New York is leading the clean energy vision with its energy and climate strategy that seeks to achieve 100% clean and carbon-free power by 2040. Recently, Governor Andrew Cuomo launched the Reforming the Energy Vision (REV), which further demonstrated New York’s commitment to clean energy.
This has also proved that investments in a carbon-free and clean energy technology need not come at the cost of raising the price for consumers. Examples from several other states have also shown that the states are doing their bit in promoting environmentally-friendly energy, even as the federal government remains embroiled in dealing with bottlenecks.
However, there are certain aspects that need to be considered, while aiming to build a clean energy system for the future. One crucial point is that regulated electric utilities are spending a lot of money. Out of this, some investment is necessary to support the equipment that produces and delivers electricity to customers. The issue here is that spending has increased at a faster pace than of electricity needs, which has led to a spike in customer bills.
The investment has also mostly been channeled in old and obsolete infrastructure that will not really facilitate a reduction in carbon emissions. In fact, it will deter the country from achieving its clean energy goals emissions will continue to surge. Much of the infrastructure is deemed of little use because it is rarely utilized – the system that it actually built for the hottest (or in places, for the coldest) days of the year makes customers pay for it all year long.
Regulated utilities lag in many other fronts. The grid is expensive, relies on traditional technology, whereas other industries have now adopted modern technology to improve quality and costs. In the case of regulated utilities, IT costs are not based on capital through which they can earn a rate of return.
In order to weaken this connection between investment and earnings, New York devised incentives to keep utility spending in line with customer interests and to reimagine how utilities deploy capital. A positive outcome has emanated from the REV policy where utilities in New York have pioneered new investment approaches to share in the value or savings that they give to energy users.
Non-wire solutions are a powerful step in this regard, considering that the issues with the grid can be addressed in a better way through non-wire solutions, instead of utility-owned wires and poles. These non-wire solutions also have many other benefits, apart from cost saving – non-wire investments encourage the deployment of clean energy technologies by providing value to portfolios of distributed energy resources. Now, this can happen directly – through the production of clean energy where required and cutting down the demand for fossil fuels – and indirectly – by providing grid flexibility. These solutions also boost economic development and job creation, along with improving customer satisfaction. Non-wire solutions have provided a practical approach for pushing clean energy and aligning it with the future of innovation.
In the current scenario, the grid is financially inefficient and that results in an increase in customer bills. In the presence of proper regulatory incentives, utilities will adopt a business model that can more efficiently use the capital to deal with a carbon-free grid. With its continuous efforts to enhance the use of clean energy, New York has made market participants rethink the traditional service model and to give it up to consider those who use clean energy as partners and not customers from whom they have to make profits.