Renewable energy policy issues in play
Changes in government policy can have a big effect on the renewable energy market in the United States. Most acquisitions and financings make it a condition to closing that there has not been a material adverse change or proposed change in law. The parties to financings spend time negotiating whose risk it is, and what happens, if the law changes in the future before the financing has been repaid.
Five Washington insiders had a wide-ranging discussion about potential changes being debated in Washington at the annual renewable energy law conference in Austin hosted by the University of Texas in late January.
The five are Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association, Tom Kiernan, CEO of the American Wind Energy Association, Daniel Simmons, acting assistant secretary of Energy for energy efficiency and renewable energy, Richard Glick, who moved in November from advising Democrats as minority general counsel to the Senate Energy Committee to commissioner on the Federal Energy Regulatory Commission, and Tom Hassenboehler, who was chief counsel for energy and the environment for the Republicans on the House Energy Committee until October, when he moved to The Coefficient Group, a Washington lobbying and strategy shop. The moderator is Keith Martin with Norton Rose Fulbright in Washington.
MR. MARTIN: Abby Hopper, how does the 30% solar tariff announced last week play out from here? For example, is there is any expectation that some countries with whom the US has free trade agreements might get exempted?
MS. HOPPER: I think it will play out in a couple ways. There is still a fair amount of uncertainty about possible exemptions for particular products. There is also uncertainty around NAFTA and around some of our other free trading partners where I assume there will be requests to grant exemptions. The action at the country level is likely to play out in the World Trade Organization. More detail is expected from the administration in terms of process.
The tariff will have a detrimental effect on demand for solar by increasing the price, thereby making solar less competitive in many markets. That will lead to some job losses across the sector in states where the price is most on the edge.
MR. MARTIN: Do you expect the US government to carve out particular countries? The US International Trade Commission recommended Singapore, Israel, various countries in Latin America and other places with which the US has free-trade agreements for relief.
MS. HOPPER: No. The president put out some information last week that said that developing countries are exempted to the extent their total solar cell or panel supplies to the US remain below certain thresholds, but he specifically took out a few important ones like Malaysia, Thailand and South Korea. None of those is exempted.
MR. MARTIN: According to news reports, Sunpower plans to ask for relief for one of its products — a high-end solar panel — and solar-powered pack backs are expected to be carved out. Do you have any sense for what standard will be used to determine what products will be exempted?
MS. HOPPER: I don’t. I think we expect to see a process and perhaps standards announced by around February 22.
MR. MARTIN: Are you hearing already from your members about any particular market disruptions?
MS. HOPPER: The nine months of uncertainty definitely affected the market. Some projects were delayed or cancelled due to inability to determine what modules cost. This then made it hard to commit to a price to supply power and made it harder to secure financing for projects.
Going forward, I don’t know. It has been a week since the tariff was announced. I think companies are still trying to wrap their arms around what exactly this means. Overall, there has been a chill in the market.
MR. MARTIN: Three more questions, and then we will move on to something else. What are you hearing about where panel prices are likely to settle?
MS. HOPPER: That’s a million dollar question. Some people say the risk was already priced into the market and so we may not see an incremental 30% bump due to the tariff.
MR. MARTIN: The last time the US imposed these types of tariffs was on steel imports in 2002 under President George W. Bush. The tariffs remained in place for two years before the US removed them. The WTO allowed other countries to impose retaliatory tariffs on some US products. What are your advisers telling you about the likelihood that South Korea, Mexico, Taiwan, China or other countries will be able to prevail in the WTO?
MS. HOPPER: I am not a trade lawyer, although I feel like I played one for the last year. What I am told is that the United States has never won a safeguard case at the WTO. It takes 18 months to two years to move through that regulatory process.
The president’s inclusion of Canada and Mexico in this tariff triggers some different legal remedies under NAFTA that I think could put pressure more quickly on the US than what is likely to come from the WTO process.
MR. MARTIN: Most of the ire in the president’s tariff proclamation was directed at China. We already collect anti-dumping and countervailing duties on Chinese panels. China has shifted a lot of its production to places like Malaysia. Are there any discussions with China aimed at resolving our differences that might lead to tariff relief?
MS. HOPPER: That’s a good question. We call it the global settlement or the grand bargain. I think there are such discussions. The president referred in his proclamation to continuing to work on a settlement. Talks have been underway for years, so it will take some leadership by the administration, but there is an interest among all concerned in having those discussions.
MR. MARTIN: Rich Glick, were you surprised that the Federal Energy Regulatory Commission voted unanimously to reject the proposal by US Energy Secretary Rick Perry that nuclear and coal plants should be dispatched ahead of other types of generation and assured a profit, and where do you see things going from here?
MR. GLICK: I was not particularly surprised. The record did not have any evidence to suggest that increasing payments or subsidies to nuclear and coal plants will make the electricity grid more resilient. If anything, the evidence suggested the opposite.
The Department of Energy’s own study last summer suggested that nuclear and coal plants have resilience issues of their own and favoring those types of plants over other forms of generation is unlikely to improve grid resiliency.
There was a big cold snap in the eastern half of the United States a couple weeks ago. Many of the power plants that had to be shut down due to the weather were the nuclear and coal plants.
The commission rejected the Perry proposal and opened a new proceeding in which we are asking grid operators who are subject to commission jurisdiction to submit information within 60 days about any resilience problems they see and, if there are any, what they believe the commission should do about them.
I suspect we will receive a wide range of opinions. After the 60 days, there will be another 30 days for public comment on what the grid operators submit.
I plan to look at the record in the proceeding, but if there is no indication of a near-term problem with resilience, then I think we need to end the focus on this subject and move on. FERC has a lot of other issues begging for action, in large part because the commission lacked a quorum for most of last year. We need to move on to these other issues if there is really no evidence that we need to do something immediately about resilience.
MR. KIERNAN: Let’s give credit to FERC. This was a unanimous, bi-partisan decision in a period when much of government has not been functioning in such a manner.
MR. MARTIN: Several states — Illinois, New York, Connecticut, New Jersey — are moving to offer things like zero emissions credits and other subsidies to keep nuclear plants operating. Is this something on which FERC should weigh in?
MR. GLICK: This is an issue to which everyone in the renewable energy community needs to pay close attention. It could have a big impact on state renewable portfolio standards and other state programs that try to incentivize renewable energy generation.
Beyond that, I need to be careful because there are some pending cases at the commission, and I am not allowed to talk about any pending cases and must not to prejudge matters.
In general, the US Supreme Court, in a case several years ago, said that states are preempted from enacting programs that have the effect of regulating pricing in the wholesale power markets. But the court was silent on whether a state can have a renewable portfolio standard or can favor nuclear or some other form of generation to the extent it does so in a manner that does not replace wholesale electric rates.
We are in a situation where the legal precedent is a little unclear. We have several cases pending before the commission dealing with a “modified offer price rule,” or MOPR, that is of particular concern in the organized markets in the eastern United States. The issue is whether state energy policy programs are causing some generating resources to bid into capacity auctions in such markets at less than their marginal costs and, if so, whether that is something that FERC needs to address.
The issue is a slippery slope. Where do you draw the line on state programs? Do we take the position that states cannot address certain externalities that the energy markets fail to take into account, like greenhouse gas emissions for instance? Do we take the position that states cannot have renewable portfolio standards or programs favoring other types of generation?
Congress bifurcated resource decisions in 1935 by giving the power over retail electric service to the states and leaving the Federal Power Commission — now FERC — with wholesale electric rate and transmission oversight. I am a little troubled that the MOPR proceeding could lead to a situation where you end up limiting the ability of states to address what they see as legitimate concerns.
MR. MARTIN: So you think FERC should stay out of it?
MR. GLICK: I have not made up my mind, but I am troubled by the concept that FERC can override state resource policy decisions.
MR. MARTIN: Dan Simmons, before you moved to your current position at the Department of Energy, you were a critic of the federal government favoring any one type of energy. You thought resource decisions should be left to the market. How do you reconcile this position with the effort by the Trump administration to favor nuclear and coal?
