One of the sticking points in the $3.5 trillion spending bill in Congress is a clean energy policy that would use financial incentives and penalties to get utilities to accelerate their shift to carbon-free electricity. Sen. Joe Manchin (D-W.Va.), has criticized the provision because he says it would pay utilities to do what many of them are already doing and harm the coal industry.
Excerpt from this story from Inside Climate News:
With tensions on Capitol Hill high, I set out this week to understand what’s driving the differing ways utilities view the clean energy proposal, which could turn on a spigot of federal money. Despite the opportunity to pad their earnings, some companies, like AEP, are urging caution about the clean energy proposal, while others, like PSEG in New Jersey, are embracing the plan.
The differences come down to variations in companies’ comfort levels with making big investments in carbon-free energy, plus local issues like the availability of wind and solar power within a utility’s territory and the politics of state legislatures and utility commissions.
The Clean Electricity Performance Program, or CEPP, as the proposal is called, would send subsidy payments to electric utilities that increase their share of electricity generated from clean sources by at least 4 percentage points per year from 2023 to 2030. Utilities that fall short of that target would pay a penalty.
If most utilities meet the goals, the U.S. electricity sector would leap from its 2020 level of about 40 percent carbon-free sources (including renewable energy and nuclear), to about 80 percent in 2030. The program would cost about $150 billion, Democrats have said.
PSEG is in the process of selling off all its fossil fuel power plants and is investing in several offshore wind farms, which helps to explain why its CEO is saying nice things about the federal proposal. Exelon of Illinois, which already gets nearly all its electricity from carbon-free sources, also supports the plan’s main concepts.
But most utilities, including Ohio-based AEP, have not said they support or oppose the policy. Instead, they are commenting in general terms about the bill as a whole, and focusing on the parts they would like to change.
The company has raised concerns with lawmakers that the policy could lead to a rush to develop renewable energy that would exceed what the market can handle, with a corresponding surge in costs. AEP has previously said its goal is to build 16 gigawatts of renewable energy projects by 2030. It is not clear how that plan would work in terms of meeting the targets in the legislation.