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FERC decision to “penalize” new electric generation created by renewable energy

2020-03-FERC-POST

 

Recently the Federal Energy Regulatory Commission (FERC) made a decision to “penalize” new electric generation created by renewable energy and energy efficiency versus electric generation from traditional sources like coal, nuclear, and natural gas. The logic behind this “penalty” is that many states offer incentives (like utility rebates!) and subsidies to companies who invest in renewable energy sources or energy efficiency projects, which the FERC believes gives those sources an unfair price advantage when competing with non-subsidized electric generation as a wholesale supply option for utilities and energy suppliers.

 

On the surface this seems like a fair decision - level the playing field so unsubsidized generation resources can compete economically to support our country’s generation needs. But this FERC decision is having the opposite effect, because now subsidized generation resources will be the most expensive option for wholesale energy buyers and will negate the whole purpose of offering a subsidy or incentive in the first place.

 

According to the U.S. Energy Information Administration, in 2019 less than 18% of our power came from a renewable resource, up from about 10% in 1999. But overall demand for electricity continues to rise (about 11% over the last 20 years). Without renewable energy being built, the growth in demand would require us to build new natural gas or coal power plants.

Screen Shot 2020-03-30 at 10.51.41 PM

All of these dry government statistics tell me that the FERC decided to fix a problem that did not exist. Rebates for energy efficiency has helped flatten the demand for electricity (2019 was the first year since the 2008 recession that overall electricity demand went DOWN in the U.S.).

Steve Moritz
Steve Moritz
President & CEO, Encentiv Energy

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