美國和中國電力行業(yè)的脫碳- DECARBONIZING THE PO WER SE CTOR IN THE U .S. AND CHIN A 2024

THEU.S.ANDCHINANEED

TOREDUCEMETHANEEMISSIONS,

SUBSTANTIALLYANDCOLLABORATIVELY

DECARBONIZINGTHEPOWERSECTOR

INTHEU.S.ANDCHINA

1

DECARBONIZINGTHEPOWERSECTOR

INTHEU.S.ANDCHINA

MikeO’Boyle,EnergyInnovation*

MaxDupuy,RegulatoryAssistanceProject*

*Organizationsarenotedforaffiliationpurposesonly.Thispaperrepresentsauthors’views,

andnotnecessarilythoseoftheirinstitutions.

KEYISSUESANDTRENDS

Together,theUnitedStates’andChinesepowersystemsemitted5,780millionmetrictonsofcarbondioxideequivalent(CO?e)in2020,about36%ofthetwocountries’and17%oftheworld’sannualcarbonemissions(InternationalEnergyAgency2022).Consensusisgrowingamongthescientificcommunitythatmajorityrenewables-basedelectricitysystemsexceeding80%carbon-freecanbeoperatedreliablyandatlowcost,withoutdevelopingnewtechnologies(Abhyankaretal.2022;MacDonaldetal.2016;Novacheck,Brinkman,andPorro2018;NREL2012;Phadkeetal.2020).TheU.S.andChinafacesimilarphysicalandpolicychallengestotransformtheirpowersectors,despitedifferenteconomicandinstitutionalconditions.Thetransitiontoarenewables-basedelectricitysystemisalsoessentialfordecarbonizingend-uses–suchastransportationandheatingofbuildings–throughelectrification.

TheNationallyDeterminedContributions(NDC)ofbothcountriesundertheUnitedNationsFrameworkConventiononClimateChangeincludesignificantpowersectorcommitments.

|and

Figure1U.S.ChinaElectricitySectorGreenhouseGasEmissions,2000-2019.

Datasource:ClimateWatch(

/ghg-emissions?end

_year=2019®ions=CHN%2CUSA§ors=electricity-heat&start_year=1990)

2

However,giventhatneithercountry’sNDCpledgesfor2030aresufficienttosupporta1.5degreesCpathway,andgiventhecentralityofthepowersectortodecarbonizationefforts,bothmustconsiderredoublingeffortstoreducepowersectoremissions.Thegoodnewsisthatwell-understoodandfeasiblepolicypathways,applicabletobothcountries,canimprovereliabilityandhelpreducecostswhileacceleratingthepowersectortransformation.

TheU.S.recentlycommittedtoreducingeconomy-widenetgreenhousegasemissionsby50%below2005levelsby2030,azero-carbonpowersectorby2035andanet-zeroemissionseconomybynolaterthan2050.TheU.S.electricitysectormustreduceemissionsapproximately80%below2005levelsby2030inordertomeetthe2030nationaltarget(Abhyankaretal.2021;Larsenetal.2021;Larsonetal.2021).WhiletheU.S.electricitysectorhassubstantiallyreducedemissionsfromitspeakin2005,andiscurrently40%carbon-free,reaching80%carbon-freein2030and100%in2035wouldrepresentadramaticaccelerationofcleanenergydeploymentandfossilretirement.Sectorexpertswidelyagreethatmeetingthesetargetsispossible,wouldmarkedlyimprovepublichealth,createnewjobs,andevenpotentiallyreduceconsumerelectricitycosts(Abhyankaretal.2022).However,doingsowillrequireadditionalpolicy,includingnewfederalregulationandsub-nationalaction.

U.S.effortsatthefederalandsub-nationallevelsareevolving.Twenty-onestatesplustheDistrictofColumbiaandPuertoRico,representingone-thirdofelectricgeneration,havesetgoalsfor100%cleanelectricity,althoughmanyoftheseare2050goals,not2035asintheU.S.nationalcommitment.139ofthe41largestutilitiesintheU.S.havemadepubliccommitmentstohitnetzeroemissionsbymidcentury(EspositoandJeffrey2022).TheU.S.passedamajorinfrastructurebillin2021whichincludesfundingforend-useenergyefficiencyandtransmissionprojects(alongwithprovisionstosupporttransmissionsitingauthorization)thatwillsupportrenewableprojectdevelopmentandrenewableenergyintegration.InAugust2022,theU.S.passedintolawahistoricpackageoffederalpoliciestosupporteconomy-widedecarbonization.2Thepackageincludesfinancialincentivesforwind,solar,energyefficiency,energystorage,andelectrificationoftransportation,buildings,andotherend-uses.TheU.S.DepartmentofEnergyestimatesthatthepackagewillreduceeconomy-wideemissionsto40%below2005levelsby2030.Withadditionalcontributionsfromstate-levelpolicy,theU.S.economy-wide2030NDCtarget(50-52%below2005levelsin2030)willbewithinreach.3

