents in neighboring states suffered as well: In Jackson, Mississippi, the storm caused a power outage and damaged the city's drinking-water plant, causing a monthlong water crisis. (9) Estimates place the number of deaths from the storm and the electric grid and related infrastructure failure at between 150 and 700, with damages totaling hundreds of billions of dollars. (10)

State officials were quick to blame these outages on renewable energy, pointing to wind turbines that froze during the storm. (11) After the disaster, Sid Miller, Texas's Agriculture Commissioner, asserted that "[w]e should never build another wind turbine in Texas." (12) Expert analyses, however, just as quickly concluded that outages at fossil fuel plants, not wind farms, were the central cause of the blackouts. (13) But even with this information in hand, Texas lawmakers responded with reforms that harden the existing, fossil fuel-centric system, requiring stronger equipment at natural gas wells and pipelines and natural gas-fired plants. (14) These types of actions are important but nearsighted responses to the root causes of recent reliability failures: They fail to fully account for potential alternative investments in clean-energy resources that could ensure reliability while avoiding the entrenchment of fossil fuels. (15)

The perceived tension between a clean-energy transition and a reliable electric grid is not only a political talking point. For at least a century, the American legal system has treated energy and the environment as distinct policy concerns. In the 1930s, Congress charged the Federal Power Commission, later renamed the Federal Energy Regulatory Commission (FERC), with regulating the country's interstate natural gas and electricity systems--several decades before President Nixon created the Environmental Protection Agency (EPA) to regulate the environment. (16) This distribution of authority endures, as the EPA is primarily responsible for regulating the environment, including the reduction of greenhouse-gas (GHG) emissions from energy use, and FERC is primarily responsible for regulating the energy grid.

Today, energy and environmental goals have converged to some degree, particularly through states adopting aggressive clean-energy laws to tackle climate change. (17) Nonetheless, the energy regulatory system is disaggregated in ways that exacerbate the failure of energy policy to support both a reliable and low-carbon electric grid. (18) States control many decisions about the construction and siting of electric generating plants and the location of virtually all electric transmission lines--even those that extend across multiple states. (19) These transmission lines are critical to supporting the large amounts of new renewable energy infrastructure that will be necessary to meaningfully reduce U.S. carbon emissions. (20) Meanwhile, the federal government oversees wholesale electricity markets and regional planning and financing of electric transmission lines. (21) These markets, too, are essential to the expansion of renewable energy resources because they determine which types of generation win out in the competition for supplying electricity. And planning and paying for new transmission lines is a necessary precondition for a clean grid. (22)

The governance of this disaggregated system is complex. In some parts of the United States, regional institutions called regional transmission organizations (RTOs) are responsible for implementing these policies under the supervision of FERC. These RTOs sometimes work in concert with the states in which they operate, and sometimes directly against the wishes of the states. (23) In other regions, utilities and states have opposed the formation of RTOs and therefore rely on more balkanized approaches to wholesale energy procurement and planning for and financing transmission lines. (24) And throughout the entire country, regional institutions called "regional entities" manage the direct regulation of electric-grid reliability under federal oversight. (25)

To further complicate matters, a curious mix of public and private institutions governs the energy sector. Some institutions are wholly public, such as FERC and the state utility commissions that govern electric generation choices and the approval (or "siting") of transmission lines. But RTOs and regional entities are private, nonprofit institutions, as is NERC, the organization that oversees the reliability of the electric grid as a whole. (26) The energy sector's substantial reliance on private governing institutions creates an additional layer of challenges that at times compounds jurisdictional and subject-matter divisions, even as these organizations' technical expertise at times provides a distinct benefit. (27)

We believe that this segmentation of energy policy--a phenomenon that renders the true convergence of energy and environmental policy extremely difficult--is an underdiagnosed cause of the perceived clash between clean energy and grid reliability. The siloed approach to energy regulation creates significant impediments to clean-energy policies, as reliability organizations often counteract clean-energy policies--often inadvertently, but sometimes more deliberately--when making decisions about how to keep the lights on. Similarly, legal silos often cause states and regional organizations to neglect valuable opportunities for collaboration. We view overcoming this structural separation that prevents the establishment of a clean, reliable grid as a crucial precondition to substantial progress on climate change mitigation in the United States.

To be sure, a grid that runs on dramatically different sources of energy will require different strategies to ensure its reliability. But the need to reconceptualize and enhance reliability should not detract from the fact that the only way to secure a reliable grid under conditions of climate change is to rapidly engage in a clean-energy transition in the electricity sector. (28) We need an institutional framework for energy in the United States that embraces this critical challenge.

Scholars often identify federalism as a...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT