Competition Creates “Flood” of Innovation

Competitive electricity markets unlock the innovative solutions required to meet America’s energy needs and environmental objectives, said experts at a COMPETE Coalition panel discussion event. Unless markets are opened up to competition, the nation’s energy system cannot reach its full potential.

Competitive markets promote competition among power suppliers to deliver the best possible service to attract and retain customers. Comparatively, in monopoly-protected states, incumbent power providers have no incentive to innovate because ratepayers are captive to their monopoly utility and power suppliers are guaranteed recovery of their costs plus a profit.

“Our nation was not created on the premise of central control, but decentralized opportunity,” said Kurt Yeager, Executive Director, Galvin Electricity Initiative. “It is that guiding principle that should dictate how the U.S. power grid is modernized. Consumers must raise their voices and demand their right to choose from a variety of electricity products and services in an open, competitive marketplace, thus establishing a truly consumer-driven electric power system.”

Competition empowers a new business model where entrepreneurs see financial opportunity for their technologies.  This is how competition in electricity creates market-driven incentives for power suppliers to innovate. Entrepreneurs with new technologies are champing at the bit for market entry, but regulatory roadblocks in monopoly-protected states are a formidable barrier.

To truly unleash innovation “government needs to set goals for clean energy and energy efficiency and let markets meet the challenge,” said Dick Munson, Senior Vice President, Recycled Energy Development. “America is based on the spirit of competition. If markets were opened, we would see a flood of innovation.”

Michael Moynihan, NDN’s Green Project Director, discussed the “Electricity 2.0” report - a plan detailing how competition can stimulate technology advances. “Quite simply, unless we upgrade to Electricity 2.0 and create a new open, plug-and-play architecture for electricity, there will be no clean energy revolution,” said Moynihan. “While creating the right balance between security, transparency, and access will not be easy, empowering the American people is critical to unleashing the potential of renewables.”

Clean energy, and wind power in particular, is thriving in competitive markets. AWEA’s 2009 Year End Market report found the total combined installed wind power capacity of the 17 competitive market states is 16,500 megawatts – nearly half the nation’s total installed capacity.