MR. SIMMONS: My position has always been that the federal government should not be in the business of picking winners and losers. That is where I am personally, but that is obviously not necessarily the position of the administration.
Other big issues
MR. MARTIN: Let me ask the entire panel, starting with Tom Hassenboehler, what are the other big policy issues on your agenda this year aside from the Perry proposal, the MOPR proceeding that Rich Glick just mentioned and solar tariffs?
MR. HASSENBOEHLER: Congress has been largely on the sidelines in these debates. There is talk about reviving an energy bill that stalled last year. There was also an effort last year to put together a targeted package of public lands bills coupled with some other modest reforms in the Department of Energy.
There is not a huge appetite in Congress currently for large, bold initiatives, but I think there is a growing desire among Republicans to be relevant again in the energy space and to engage on some of these issues, including on the Perry NOPR. The House Energy and Commerce Committee launched a “Powering America” series of hearings that looked at emerging issues, from the federal-state jurisdiction questions that Rich Glick mentioned all the way to the historical origins of the Federal Power Act and how new technology and digitization of the economy and renewable integration may require changes in federal regulation. In the longer term, Congress will need to tackle these issues.
We have a lot of litigation coming up this year, and a lot of FERC decisions have the potential to stir Congress. In addition to that, it is possible that a small energy bill could hitch a ride on the infrastructure package that the president wants to put through Congress.
MR. GLICK: There are three other policy issues in play that are relevant for this audience.
One is a pending rulemaking that was proposed in 2016 that would enable energy storage and distributed energy resources to bid into the wholesale power market. Energy storage lacks the ability currently to fully monetize the benefits it provides. The ability to participate in the wholesale market should make storage more economic to install.
Next, we are looking at generator interconnection reform. The commission proposed a rule a while back. It is still pending. There is a lot of interest, especially from solar and wind companies, to streamline the interconnection process.
The third issue is PURPA. Congress is taking a look at PURPA reform and so is FERC. There was a technical conference a while back. The state regulators in particular are really pushing FERC to change how we implement PURPA.
MR. SIMMONS: The administration is focused on affordable and reliable energy to promote economic growth and energy security. Those four items — affordable energy, reliability, economic growth and energy security — are at the core of where the administration wants to go on energy.
Affordability is critical. Reliability is critical. You see that in what Secretary Perry asked the Federal Energy Regulatory Commission to do. Economic growth is critical as is energy security. You will hear a lot about both tomorrow night from the president in his State of the Union address to Congress.
Along with those, there will be a big infrastructure push this year. Finally, one of the important takeaways from the grid study that we did at the Department of Energy at Secretary Perry’s request was how to ensure that there is adequate compensation for grid reliability services. Those are what I see as our priorities.
MS. HOPPER: After the solar tariff and the Perry NOPR, our biggest federal priorities are moving away from playing defense. We are thinking about the infrastructure bill and the ways that solar, and energy in general, are addressed as part of any new national infrastructure plan.
Another issue is monitoring how the new tax law is affecting the solar sector and engaging with the government on some of the guidance needed to implement it.
PURPA obviously is an issue we care deeply about. State policies can also have a significant effect on the solar market and on energy security and reliance, and we continue to monitor potential changes at the state level.
Tom Kiernan and I have a personal and an organizational commitment to working on many of these things together. So debates around transmission planning, and how we participate in wholesale markets, are areas in which we are going to be working together.
MR. KIERNAN: Two priorities, somewhat consistent with what Abby and other panelists have said.
One is getting more transmission so that the grid as a whole is more reliable and so that we can move electricity from the windy places where wind farms are built to where people live.
The other is market design, meaning making sure that we have competitive markets with effective pricing of electricity and of essential reliability services. I agree with Daniel Simmons that all electricity generators — wind, solar, others — should be able to compete effectively to provide reliability and resilience services and be compensated for them.
Transmission and market design benefit all sources of electricity. The more transmission and more competitive a market design we have, the better off consumers are because those policies would help reduce the cost of power.
MR. MARTIN: Tom Hassenboehler, you mentioned an energy bill as a possibility this year. Rich Glick, you just came off Capitol Hill as well. What is the likelihood of an energy bill, even a small one, being attached to a larger infrastructure bill, and is there anything in the energy bill that will affect people in this room?
