By: Bill Prindle, Deb Harris, and Chris MacCracken, ICF
Utilities are increasingly placed on the front lines of climate change. As the U.S. government forges federal policy and program solutions to address climate, many utilities are working with state regulators and stakeholders to reduce greenhouse gas emissions, even as they are forced to navigate climate change impacts through extreme wildfire, hurricane, heat, flood and drought conditions. The term “decarbonization” has evolved to embrace the range of strategies utilities are developing in this context.
There is no “silver bullet” solution to decarbonizing the massive and complex U.S. economy or its energy systems; no single strategy can accommodate all interests while providing affordable, reliable and resilient energy services for all. Yet, there are promising options that a given utility can tailor into portfolios that meet decarbonization goals and make sense for their customer mix, their geography, and their policy environment.
As governments and utilities move to make major changes in our energy infrastructure, traditional analytics models aren’t adequate for the task. In order to understand the complex interdependencies of today’s energy systems, economic sectors and geographic differences, utilities pursuing decarbonization strategies will need to apply science-based research, new modeling and analysis tools, and experience-based market insights to design policy and program solutions that meet emissions targets and keep their systems sound.
Moving away from the “silver bullet” fallacy
When thinking about long-term decarbonization strategies, solutions presented as “one-size-fits-all” fall prey to the silver bullet fallacy, meaning that the same single option does not apply to all situations. Solutions that meet system operation needs, address stakeholder concerns, and comply with regulatory mandates require the consideration of multiple elements, whole-system thinking, and a “no regrets” risk management approach.
For a challenge as complex as decarbonizing U.S. utility systems, silver bullets can quickly become red herrings, for several reasons. Geographic, technological and sectoral differences strongly affect a given solution’s technical nature, as well as its timing. For example, utilities managing transmission and distribution assets in the unique Texas ERCOT power system face different challenges than National Grid’s northeastern operations spanning two wholesale power systems, one for New York and one for New England.
Preserving system reliability and energy resource diversity is key to forging realistic solutions in achieving decarbonization goals. Much like overreliance on imported oil triggered energy and national security crises in the 1970s, overreliance on any single energy resource, technology, or delivery system will likely lead to regret-prone risks and unintended consequences.
Managing under increased uncertainty and risk is a new reality for utilities in this decarbonization era. New technologies, for example, can explode from startup status to market leading positions in just a few years. Climate change impacts such as wildfires or floods can accelerate in unpredictable ways, raising the urgency of system operations solutions, and putting vulnerable populations at higher risk. A “no regrets” planning approach is needed to keep flexibility to pivot to new technologies, manage risks from extreme events, and allow for evolving environmental justice needs.
Three prongs of successful decarbonization strategies
While decarbonization strategies will be different based on geography, technology, costs, and system operations considerations, recent insights from the ICF Climate Center identifies three themes that effective approaches share.
First, a successful decarbonization strategy must be built on robust analysis and assessment. This typically involves extensive modeling and planning, but utilities can pursue proven, cost-effective solutions while assessing and testing new solutions. For example, customer energy efficiency and other distributed energy resource programs help manage the demand side of the system, increase affordability, and improve reliability while new generation, transmission, and distribution solutions are planned and procured.
Second, utilities should avoid committing to specific pathways too soon, even as they plan and build out broader, longer-term system solutions. This includes studying multiple scenarios in detail in the strategy planning process; this helps avoid tunnel vision, allowing for adjustment of strategies when conditions on the ground change. This kind of flexibility is essential, because new technology and cost trends will doubtless shift the mix and priority of decarbonization strategies in the coming decades. It is also true, however, that long lead times for some strategies may require decisions to be made before uncertainties are resolved. Utilities can help manage these shifts by testing and piloting alternative solutions on an ongoing basis.
Third, utilities will need new efforts to collaborate more closely and engage more stakeholders. The likely shifts in America’s energy infrastructure will have major effects on a wide range of stakeholders, including disadvantaged communities. Collaborating with policymakers, technology innovators, financers, customers, skilled trades and unions, environmental justice advocates, and other citizen organizations will be essential to gaining the support needed to reach ambitious decarbonization goals.
Improving energy equity is an especially important priority in this process. Utilities must help protect the most vulnerable populations who have the most to gain or lose from climate change impacts and clean energy solutions. This requires broadening the network of communities that utilities engage, changing the methods by which costs and benefits are calculated, and reframing the ways in which the benefits of decarbonization solutions are defined and delivered.
By following this three-pronged approach, utilities will be better equipped to design and implement successful decarbonization strategies. They will be better positioned to choose the right solutions, deploy them flexibly, while meeting the needs of a wide range of stakeholders. And in the process, they will be readier to keep America’s energy systems reliable, affordable, and more equitable.
About the Authors
Bill Prindle is a Vice President, Sustainable Energy and Climate + ICF Climate Center Senior Fellow
Deb Harris is a Senior Director, Climate Planning + ICF Climate Center Senior Fellow
Chris MacCracken is a Vice President, Energy Advisory + ICF Climate Center Senior Fellow
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