Competitive Markets Seen as Path Toward a Clean Energy Economy

Regulators, environmental groups, technology innovators and customers are increasingly converging on the fact that market forces can empower consumers to manage increases in energy costs and stimulate the technological innovations required for America to transition to a clean energy economy.  The latest voice in this growing chorus comes from the Deloitte Center for Energy Solutions.

In a white paper exploring how America can move toward sustainable jobs and a long-term clean energy strategy, Deloitte underscores how competitive markets can encourage the innovation solutions required to meet national electricity needs and environmental objectives.

The paper, Clean Energy 1.0, laments America falling behind in the international clean energy race, but sees salvation in the power of private investment and innovation driven by competition.

“Energy policy is not about energy. It is about technology and the new clean technology development path. The end is fostering (through markets) government policy and rules/regulations for developing clean technology for growth. It will apply along the complete value chain from R&D to final product implementation.”

Deloitte also released a survey of state energy regulators finding that while the regulators are concerned about increasing energy costs, a strong majority look to time-of-use prices to give consumers the ability to control their energy bills. This kind of dynamic pricing, a hallmark of competitive markets, allows consumers to take control by altering their energy consumption patterns in response to real-time price signals in the marketplace.  The survey found an overwhelming 83 percent of state regulators believe time-of-day pricing should be considered.

Given that 85 percent of the surveyed regulators expect the cost of electricity to increase in 2011, their views supporting the kind of dynamic pricing that markets provide is a powerful endorsement for one of the key benefits of competition. “Clearly, regulators are interested in time-of-day rates as a way for the public to benefit from cheaper access to energy, especially in light of the current economic downturn,” said Branko Terzic, a former Wisconsin state regulator and Federal Energy Regulatory Commissioner.

Significant investment is needed to reach our nation’s sustainable energy goals and maintain electric reliability. Fortunately, competition breeds innovative solutions through advances in energy efficiency, storage and generation technologies. “Businesses and governments should respond to this new reality by creating the products and services that will help Americans manage their energy consumption,” says Dr. Joseph Stanislaw, Deloitte’s independent senior advisor for energy and sustainability.

Joel Malina | June 9, 2010