MR. HASSENBOEHLER: There is a commitment by the four key members at the committee level in the Senate and House to try to do something, but the enemy this year is time. It is very hard to get anything on the legislative calendar during an election year, since the calendar tends to be taken up with must-pass items like funding for the government and the need to raise the public borrowing limit and with messaging bills that the party in control wants to put through in advance of the elections.
There is a bipartisan energy bill that actually has consensus and buy in by both parties. Sometimes those kinds of measures can creep in during an election year. A lot of work was done on it in conference between the two houses last year, as Rich knows. He and I worked on it together on the Hill. The real issue will be getting time on the calendar.
MR. MARTIN: Rich Glick, what odds do you give an energy bill this year?
MR. GLICK: The bill passed the Senate last year by an 85-to-12 vote, which is very unusual in the current Congress, but it is tough to do anything in the current environment.
There is nothing earth shattering for this audience in the bill. There are a few provisions, such as R&D for energy storage, the smart grid and geothermal development on public land that might be helpful.
MR. MARTIN: Tom Kiernan, is there anything AWEA is watching in the energy bill?
MR. KIERNAN: We want to see improvements in transmission, so we are having some discussions about it, but that’s about it.
Effects of new tax law
MR. MARTIN: Abby Hopper, are you hearing any complaints from your members about the new tax law and, if so, what?
MS. HOPPER: There has been some discussion about the base erosion and anti-abuse tax — BEAT — and its potential effect on the tax equity market. BEAT has a differential impact on wind versus solar. There are some indications that the intense anxiety we felt in early December may not bear out in terms of getting deals done after the 80% renewables fix that Congress added to the BEAT in conference.
The decrease in the corporate tax rate reduces the value of the depreciation on projects and, therefore, the amount that can be raised in the tax equity market.
The lack of guidance is problematic, and that is where I am hearing more complaints. There are some areas where we need more clarity on how the new rules of the road work.
MR. MARTIN: Tom Kiernan, what are you hearing from your members?
MR. KIERNAN: On the BEAT, the general sense is it will hurt by reducing the amount of tax equity that can be raised for projects. How much and whether that will tank some projects is to be determined. We have heard of some projects slowing down as some tax equity investors take stock of how they will be affected by BEAT, but our sense at the end of the day is projects will move forward, albeit potentially at a higher cost of capital. There is still some analysis to be done.
MR. MARTIN: Is there an effort underway on Capitol Hill to try to improve on the 80% fix for the BEAT?
MR. KIERNAN: There are a number of ideas floating around for how to get rid of any remaining potential for the BEAT to claw back tax credits or to further reduce the potential cost to tax equity investors who are subject to the BEAT.
There was a bipartisan deal in 2015 in which the wind industry actually proposed to phase out production tax credits for wind over a ramp-down period of four years. The goal has been to preserve that deal and not weaken it through the BEAT. So there are some discussions on fixing the 20% claw back, but nothing definitive.
MR. MARTIN: Rich Glick, 12 state attorneys general wrote FERC in early January asking it to force utilities to pass through the corporate rate reductions to their customers. I assume that just means pipelines and transmission companies, since those are the only utilities over which FERC has jurisdiction. Does FERC have a potentially broader role?
MR. GLICK: We are taking a look at it now and are waiting for a memo from the commission staff. Clearly there are opportunities to reduce rates where utilities are recovering taxes at a 35% tax rate, so that needs to be adjusted, and I think we need to do it quickly. I understand the issue may be a little more complicated for pipeline companies because of the way their rates are set. However, I think we will be acting on this fairly soon.
MR. MARTIN: On what timetable do you see FERC acting?
MR. GLICK: The chairman makes that decision, but certainly this year and hopefully in the first half of this year.
MR. MARTIN: Dan Simmons, you told PV Magazine in September that you are concerned about the fact that wholesale electricity rates have fallen dramatically while retail rates remain sticky downward. To what do you attribute this?
