Fresh from establishing the first national regulatory standards for carbon emissions earlier this month, President Obama has now joined the debate over the utility business model and called for a distributed, clean energy revolution.
The president took his commitment to the fight against climate change to new ground in a keynote address at the eighth annual Clean Energy Summit in Las Vegas, Nevada. His bold words reinforced the message delivered earlier in the day by Senator Harry Reid (D-NV), who also showed an unflagging commitment to renewables and a reformation of the utility business model.
“Earlier this month I unveiled our Clean Power Plan,” the president told a packed house at the Mandalay Bay Convention Center. “It is the first set of nationwide standards to end the limitless dumping of carbon pollution from our power plants and it is the single most important step America has ever taken to combat climate change.”
He repeated his now-familiar belief that “no challenge poses a greater threat to our future than climate change.”
But his administration holds another belief as well, he added.
“We are deeply optimistic about American ingenuity. We think we can do good and do well. We believe we have the power, the dynamism, and the creativity to solve a big problem while keeping the engines of the American economy moving.”
The president talked about his administration’s crucial investments, beginning with the 2009 Recovery Act — which he called the biggest commitment to renewables ever made — and carrying through to a just-announced $1 billion Department of Energy (DOE) commitment to new loan guarantees for distributed generation technologies.
That loan program was just one of multiple executive orders the White House released Monday ahead of Obama's speech, all looking to stimulate the growth and technological progression of distributed resources.
In line with his executive orders, the president aggressively advocated for higher penetrations of renewables like solar and wind, and reiterated that government investments that are needed to help make it happen.
“If we keep investing in wind rather than making mindless cuts chasing shortsighted austerity, wind could provide as much as 35% of America’s electricity and supply renewable power in all 50 states by 2050,” Obama said, taking a swipe at fiscal conservatives on behalf of wind energy’s production tax credit.
“America generates 20 times as much solar as we did in 2008,” President Obama said. And with a new solar array connected every three minutes, the solar industry last year added jobs 10 times faster than the rest of the economy, he said.
“Now is not the time to insist on massive cuts to investments that have helped drive our economy, including the hundreds of millions of dollars in cuts that many Republicans want to take from successful job-creating clean energy programs,” Obama said, “investments that have finally, in some places, made clean power from the sun cheaper than conventional power from utilities.”
It had to be a hard-to-hear message for NV Energy CEO Paul Caudill, who spoke just ahead of the president. His utility is in a tense face-off with Nevada solar advocates over its proposal to reduce the nationally embattled net energy metering policy crucial to the rooftop solar value proposition.
“NV Energy needs to get real,” Senator Reid, whose age and health make a 2016 Senate run unlikely, warned in a private session earlier in the day. “It is not 1888. Customers want choice. If NV Energy continues on this path, they will lose on the battlefield of public opinion and the courts will also ultimately decide they are wrong.”
President Obama on the economics of renewables
It is impossible to overstate the significance of solar becoming price competitive with utility-provided electricity, the president said. “For decades we have been told it doesn’t make economic sense to switch to renewable energy. Today that is no longer true.”
He described big renewables buy-ins from major corporation such as Google, Apple, and Costco. “Walmart has the most installed onsite solar capacity of any company in America," he said. "They are not in the business of giving away money.”
The commitment of these companies should be cause for hope in the climate fight, he added, but to get to the renewables goals his administration has set, “we have to triple where we are today — so I am here to give you hope, but not complacency.”
He described a new initiative from DOE to fund the Property Assessed Clean Energy (PACE) program that will allow homeowners to obtain solar financing secured by their mortgages and repay the loan through their energy bill savings.
“It will allow more Americans to join this revolution with no money down,” Obama said. “You don’t have to share my passion for fighting climate change. Americans are going solar not because they are treehuggers, though trees are important, but because they are cost-cutters. Solar isn’t just for the green crowd anymore — it’s for the green eyeshade crowd, too.”
