WWW.UTILITYDIVE.COM
The transition toward cleaner, more sustainable energy systems in the Eastern U.S., like elsewhere across the world, is complex and multi-faceted and faced with a lot of challenges to overcome. From a policy, regulatory and technology standpoint, utilities are faced with the challenge of navigating a complex landscape of having to modernize the electric grid while simultaneously decarbonizing our economies. And while attempting to do this, utilities are being directed by regulators to continue maintaining a reliable, resilient and affordable grid – a challenging trifecta to win.
What we know
It’s clear that a one-size-fits-all approach to decarbonization and electrification is not feasible given the diverse energy landscapes across different regions and energy needs. Jurisdiction-specific planning is crucial, factoring in availability of resources and technologies, existing infrastructure and emerging needs and state and local laws and regulatory policies. Tailored approaches that leverage a mix of clean energy technologies and consider localized challenges and opportunities are necessary to ensure effective decarbonization.
Embracing diverse technological solutions and fostering innovation is essential if we are to have any chance of meeting “net-zero” goals advocated by many states. Hybrid and portfolio approaches combining multiple low carbon fuel sources and technologies provide the most economical pathway to decarbonization. Strategies and plans to decarbonize must remain flexible and adapt to changing circumstances and emergence of new and innovative technologies. This necessitates regulatory frameworks that incentivize clean energy investments while providing flexibility to accommodate technological advancements and an “all hands-on deck” approach to decarbonization. And the financial viability of distribution utilities is paramount if they are to raise the large sums of capital needed to support electrification and decarbonization.
However, policy challenges, including regulatory barriers and public perception, remain significant challenges. Overcoming these challenges requires collaborative efforts between public and private stakeholders, transparent communication and regulatory flexibility to incentivize clean energy adoption. We must bridge the gap between ambition and reality, which are currently on diverging paths. It is impossible to decarbonize our energy systems through electrification without regulators allowing distribution utilities and other energy providers to recover costs and earn a fair return on investment.
What we need
While sustainability goals are important, it’s essential to prioritize safety, reliability and affordability of energy services to ensure a smooth transition. And this will take time and cost money. This involves careful planning, investment in energy system infrastructure and consideration of localized community and customer impacts. It is essential we understand and calculate the true cost of electrification (including the cost to upgrade the electric grid to support new loads and the needed infrastructure upgrades) and bring transparency to how and who will pay for it.
The cost of electrifying everything in the U.S. is bound to be very large. Just in March 2024, the Clean Freight Coalition released a report indicating that the full electrification of the U.S. commercial truck fleet would require nearly $1 trillion in infrastructure investment alone. Other sources suggest it would require doubling or tripling the size of the electric infrastructure to support electrification. And we can’t ignore the role that natural gas will continue to play during the transition to maintain a reliable electric grid and continue to meet the gas needs of customers.
At the same time, we need to assess the feasibility of these electrification pathways. Many states are pushing for “net zero” carbon emission goals by 2050. Today, installing a 345kW substation takes on average 3 to 5 years and the amount of high voltage capacity built has been declining year-over-year. And it can take billions of dollars and 10 to 20 years to build new high voltage electric transmission. One must wonder how we will be able to achieve aggressive clean energy goals on time even if we have all the funding available – which remains in doubt.
Lastly, customer engagement and commitment is needed to drive adoption of new technology promising to put us on the path to decarbonization. In most studies, specific customer behaviors (i.e. adoption of electric vehicles, willingness to switch or upgrade appliances) are assumed with very limited data on the willingness to adopt these new technologies.
For example, some utilities are covering all the costs to electrify homes and still customers are not enrolling in these programs. It is clear the industry is making incorrect assumptions on customer desires and behaviors, which will hinder the ability to transition our energy systems. Costs, who pays for what, and consumer behaviors, are not talked about enough. To achieve net-zero gorals we must get this right.
Conclusion
Transparent communication, education and collaboration with customers are essential to overcome barriers such as high upfront costs and complex processes. Policy makers, regulatory agencies and utilities must listen to customer feedback and adapt messaging and decisions to align with customer demands and preferences. By embracing flexible approaches, leveraging diverse technological solutions and prioritizing customer engagement, the energy industry can work towards building an affordable, reliable, resilient and sustainable energy future.
