Manufacturers of smart grid devices and other electrical equipment have drafted a broad policy wish list, hoping to influence creation of a new national energy strategy in a time of profound change and governmental deadlock.
The industry's prescription, "Modernizing America's Electric Grid," was released yesterday, prior to its submission to the Obama administration, which has begun development of a Quadrennial Energy Review (QER) that aims for consensus among governments and industry about the energy future.
The QER, coordinated by the Energy Department, has begun the first of more than a dozen outreach meetings, hearing from the spectrum of energy producers. Another meeting is set for today in Portland, Ore., on electricity transmission, storage and distribution, one of the first policy areas to move forward.
Members of the National Electrical Manufacturers Association (NEMA) outlined their proposals to the QER yesterday, making the case that a transformation of the power grid is underway, with large-scale retirements of coal plants yielding to natural gas generation, renewable power resources, electricity storage and demand-side programs. The changes require efficient, accelerated development of new technologies, and that requires a national energy road map, the NEMA representatives said.
"That is why an overarching strategy for the country does make sense," said John Estey, executive chairman of S&C Electric Co., a Chicago-based grid technology provider, speaking at a media briefing. "We've got to figure out what kind of generation fleet we want, [and] how do we want to manage this stuff. Having a big-picture look at it would be very useful. It is something that is desperately lacking at this moment."
NEMA's proposals reflect common interests in that industry, but some of the key recommendations underscored the challenge facing the administration's QER architects as they seek a balance of interests -- some of what fulfills the electrical equipment manufacturers' wants may come at the expense of other interests, or present new spending demands to a Congress deadlocked over spending conflicts.
The NEMA recommendations include:
- Incentives for construction of microgrids and energy storage systems.
- Changes in federal flood insurance policies and other laws to allow the replacement of storm-damaged grid equipment with state-of-the-art replacements.
- Backstop authority for the Federal Energy Regulatory Commission to site interstate transmission lines where state regulators cannot agree, removing a de-facto veto power by single states over multistate project proposals.
- Amendment of the federal Safety Act to expand its liability protections to manufacturers and vendors of cybersecurity technologies, protecting them against lawsuits should a large-scale cyberattack occur. "Such protections are essential to incentivize innovations and the robust development of technologies designed to protect the electric grid from increasingly sophisticated cyber threats," NEMA said.
- Authority for the Energy Department to require strategic siting of spare power transformers and other long-lead-time grid components, and creation of regional pools of equipment reserves.
- Accelerated depreciation for smart grid technologies, taking the depreciation period down to five years.
- Creation of a national infrastructure bank to reduce private-sector financing costs for grid modernization investments.
The storage example
The need for advanced, affordable electricity storage technology is a key example of the challenge, the NEMA representatives said. Large-scale expansion of wind farms, microgrids and rooftop solar-powered distributed systems requires power storage to be economically viable, Estey said.
"Storage is critical to our future," said Daryl Dulaney, president and chief executive of Siemens Industry Inc.'s infrastructure and cities sector. "Lots of [storage] technology is being developed and absolutely will be an important part of the future. There is no alternative.
"The whole electrification of society right now is bottlenecked due to storage. As soon as we have improved storage, you'll see lots of innovation and development accelerate," he said.
"Storage is actually close to economically sound today if you add up all the various benefit streams that can flow from it," Estey added. "The pesky part of it is that those benefit streams flow to different people. ... So regulation needs to deal with the fact that if society wants these things, we have to find another way to pay for it than exists today. We have a regulatory scheme that has not caught up with the technology."
"Who should own the storage?" Dulaney continued. "And how should we pay for it? No regulatory body in this country can answer that question today. They're worried about it. But nobody can answer that question."
Dulaney said that having started the QER, the administration must extract comprehensive strategies from the conflicting positions across the energy sector. Speaking of the NEMA platform, he added, "I don't think this is just what the individual companies that are members of NEMA want. This is a consensus of what we think is a good approach for our country. In a democracy, it takes many voices to sort out the right path.
"We think it is very important that the industries directly involved in these issues have a voice."
The administration "has to work this through and figure out, of all the ideas they've heard, which of these fit together to make the most sense," Estey said. "We need a national energy policy. We need a national approach to this subject.
"There are aspects that we wouldn't agree on, but that's what makes a democracy work," Estey added. "The squad doing the QER has got to go through and do the hard work of figuring out which of these things makes sense and which don't, and promote this as their plan.
"If they just throw this all in a bucket and say, 'Here are some ideas for you,' they've wasted everybody's time."
Like what you see?
We thought you might.
Start a free trial now.