The Waiting (Is the Hardest Part)
Themed "The Waiting (Is the Hardest Part)," this Fall 2023 Energy Industry Update examines recent trends in the utility and energy industry, where stakeholders are waiting for new technologies to emerge and the results of various regulatory initiatives to be seen. In this issue, we look at regulatory activity at the Federal Energy Regulatory Commission (FERC) on grid issues and at the states relating to gas sector decarbonization.
We also look at the U.S. Environmental Protection Agency's (EPA) proposed power plant greenhouse gas rule and industry activity on gas-power coordination. On technology, we consider energy transition activities in Denmark and the growth in virtual power plants (VPPs) in the United States and Puerto Rico. In all of these cases, the "waiting" is indeed the hardest part for energy infrastructure development.
HIGHLIGHTS FROM THIS
ENERGY INDUSTRY UPDATE
Waiting for the Emergence of New Technologies
- EPA has proposed a new rule regulating greenhouse gas emissions in fossil fuel-fired power plants. However, the proposed emissions standards use green hydrogen and high levels of carbon capture and storage as the benchmark, anticipating future technologies that are not yet at commercial scale.
- ScottMadden sponsored a Smart Electric Power Alliance fact-finding mission to Denmark. Denmark recently passed legislation requiring a 70% reduction in economy-wide greenhouse gas emission by 2030. Leveraging abundant wind, bioenergy, and growing solar resources, targeted investments in technologies such as power-to-fuel (e.g., green hydrogen) and carbon capture and sequestration are key elements to achieving this goal.
- The aggregation of distributed energy resources (DERs) into VPPs—coordinated, demand-flexible resources—is proving valuable in a growing number of markets, as hardware, software, and customer-centric energy technologies gain market traction. Evolving market rules, coupled with growing reliability concerns, will allow new VPPs to leverage a rapidly growing and technology-diverse universe of DERs.
Waiting for Results of Regulatory Proceedings
- Several state regulatory commissions are conducting proceedings to consider the role of natural gas distribution utilities in achieving state decarbonization goals. Gas utilities have discussed diverse strategies that provide flexibility and optionality among various technologies and maintain affordability.
- Coordination and interdependence of the gas and power sectors has been an issue for many years, but a thorny one to resolve. A recent industry forum yielded some progress on alignment, but more may need to be done to ensure reliability, as gas-fired power remains critical for grid reliability. FERC will consider some gas-power coordination issues this fall.
- FERC has cited transmission as a key area for policy development. Over the last couple of years, the bulk power system has been challenged with extreme weather (e.g., Winter Storms Uri and Elliott), cyber and physical attacks, and backlogged generator interconnection. FERC has issued several new rules to deal with some of these issues, and more actions are expected, as grid owners and operators develop compliance strategies.