InSeptember2020,theChinesegovernmentupdateditsNDCtargetstopeakcarbonemissionsbefore2030andachievecarbonneutralitybefore2060(knownasthedualcarbonpledges).Thegovernmentalsosetatargetforabout25%oftotalenergyconsumptiontobemetbynon-fossilfuelsby2030anda2030powersectortargettosurpass1,200gigawatts(GW)totalwindandsolarpowercapacity(People’sRepublicofChina2021).Meanwhile,accordingtothe14thFive-YearPlan,non-fossilpowergenerationwillreach39%oftotalpowergenerationin2025.WhileitappearstherapidpaceofwindandsolarinvestmentmeansChinaisonapathtoexceedthe2030windandsolarcapacitytarget,continuingpowersectorreformwillbeneededtosupportintegrationoflargeamountsofnewrenewableenergyintothegridandtomeetthelonger-termdecarbonizationgoal.

OPPORTUNITIESANDCHALLENGES

Togetthemostoutofthecleanenergyopportunitiesandmeetdecarbonizationgoals,policymakersintheU.S.,China,andaroundtheworldareconsideringabroadlysimilarsetofpowersectorissues,centeredonensuringareliablegridwithhighlevelsofwindandsolargeneration.Fortunately,thischallengeismanageable.Withawell-designedpolicy,market,andregulatoryframeworkonecanexpectaveryreliablepowersector,evenatveryhighpenetrationsofwindandsolargeneration.Agrowingbodyofinternationalexperience–includingfromtheU.S.andChina–bearsthisout.Herewesummarizeseveralkeyaspectsofthecommonopportunitiesandchallengesfacedbybothcountries.

1ForalistofthesestatesseeCleanEnergyStatesAlliance.

/projects/

100-clean-energy-collaborative/

2ThepackageispartoftheInflationReductionActof2022.Forasummary,see

/imo/media/

doc/summaryofthe_energy_security_and_climate_change_investmentsinthe_inflation_reduction_actof2022.pdf

3USDepartmentofEnergy,“TheInflationReductionActDrivesSignificantEmissionsReductionsandPositionsAmericatoReachOurClimateGoals,”August2022.

/sites/default/files/

2022-08/8.18%20InflationReductionAct_Factsheet_Final.pdf.

3

Reliabilitychallenges

BoththeU.S.andChinahavestruggledrecentlywithregionalpowersectorreliability.Inbothcountries,somestakeholdersarguetrade-offsexistbetweenanelectricpowersystembasedoncleanenergyandothergoalssuchaspowersectorreliabilityandenergysecurity.Theseargumentsposeathreattothepaceoftheenergytransition.However,evidenceindicatesthatpowersectorreforms,suchasthoserecommendedbelow,canimprovepowersectorreliabilitywhileacceleratingthecleanenergytransition,atlow(orevenreduced)cost(Abhyankaretal.2022;EnergyResearchInstitute2022;Geocaris2022).

In2020-2021,thetwolargestU.S.states,CaliforniaandTexas,facedextremeweatherconditionsandexperiencedrollingpoweroutages.InCalifornia,extremeregionalheatandwildfirethreatsaffectedthereliabilityoftheregionalfossilfleet,transmissionsystem,andwindoutput,forcingrollingoutages.InTexas,extremecoldshutdownsignificantgascapacityandledtoextendedoutagesduringlife-threateningweatherconditions.In2022,thenationalgridreliabilityauthoritywarnedthatextremeheatwouldthreatensummerreliabilityformostoftheU.S.grid,citingfaster-than-expectedcoalretirementsandafailuretoquicklyreplacethatcapacity(NERC2022).Whilenosuchoutagesoccurredin2022,therewereseveralclosecallsinregionswithhighsharesofrenewableenergy.

