This year, Massachusetts became the first state to require utilities to modernize the electric grid. Utilities will develop and implement a 10-year plan to help users better manage and reduce their consumption, enhance grid reliability, promote new technology, and integrate more microgrids, renewable sources, demand response, and electricity storage.
Also this year, Ohio became the first state to enact a bill that freezes targets for increasing renewable sources and energy efficiency programs. For the next two years, utilities will no longer be required to help customers reduce their energy usage or to increase the percentage of power generated by wind and solar.
Supporters of the Massachusetts initiative view grid modernization as a “strategic investment” that will pay off with lower energy prices. It will also enhance Massachusetts’ economy with new jobs in the clean energy and efficiency industries.
Supporters – primarily utilities – of the Ohio initiative view renewable energy sources and energy efficiency programs as excessively expensive. They say that eliminating energy targets will pay off with lower energy prices. It will also enhance Ohio’s economy by maintaining jobs in industries that would otherwise lay off workers as a result of higher energy costs.
Who’s right? At least in the very short term, some win and some lose under each scenario. Businesses involved in efficiency and clean energy win in Massachusetts but lose in Ohio (and some have announced that they are leaving the latter to sell their expertise elsewhere). Utilities win in Ohio because they do not need to inform customers about how to buy less of their product – the strange place that utilities inhabit until some method is found to decouple their profits from the volume of product that they sell. Utilities also do not feel so great an impact from building owners who deploy renewable resources like wind turbines and solar yet remain dependent on the grid for the rest of their supply. The utilities’ fixed costs for supplying power must then be distributed over fewer kilowatt-hours, putting upward pressure on rates for all users.
But short-term issues are not what the energy industry is facing. Grid modernization, reliability, and environmental concerns are inevitably and massively changing the way power is generated, distributed and purchased. From that point of view, the Ohio initiative is a step backward.
A national policy or national business model for utilities would be a step forward.