Opinion

To ‘Build Back Better,’ We Need to Modernize Electricity Markets to Spur Cleaner Energy

American innovators, entrepreneurs and businesses are constantly evolving, competing against each other to develop groundbreaking technologies and solving our country’s most challenging problems. Similarly, it is time to unleash the power of innovation through competition once again to solve this century’s challenges of modernizing and preparing our vital electricity grid for climate change.

The interstate electricity system is stymied under the same traditional utility design that was established nearly 100 years ago. This outdated structure inhibits competition in the West and southeastern United States and limits clean energy ambitions and options for the businesses and energy consumers we represent. Under the Biden administration, the federal government is serious about tackling the climate crisis and should follow the lead of American businesses and support expanding our nation’s organized wholesale electricity markets.

As we look toward the “Roaring ’20s,” with state and local governments setting goals to decarbonize their electricity systems and the federal government’s vision for America to reach 100 percent carbon pollution-free electricity by 2035, the lack of innovation-spurring competition is coming to a crossroads.

As Fortune 500 companies, industrial manufacturers, power generators and the individual energy consumers we employ, we want to work with our nation’s leaders to reliably transition the electricity system while growing and maintaining American competitiveness. To get there, we need to modernize regions and advance market reforms to existing competitive markets. When coupled with the accelerated deployment of new technologies that spur innovation, these are the necessary tools to cost effectively decarbonize America’s electricity sector while ensuring the system remains reliable.

In the last two decades, organized wholesale markets have grown considerably and now operate in two-thirds of the country. These markets, while not perfect, are run by various independent, non-profit entities that allow open, non-discriminatory access to the nation’s transmission system. Much like air traffic controllers overseeing America’s skies, these grid operators provide electricity to 200 million consumers, increase competition in the marketplace, reduce energy prices, increase reliability and work seamlessly balancing electricity grids by the second and planning electricity infrastructure by the decade. As businesses and energy consumers look to lock in energy price certainty and access clean energy, they know that competitive wholesale markets are critical to meeting changing customer needs.

Expanding and improving the nation’s competitive wholesale electricity markets — not retreating to inefficient and expensive historical models — will create a scalable platform to advance our country’s ambitious economic and environmental goals. Rather than continuing the status quo, now is the time to work with businesses and energy consumers across the country so we can continue to contribute to a net-zero carbon energy system. We cannot allow this opportunity to pass us by.

A future based on cleaner, low-cost resources is coming and those resources will be best managed and delivered across large and diverse geographic areas, run efficiently by competitive wholesale market operators. This means businesses and energy consumers support creating regional, organized, competitive, wholesale electricity markets in areas where they currently do not exist.

However, as wholesale markets expand, one size does not fit all. What works in the West may not be the best option for the Southeast. States and energy consumers can collaborate with the electricity sector, to design new and flexible markets.

Looking ahead, the current public policy and regulatory frameworks have not kept up with American businesses’ technological advancements — advancements that will also help us address the climate crisis. To meet the nation’s goal of carbon pollution-free electricity by 2035, expanding and designing better electricity markets must be a pivotal part of getting us there.

We must also prioritize taking care of our workers and communities, ensuring a just transition and bringing jobs and opportunity to all corners of the country. Here too, extending the footprint of competitive wholesale markets can help create the platform for attracting clean energy projects and efficiently integrate clean energy. This expansion will create jobs, build new tax bases and promote economic development opportunities in the transition to a sustainable and clean, carbon-free economy.

American businesses and energy consumers are demanding a new paradigm — one that encourages both economic competitiveness and clean energy. As we look toward the “Roaring ’20s” and move toward a clean energy future, now is the time to update our electricity markets, unleash technological advancements and promote job growth. Only then, will we be able to confidently — and competitively — meet America’s goal of reaching 100 percent carbon pollution-free electricity by 2035.

 

Miranda A. Ballentine is the CEO of the Renewable Energy Buyers Alliance. Todd A. Snitchler is president and CEO of the Electric Power Supply Association.

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