MR. SIMMONS: I don’t know, but we hear about how power purchase agreements are being signed by generators at lower and lower rates to supply power, and then you look at retail rates and, instead of decreasing, they are increasing slightly. I am very concerned. I do not see a federal role for regulation in this area, but there is an important federal role in researching what is going on.
MR. MARTIN: Let’s move to PURPA, a 1978 law that requires electric utilities to buy electricity from independent generators in some parts of the country at the avoided cost the electricity would pay to generate the electricity itself.
Both Rich Glick and Tom Hassenboehler mentioned it. There is an effort before both Congress and FERC to water down the remaining purchase requirement. Tom Hassenboehler, starting with you, what are the principal issues in the PURPA debate?
MR. HASSENBOEHLER: The House Energy and Commerce Committee held a hearing on a draft bill about a month ago. There are basically three issues.
The first two are things that FERC can do administratively. The utilities want to amend the one-mile rule.
MR. MARTIN: So multiple wind turbines will be considered a single project even though they are more than a mile apart if they function like a single project. This is important because utilities are not required to buy electricity from projects once they pass a certain size.
MR. HASSENBOEHLER: There would be a rebuttable presumption that the turbines are a single project. The existing FERC guidance requires that turbines that are more than a mile apart be treated as separate projects.
The second issue is some utilities want to reduce the size of projects from which they are required to buy electricity in organized markets from 20 megawatts to 2.5 megawatts. This is something that I believe FERC can do administratively.
The third thing is to let the states make the decision when the mandatory purchase requirement should apply. Basically it would remove from FERC the ability to require utilities to purchase, which could lead to state-by-state variances in how PURPA is implemented across the country.
MR. MARTIN: It would make the PURPA purchase requirement optional. States would decide.
MR. HASSENBOEHLER: Yes. Those are the three main proposals in the bill. It is in the legislative hearing phase. Many of the utilities appear to be aligned on what they want. Obviously not all the independent generators see eye-to-eye on these changes. The prognosis for it moving in the House is a little above 50%. There is growing interest in addressing these issues.
However, my guess is it is going to take a little while to get all the way through Congress. In the meantime, FERC has the ability to do some of these things on its own.
MR. MARTIN: Rich Glick, why is there both a FERC technical proceeding and this legislative process? Is this the utilities trying to open both doors? Also, I thought I heard at one point last year that it was possible PURPA might actually be expanded.
MR. GLICK: The utilities have been on Capitol Hill about these issues for a number of years and, for a variety of reasons, have not been able to get the changes they want, in large part because it is very difficult to get anything like this through the Senate. You have to get 60 votes. The ranking Democrat on the Senate Energy Committee, Maria Cantwell, has basically said, “Over my dead body.” She is a pretty formidable legislator.
I think the utilities are a little frustrated, so they have come to FERC and suggested FERC should address some of these issues.
Congress narrowed the purchase requirement in 2005 to generators in parts of the country where they do not have the option to bid into a competitive power pool. It said that there is a rebuttable presumption that utilities do not have to buy from a facility that is more than 20 megawatts in size and interconnected to a grid operated by a regional transmission organization or independent system operator that has certain elements of a competitive market. For facilities up to 20 megawatts, there is a different story. There is a rebuttable presumption that such a facility lacks competitive access and, therefore, the must-purchase requirement still stands.
Much of the western US does not have RTOs and ISOs. There are a lot of solar facilities in North Carolina that also rely on PURPA. People have made the determination that in those regions, in particular, small renewable energy generators need access to PURPA to be able to get utilities to sign power purchase agreements.
The debate over the one-mile rule has become fairly heated. The issue is whether wind turbines or solar arrays that are more than one mile apart should be considered different facilities for determining the size of the power plant. No utilities — in or outside competitive markets — are required to buy electricity from renewable energy facilities that are more than 80 megawatts in size.
There is also a debate around whether the separate 20-megawatt cap for the purchase requirement in competitive markets should be reduced to 2.5 megawatts.
FERC has authority to address these issues and, when I was on Capitol Hill, I would always say, “We should leave it to FERC to address.” Now that I have a different role I think a lot of these issues are better addressed by Congress. [Laughter]
That said, I would not be surprised if we see a rulemaking at some point — not in the near future, but at some point down the road — addressing some of these issues.
