Technological innovation

Clean energy generation has grown at a phenomenal pace in the PJM Interconnection market.  Data from PJM’s Environmental Information Services’ (EIS) tracking system shows that over the past five years, wind generation has increased almost 1,300 percent, from 500,000 megawatt-hours (MWh) in 2005 to 6,500,000 MWh in 2009. Solar power, which accounted for only 100 MWh in 2005, produced more than 81,000 MWh – a 3,000 percent increase.

This infusion of clean energy has reduced PJM’s carbon dioxide emissions per MWh of generation by 12 percent since 2005, created green jobs, and provided customers with low-carbon energy alternatives, according to the EIS data.

Regional electricity markets are well-structured and well-regulated, and by delivering competitive results are providing real economic and environmental benefits to consumers, the Independent Market Monitors for the majority of regional transmission operator/independent system operator (RTO/ISO) markets said at a COMPETE-sponsored Capitol Hill policy briefing. These markets are creating innovation, new investment and competitive electricity rates – all the while ensuring system reliability, the monitors said.

During last week’s regular open meeting, staff with the Federal Energy Regulatory Commission presented their 2009 State of the Markets Report, and the outcome for energy consumers was profound.  Prices for natural gas were down by 50 percent across the country, and as a result electricity rates declined proportionately in the organized competitive markets, where gas is a key generation fuel. Costs for both natural gas and electricity were at the lowest levels seen since at least 2002 – even earlier in some regions, FERC staff reported.

Organized competitive markets create an effective mechanism to stimulate technological innovations and achieve federal emissions reductions goals. Promoting innovative solutions and market approaches delivers economic and environmental benefits to consumers.

A proposal being developed in the U.S. Senate would use a market-based approach to limiting carbon dioxide emissions from the electricity sector. While drumming up support for the tri-partisan bill, Senator John Kerry (D-MA) said that markets unleash “ingenuity” and send the proper price signals for investment. COMPETE couldn’t agree more, as outlined in a joint statement with the Environmental Defense Fund (EDF).

KEMA – a leading global energy and utility industry consultancy – will examine key business and policy issues facing retail energy markets at a two-day forum on March 30-31 near Dallas, Texas. The forum will convene key stakeholders in the U.S. retail energy industry and feature industry executives, state and federal regulators, investors and energy buyers - including several COMPETE members.

The conference – KEMA’s 21^st Executive Forum: Change through choice – will focus on the current state of retail energy competition and where it is headed in the future. Industry leaders will discuss the strategic issues facing evolving energy markets and the impact on retail customers. Participants will also explore technological innovations and advancements in renewable energy.

In recent remarks, entrepreneur and philanthropist Bill Gates called for “energy miracles” to meet the threat of global climate change.  But we at COMPETE would submit that with or without divine intervention, organized competitive markets have become incubators of technological innovation and renewable energy that meet rising demand with efficient clean energy generation.

“COMPETE believes a market-based approach to reducing greenhouse gas emissions and producing clean electricity offers the most innovative and economically efficient means of addressing climate change,” said Federico Peña, COMPETE Coalition Co-Chair and former U.S. Secretary of Energy.

A recent proposal by California’s Administrative Law Judge (ALJ) would settle a dispute between utilities, competition supporters, and consumer advocates by raising the state’s limit on retail power market shopping by 8,354 megawatts (MW). This compromise follows recent legislation that broadened the scope of retail power competition in California, and is but a step in the right direction.

According to the proposal, the cap on retail power shopping will be raised by 3,946 MW each in the Southern California Edison and Pacific Gas and Electric service territories, but only by 462 MW for San Diego Gas and Electric’s consumers. The proposed increases are equal to 10 million megawatts of annual use across the state.  Compare that number to recent data pegging California’s total retail electrical sales at more than 268 million megawatt hours per year.  The proposed increase in shopping is only equal to 6 percent of the entire load served, and is less than annual demand variations due to weather and economic swings.

Two groups this week underscored the need for consumer access to real-time dynamic electricity pricing to reduce greenhouse gas emissions and save money on their bills. On Monday, the Association of Home Appliance Manufacturers (AHAM) released a white paper strongly advocating that “residential electricity prices must be based on time of use” to fully enable smart grid technology. Yesterday, multiple high-tech companies and advocacy groups issued a statement at the United Nations-sponsored climate change negotiations in Copenhagen (COP15) urging world governments to ensure consumers see real-time energy use data to improve energy efficiency and cut greenhouse gas emissions.