How can advanced energy technologies save Californians from reliving the fustercluck of the Public Safety Power Shutoffs of 2019?
This was the (paraphrased) central question of the California Energy Commission’s energy resilience forum in Long Beach this week.
The tone was both realistic and aspirational. The California Energy Commission (CEC) understands the urgency of the situation and gets California’s position of leadership. It wants to be out front on the issue (or as out front as an institution can be in a society that started planning 20 years too late).
The day left me hopeful about the suite of technological solutions available and reeling over the complexities of bringing them to scale. Here are the four conversations I’d like to address to understand how we get there from here.
1. How do we finance energy resilience?
We’re collectively coming to the realization that climate resilience is more valuable than just the cost of a watt. Last year’s Public Safety Power Shutoffs revealed a sliver of the cost of inaction.
“The effect of wildfires extend far beyond property damage and loss of life,” said Adam Rose, a research professor at USC’s Price School of Policy and director of CREATE, an organization that conducts economic analysis of terrorism events. “Business interruptions start when a wildfire begins. But they continue until you’ve recovered.”
In addition to the immediate halt of business, ripple effects occur through the economy — including supply chain disruptions and loss of productivity. Just as important (but harder to quantify) are the human costs, such as displaced populations, post-traumatic stress disorder and the rise of illness and disease associated with the fires. All these things add up.
In panel discussions about paying for system upgrades, very smart people correctly asserted that when we look at the cost of resilience holistically, we can’t afford not to act.
The problem is if our investment in resilience works, we don’t know the costs we’re avoiding. What’s more, our political system is designed to reward short-term thinking. Politicians often deprioritize long-term planning for quick wins, deferring investments in upgrades and maintenance in vulnerable systems — which is actually borrowing from the future. Journalist Alexis Madrigal refers to this as “technical debt.”
“Like other kinds of debt, this debt compounds if you don’t deal with it, and it can distort the true cost of decisions,” wrote Madrigal in The Atlantic. “If you ignore it, the status quo looks cheaper than it is. At least until the off-the-books debt comes to light.”
We all know failure to be prepared will result in untold economic impacts. But how can we transform that understanding to shift public funds and investment to prevention, rather than reaction?
2. How do we accelerate deployments?
In California, we’re halfway to the next fire season, yet we haven’t seen the deployment of critical infrastructure at the scale needed to protect communities.
“The clock’s running right now,” said Tom Tansy, chairman of SunSpec Alliance, a trade association that works on information standards for distributed energy, during one of Tuesday’s panels. “The fires season starts in September, and we’re still talking about mobilization plans. It doesn’t seem like we’re going to do much this year. It seems like we missed a whole nother season.”
This isn’t for lack of conversation, technology or understanding. The California Public Utilities Commission (CPUC) is in the midst of a proceeding to address this issue. While a step in the right direction, in some ways this proves the point: We’re awaiting outcomes of a slow, bureaucratic process at a time when we should be galloping toward deploying new technologies at scale.
“The regulatory friction across the stack is overwhelming for emerging technologies in California,” said Jim Mason, founder and CEO of All Power Labs, a company with a biomass gasification technology.
This is different from Europe and Asia, countries that make it easier for small-scale generation to connect to the grid, according to Mason. For example, one of All Power Lab’s machines costs $50,000 while connecting it to the grid in California could cost $500,000, according to Mason.
“You get put through this totally complicated intertie process that just crushes the economic viability of the proposition,” he said.
3. What are we going to do about soft costs?
The complex regulatory environment adds soft costs to distributed energy deployments — even for technologies that are tried and true.
For example, in California, the paperwork and requirements to install rooftop solar can take two to six months, according to JP Ross, director of local development, electrification and innovation at East Bay Community Energy. In the meantime, it isn’t uncommon for potential clients to get cold feet during the process.
“It takes us a day, maybe two days, to install solar and batteries. But it takes two months to get all the permitting and interconnection, and customers cancel in that time, and all those costs just get loaded onto the next customer,” said Audrey Lee, vice president of energy services at SunRun.
And that’s rooftop solar, a technology already deployed on a million homes. The soft costs associated with upgrades for electric heat pumps, electric vehicle charging stations or microgrids are prohibitive for many customers.
“The technology is pretty ready; the infrastructure needs work, but we’ll get there — but the soft costs are really going to slow things down,” Ross said.
4. How do we rethink utility ownership models?
Utility business models are the “elephant in the room,” according to Lee.
Deploying new technologies requires coordination and cooperation among utilities, building owners and technology providers. Investor-owned utilities (IOUs), which serve 72 percent of Americans and three-quarters of Californians, have a responsibility to shareholder profits that may not align with welcoming new technologies.
The CPUC, tasked with regulating utilities in the state, works to align the incentives. But the process, according to Mason, is slow-going, as utilities weigh into proceedings and can file lawsuits to impede the transition.
“It’s been decades of pushing the IOUs inch by inch,” Mason said. “It’s totally different when you’re working in Germany or Italy. If the state wants to try a new policy, it’s not this battle to the death.”
The path forward is unclear, although some officials have offered suggestions in the wake of Pacific Gas and Electric’s bankruptcy proceedings. If you know the answer, let me know.
This article is adapted from GreenBiz’s newsletter Energy Weekly, running Thursdays. Subscribe here.