MR. MARTIN: Is it possible that PURPA might actually be expanded instead of cut back?
MR. GLICK: Possibly, in some areas. I still have to review the record from the technical conference more closely, but I think you could see a grand compromise, whether legislatively or administratively, where some of the complaints by utilities get fixed at the same time some of the other complaints that generators make about access and about utility actions that the generators say suppress competition also get addressed.
MR. MARTIN: Abby Hopper, how big an issue is PURPA for solar?
MS. HOPPER: It is a fairly large issue for the solar industry, and we are engaging with Congress and FERC on these issues. North Carolina is the second largest solar market in the US, and a large part of that is because of PURPA. We think PURPA is an important tool. We are always happy to talk about ways to streamline it or make it more efficient, but we are not in favor of subverting the underlying purchase requirement.
MR. MARTIN: Tom Kiernan, how big an issue is it for wind?
MR. KIERNAN: Not particularly a big issue. Most wind farms being built today are too large to benefit from PURPA.
MR. MARTIN: There was talk at the start of the Obama administration about making it easier to build new transmission lines. Little headway was made. Is the effort hopeless?
MR. SIMMONS: Let’s see what comes out with the infrastructure push. We heard from a lot of people early in the administration about the need for help with transmission siting. One thing the administration can do is streamline the federal environmental review under the National Environmental Policy Act. Long drawn-out agency processes are a concern for transmission. That’s one area where we hope to make a difference.
MR. MARTIN: Rich Glick, you were quoted last week in the press as saying that the government ought to give greater weight to local views when it comes to siting new gas pipelines. Isn’t the inevitable local opposition the main impediment to building new transmission lines?
MR. GLICK: It would take a while to explain, and I can’t talk fully about this because it is a pending matter before the commission, even though I dissented in the case. There may be a rehearing. But I will say this: FERC has authority to site natural gas pipelines. It does not have that authority for transmission. The Natural Gas Act requires the commission to find the pipeline is essentially in the public interest.
In order to determine whether it is in the public interest, you need information. In some cases, states do not give developers of proposed gas pipelines access to the information we need to make an informed decision, so the developers come to FERC and say, “Why don’t you just grant us the certificate? We’ll come up with that information later because we can use eminent domain once we get the certificate. Then we’ll provide the information for you, and you can make up your mind whether it is in the public interest.” To my mind, that is backwards.
The new FERC chairman announced in his first public meeting that the commission will review its natural gas policies because there are questions about whether we are following the precedent the commission set in the 1990s on natural gas pipeline siting. I hope access to information will be addressed in that proceeding.
MR. MARTIN: Dan Simmons, the Department of Energy set a goal in 2011 to cut the cost of solar to 6¢ a kilowatt hour by 2020 to support broader deployment. That goal was reached last September. Will a new goal be set for solar?
MR. SIMMONS: Yes. We have a new goal. That is for utility-scale solar with an average amount of sun, so it would be for an area like Kansas City as opposed to, say, Texas or Arizona. Our goal is to move to 3¢ a kilowatt hour by 2030. Goals are important and, in focusing our efforts to drive down cost, affordability is one of the keys for the Trump administration and that includes continuing to reduce the cost of wind, solar and other types of generation.
MR. MARTIN: Abby Hopper, does 3¢ a kilowatt hour by 2030 sound like an achievable goal or is it perhaps not ambitious enough?
MR. SIMMONS: Maybe not ambitious enough. What do you say, Abby?
MS. HOPPER: Maybe not ambitious enough. I have the utmost confidence that we can meet it. The biggest challenge in reducing costs is not the technology or equipment, but soft costs that make up a big chunk of the cost of a project. To the extent that DOE is doing work on how to reduce soft costs as well as the technology costs, that is incredibly important.
I come from the great state of Maryland. Every county has a different standard for how it inspects solar projects, and that is intensely inefficient and cost-prohibitive. So keep working. That’s great.