Resistance and change
Solar is less than 1% of the U.S. energy mix and wind is only about 5%, but together they were over half of the new generation capacity built in 2014, the president said. “We see the trend lines. We see where technology is taking us, we see where consumers want to go.”
But fossil fuel interests, formerly unrestrained advocates of a free market, are suddenly opposed to choice in the marketplace because “solar is what people want to buy,” he smiled. “That’s a problem.”
The president acknowledged Tea Party members who, in joining a Green Tea Alliance with environmentalists, stayed true to their free market ideology. “This is not and should not be a Republican versus Democratic issue,” he said. “If you care about the future of our children and grandchildren, you should care about it.”
For decades, he explained, “utilities generated power, usually by burning fossil fuels, they ran lines to homes and businesses, and we paid for it. It wasn’t exciting. There wasn’t a lot of innovation. And we didn’t think about much about it until the bill came. And the economy grew under that model."
But that has all changed, the president said. With smart technologies, customers can understand their energy use, change their habits, use energy more efficiently, and save without great sacrifice.
“That empowers us to generate our own energy or store it in battery packs or sell it to the grid," he said. "That is power. That is the future. It is happening now. It is like evolving from the telegraph to the smart phone in less than a decade.”
The president commended the utilities that are adapting their business models “to seize the opportunities of this emerging reality.” He called out CPS Energy of San Antonio for its rooftop solar program, Southern Company for its partnership with Nest and Tesla on energy storage, and Oklahoma Gas & Electric for its smart meter rollout.
The rapid change is also drawing protective resistance from “some fossil fuel interests” dedicated to an “outdated status quo,” he said. But utility CEOs may have found solace in the president’s call for addressing “legitimate issues around how a new distributed system can work and how to deal with the costs.”
There is no legitimacy, however, in “massive lobbying efforts backed by fossil fuel interests or conservative think tanks or the Koch brothers” against consumers’ rights to choose renewables, the president said. “That is not the American way. That is not progress. That is not innovation.”
Obama echoed Senator Reid’s earlier attack on NV Energy. “The utility business model made sense a long time ago,” Reid said. “But today consumers would rather pay to make their homes more efficient than for utility electricity.”
Utilities thinking of clean energy as a burden,” Reid said, makes as much sense as the Washington Nationals benching star player Bryce Harper. “Utilities must not have a stodgy commitment to the status quo. They must seize the clean energy opportunity or consumers will suffer.”
There is something big happening
President Obama framed the fight over energy as a question of whether the “big polluters” control the system or consumers have the “freedom to choose,” pitting “old ways” against new business models.
“This is about the past versus the future and America believes in the future," Obama said. "But to make that future real, we have to have everyone: Utilities, entrepreneurs, workers, businesses, consumers, energy regulators, treehuggers, Tea Partiers. Everybody has to seize the opportunities before us.”
Some utilties that have chose to disrupt themselves have already moved in the direction the president and Senator Reid described. In particular their comments fall in line with NRG Home’s organizing principle, as described recently to Utility Dive by CEO Steve McBee.
“The company’s strategy, value proposition, and value creation are aimed at figuring out what the customer wants,” McBee explained. Companies that don’t understand what is happening are struggling, while companies that are empowering consumers are seeing success.
“There is something big happening in America,” President Obama said. “For the first time we can actually see what our clean energy future looks like.” If the opposition claims it is a bad thing, “we have to be able to politely but firmly say ‘Sorry, we are moving forward.’”
It is “an age old debate in America between the folks who say ‘No we can’t’ and the folks who say ‘Yes we can,’” Obama said. “America always comes down on the side of the future. We have always been a people who reach, proudly and boldly and unafraid, to that more promising future. We refuse to surrender the hope of a clean energy future to those who fear it and fight it. And sometimes provide misinformation about it.”
They underestimate what the American people are capable of, the president said.
“This generation of Americans is hammering into place the high-tech foundations of a clean energy age. Like the Americans who harvested the power of the atom, they are harvesting the power of the sun. That is what Americans do. You,” he said to the clean energy advocates in the summit’s audience, “are doing it every day, and I am going to be right there beside you.”