A 21st Century Distribution System Will Provide Economic Recovery

15 Jul 2020

In response to the Covid-19 economic downturn, energy sector stakeholders are calling for a national transmission system and grid modernization but California should take a state-centric approach.

“Local level economic recovery can come from distribution system modernization,” V. John White, Center for energy Efficiency and Renewable Technologies executive director, told Current. The benefit of investments in renewables after the 2008 recession exceeded the costs, which are now far less. “Stimulus funding will go farther to meet California’s climate goals faster.”

Grid modernization can extend to distributed energy resources like rooftop solar and storage, demand response, and transportation and building electrification, Erica Bowman, Southern California Edison Director of Resource Planning and Resource Strategy, added. “All of them could put stimulus money into economic activity and feed a recovery.”

Source: DOE

There are four key principles of stimulus and recovery, according to a new Rocky Mountain Institute analysis. Spending should create job and economic growth, improve public health or resilience, and advance renewables and decarbonization. Distribution system modernization aligns with those principles, Rushad Nanavatty, RMI Senior Principal, said.

“Covid-19 wiped out five years of solar job growth, so it’s really important to emphasize this labor-intensive segment of the industry in the context of an economic recovery,” Nanavatty added. Distributed energy resources and energy efficiency are particularly important because they are “hard to off-shore and predominantly blue-collar.”

Distributed renewables and energy efficiency also provide wildfire resilience. In addition, they allow further phasing out of the fossil fuel generation that causes the respiratory health-compromising pollution, which the pandemic exacerbates.

A modern distribution system should include wildfire resistant poles, wires, and substations.

“That smarter system will allow two-way power flows that allow customers’ distributed energy resource investments to bring more money and jobs into local economies and make the state’s distribution system more robust,” White said.

But stimulus funding from California’s depleted budget is likely to be limited and federal investment remains in doubt.

For Edison, the most cost-effective way to reduce greenhouse gas emissions is transportation electrification.

There is “a real opportunity to develop California’s building electrification labor force and transition away from natural gas for heating, cooking, and water heating to all-electric homes,” according to Bowman.

New system hardware and software to allow building and transportation electrification will be needed in almost every suburban and rural location, and along most transportation corridors in the state, White said. Also needed are investments at ports, airports and at heavy duty fleet vehicle sites that will use large electric loads.

California must move beyond the natural gas dependence in California Public Utility Commission planning to “portfolios of local distributed energy resources delivered through a smarter, stronger, more resilient distribution system,” to cut greenhouse gases, White said.

While funding is a major issue, some could come from borrowing against the low-interest money currently available. Some should also come from ratepayer investments in distribution system modernization proposed to address state mandated greenhouse gas reductions and hardening against wildfires.

There also should be funding from outside sources, and leveraged investments from private and public utilities and community aggregation.

The state Office of Business and Economic Development is developing a list of shovel-ready infrastructure investments and various types of creative financing mechanisms.

“A new, interagency effort is needed to remove bureaucratic barriers and streamline regulatory approvals” to use those opportunities for economic recovery, according to a draft letter by CEERT and other renewable advocates, including the Alliance‌ ‌for‌ ‌a‌ ‌Clean‌ ‌Economy, to Gov. Gavin Newsom and legislative leaders.

“California‌ ‌can‌ ‌restore‌ ‌over‌ 100,000‌ ‌clean‌ ‌energy‌ ‌and‌ transportation ‌‌jobs‌ lost‌ ‌as‌ ‌a‌ ‌result‌ ‌of‌the‌ ‌pandemic,‌ ‌and‌ ‌over‌ ‌$1billion‌ ‌in‌ ‌lost‌ ‌economic‌ ‌investment,” adds the letter to be sent later this week.

Expansion of the use of funds generated by the state’s Low Carbon Fuel Standard program is another option.

White recommended an extension of the federal solar investment tax credit and for standalone storage but warned against other tax credits. “Low interest loans and loan guarantees make more sense because they can be leveraged with other financing.”

By the end of this year, the state’s electricity providers will roll out an ambitious rebate program for transportation electrification, using Low Carbon Fuel program funding. Similar state-level or CPUC-approved bill charges could go toward rebates for transitioning homes to electricity, which would benefit smaller local businesses, Bowman said.

With federal money unavailable and California budget so squeezed, funding a stimulus package will be an uphill challenge. Stimulating the economy with funding from everyday people must be balanced against that cost burden, Bowman noted.

At the same time, investments to reduce dependence on price-volatile fossil fuels and to bring value to local communities, will save more than they cost.

“Preliminary data from a new CEERT-supported study show very significant savings, including from distribution system modernization,” according to White.

Herman K. Trabish

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