Economist Jonathan Lesser, PhD, urges policymakers to adopt a more rational planning framework
According to a National Center for Energy Analytics (NCEA) report, mandates to electrify the American economy while rationing customers' energy use may worsen the energy affordability crisis and power access.
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“Forcing consumers into electrification while limiting their access to electricity and relying on less reliable renewable sources are irrational approaches,” said NCEA senior fellow and the report's author Jonathan Lesser, PhD. “Electric utilities should design systems to meet customers' requirements and growing demand, rather than rationing and restricting power access.”
Lesser's analysis reveals an epic failure in the electric utility planning process. Because regulators and policymakers haven't focused on increasing supplies of affordable and reliable electricity, consumers are being hit with far higher electric bills and greater risks of rolling blackouts. In northern California, for example, the frequency of power outages has doubled over the past decade. Meanwhile, residential rates throughout the state have increased 75% on average from 2020 to 2024.
Recently, the Department of Energy (DOE) awarded a $15 billion loan to Pacific Gas and Electric (PG&E) to develop virtual power plants-home-based solar and battery storage facilities, and voluntary power shutoffs-as a way to meet customer load. However, Lesser believes this investment still misses the mark.
“While virtual power plants may increase supply, they still epitomize how utilities have failed to plan for the long term, especially when considering grid reliability,” according to Lesser. “The DOE's loan to PG&E is a costly bandage that doesn't address a fundamental component of electrification policies, which is ample supplies of affordable and reliable electricity.”
Electric utilities are increasingly using direct controls and higher prices to limit or ration electricity use. Lesser recommends incorporating consumers' inconvenience costs directly into utilities' “least-cost” resource planning efforts. This, he stresses, is far better than relying on time-of-use schemes that charge consumers even higher prices when they most want access to electricity, or even direct load controls that allow utilities to shut off power when demand is too high to meet.
Although policymakers have pushed electrification mandates to address carbon dioxide emissions, Lesser believes that using more natural gas and nuclear energy are better options for grid reliability while reducing emissions at a far lower cost.
“Whether or not we have electrification mandates, the U.S. will still need a bigger and stronger infrastructure to avoid power disruptions,” he said.
The report, titled “Electrification Without Electricity: An Epic Failure in Planning for Critical Infrastructure,” is available at utilities.energyanalytics.org.
About the National Center for Energy Analytics (NCEA):The National Center for Energy Analyticsis a think tank devoted to data-driven analyses of policies, plans, and technologies surrounding the supply and use of energy essential for human flourishing. Through objective analyses of energy policies and their implications, NCEA aims to inform policymakers, industry leaders, and the public on critical energy issues.
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SOURCE National Center for Energy Analytics
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