MR. MARTIN: Rich Glick, shortly after the Trump victory I asked you how you thought the Trump energy and environmental policies would affect renewable energy. The president threatened during the campaign to withdraw from the Paris climate accord, cancel the Obama Clean Power Plan, promote coal and build the Keystone pipeline. You said you did not expect much of an effect in the short term. Is that still your view?
MR. GLICK: Yes. Corporate demand for renewables is growing. Utilities are buying more renewables because they know they will lose their corporate customers if they don’t do that. Also, key states are continuing to encourage a shift from fossil fuels to renewable energy.
In the longer term, when the tax credits for renewables expire, things become a little more murky.
MR. MARTIN: People thought in 2015 when the deal was cut to phase out tax credits that the phase out would take the industry through 2020, when the Paris climate accord and Clean Power Plan would start to kick in as a driver. Those are both gone now. How important were they?
MR. KIERNAN: It was unfortunate to find them pulled away. However, the main driver for growth in renewables is the continued reduction in the cost. The cost of a wind farm has fallen by 66% in the last seven years, and costs continue to fall. Both corporate buyers and utilities are realizing that renewable electricity is becoming really inexpensive, so they say, “Let’s buy it. Let’s buy a lot of it.”
State RPS targets and integrated resource plans will continue to help after 2020.
MS. HOPPER: I would add on the solar side that as we look at procurements for 2017, about two-thirds of them were based on cost. They were not policy-driven decisions. They were price-driven decisions. We hope to make it on cost.
MR. HASSENBOEHLER: We are in a good place where costs are coming down and equipment is becoming more efficient as a result of policies of the past. The mandates, subsidies and tax credits did the job they were supposed to do.
I think we are entering a phase where consumers are really driving things. The combination of digitization of the industry and emergence of new technologies has the potential to take it from here. The question is whether the market rules will allow the large corporate purchasers to do the things that they claim they want to do.
Assuming the market rules are accommodating, the branding and the environmental awareness from the bottom up versus the top down should continue to drive renewables, regardless of whether the Clean Power Plan ever comes back or whether a price is put on carbon.
MR. MARTIN: We are down to the last three questions. Renewable portfolio standards have been a driver for renewable deployment at the state level. The Koch brothers have been funding an effort to roll back the standards in some states. How do you see this battle playing out? Who is winning?
MR. KIERNAN: That battle will continue, but in the last several state legislative sessions, more states have been increasing their RPS targets or moving forward on new RPS targets because that is what consumers are looking for. They want clean, renewable electricity. Renewables are rapidly becoming the lowest-cost electricity.
MR. MARTIN: There was a prediction that when Trump took office attention would shift to the states as the federal government lost interest in promoting renewable energy. Abby Hopper, what is the next biggest state issue, after RPS targets, that you are following? You are a former state energy official.
MS. HOPPER: On the solar side, the net metering conversation continues to be alive and well. It plays out in legislatures, and it plays out in a lot of regulatory proceedings. These are intensely time-consuming and detailed proceedings, but we have a rate design expert on staff now because we are participating in so many such proceedings across the country.
I agree with both Toms that consumers are driving demand for renewable energy at this point. That consumer preference is being felt from one state to the next. Sometimes it is RPS. Sometimes it is tax rebates. Sometimes it is some other program to help fuel the move to renewables, and it is happening across the country.
MR. MARTIN: Last question for Dan Simmons. You oversee the National Renewable Energy Laboratories, which are doing very interesting work. Is there one thing on which they are working that should excite this audience?
MR. SIMMONS: If you ever get the chance to visit any of the national labs, I suggest you take advantage of that opportunity because they are great. There is no one thing. There are many things, such as in the area of solar, almost sci-fi technologies such as spray-on coatings that allow all manner of equipment to generate its own electricity to much more mundane issues such as increasing the value of power electronics so that wind and solar are able to produce better grid reliability services in terms of frequency and voltage support.
Other exciting areas are control strategies that can turn buildings into sources of virtual storage for the grid and better communication that makes the grid more complex, but also creates new sources of value, which is one of the reasons why the issues of price formation and assigning the right value to grid reliability services are so important. ¥