Low power prices and stagnant electricity demand have buffeted utilities. Energy efficiency has flattened electricity load across most of the United States, a trend that is expected to continue for the foreseeable future. More Americans have installed rooftop solar panels, which further reduces demand. Many in the power industry worry about the sustainability of their traditional business model.
Environmentalists fear losing ground during an Administration that has repudiated the Paris climate accord and the EPA’s Clean Power Plan.
Here’s the deal: the power industry commits to an even cleaner grid in exchange for support from environmentalists on electrification. This allows the power industry’s on-going decarbonization to be leveraged throughout the economy.
For utilities, electrification is the silver bullet to flat demand. A 2017 Brattle Group study concluded that the widespread electrification of transportation and space heating could nearly double utility sales by 2050 while achieving deep decarbonization.
In exchange, environmentalists should seek the power industry’s commitment to creating an even cleaner grid. This could include investments in wind and solar generation, grid modernization, energy storage, energy efficiency, and demand side management, as well as support for EV charging infrastructure and time-of-use rates.
Instead of responding to market change, utilities would be helping to drive the change. They would be viewed as part of the solution, with clear marketing and financial benefits. One major utility, Southern California Edison, has already issued a white paper that proposes continued decarbonization of the electric sector, accelerating electrification of transportation, and increasing electrification of buildings.