In2021,Chinaexperiencedaseriesofpowercrisesaffectinglargepartsofthecountryandmanymillionsofconsumersexperiencedpoweroutages.Thesummerof2022hasbroughtamajorheatwave,severedrought,significantlyreducedhydroelectricgeneration,andrenewedpowerreliabilityproblems,particularlyinthecentralpartofthecountry.

ControlandRetirementofCoal-firedGenerationCapacity

Coalpowerisamongthemostemissions-intensivepowersourcesandisresponsibleforamajorityofU.S.andChinapowersectoremissions.TheApril2022IntergovernmentalPanelonClimateChangereportfindsthat“l(fā)imitingglobalwarmingto2degreesCorbelowrequiresarapidshiftawayfromunabatedcoalconsumption….Thiswillrequirecancellationofnewcoalpowerprojectsandacceleratedretirementofexistingcoalplants.”(IPCC2022).Coalalsocreateslargepublichealthcoststhroughairandwaterpollution.

Fortunately,itisincreasinglyclearthatnewcoalpowerisnotneededforaffordable,reliablepower.Internationally,well-designedmarketsandplanningmechanismsnolongeridentifynewcoalgenerationcapacityasthebestsolutiontomeetpowersystemneeds,forseveralreasons.First,intheU.S.,China,andmanyothercountries,thelevelizedcostofsolarandwindgenerationisnownearorbelowthefuelcostofcoal-firedandgas-firedpowerplants,meaningthatitcanbelessexpensivetoconstructnewsolarandwindgeneratorsthanitistooperateexistingthermalplants(IRENA2022).Thisrenewableenergycostadvantagehasbeenstrengthenedbycoalpriceincreasesseenbymanycountriesin2021and2022.Second,comparedtohydro,demandresponse,energystorage,andgas-firedgeneration,coalpowerisrelativelyill-equippedtoprovidetherapidchangesinoutputtocomplementlow-costwindandsolargeneration(Linetal.2022;Luetal.2019).

TheU.S.hasmadesignificantprogressreducingcoalgenerationandretiringcoal-firedpowerplantsinthelastdecade.Sincepeakingin2007,coalgenerationisdown55%.Endingunabatedcoalpowerby2030iswithinreach,althoughadditionalnationalandsubnationalactionwilllikelybenecessarytoeliminatemanyofthelastunabatedcoalplants.Coalminingandcoalpowerremainculturally,economically,andpoliticallyimportantinsomepartsoftheU.S.Furthermore,insulationfromthefullsocial(e.g.,health)costsofcoal,alongwithstrandedassetconcerns,haveledsomeutilitiestodelaycoalretirements.Theopportunitytodeveloplower-costcleanenergyportfolioslocallytoreplaceretiringcoalisvirtuallyubiquitousintheU.S.(Gimon,Myers,andO’Boyle2021)TheInfrastructureInvestmentandJobsActof2021andInflationReductionActof2022providegrantsandincentivestocoal-dependentcommunitiestoinvestincleanenergymanufacturing,andprovidetheutilityindustrywithlow-costfinancingtotransitionfromcoaltocleaninfrastructure.

4

InChina,manyofthesefactorsarealsorelevant.Awell-designed“scientific”setofmarketandplanningmechanisms,suchasthosecurrentlybeingpursuedunderthebannerofpowersectorreform,willlikelyidentifybetterandlower-costsolutionsthannewfossil-firedgenerationcapacitytosupportapowergridwithincreasingamountsofrenewables.Thesereformedmechanismswillalsolikelyrejectthepropositionto“cutandreplace”oldcoalplantswithnewmoreefficientcoalplants.Replacingoldcoalpowerplantswithcleanerandmoreflexibleresources,includingdemandresponseandenergystorage,willlikelybelower-costandbetterforreliability.

Regionalintegration

Whenoptimizingdemandandsupplyonthegridinrealtimeandwhenplanningnewtransmissionandnewresources,wideningthegeographicoperationalbalancingareaisbeneficial.Thisregionalapproachcanbeaneffectiveandlow-costwaytoboostsystemreliabilityandsupportintegrationofwindandsolargeneration(IRENA2019).Real-timeeconomicdispatchacrossbroadregionsdirectsdispatchablefossilresources,whichincurcostsbypurchasingandburningfuel,toadjustoutputbasedontheavailabilityofcomplementarysourcesofzero-marginal-costwindandsolarenergy,reducingcostandincreasingtheshareofrenewableenergyinthegenerationmix.Unifyingthisdispatchfunctionoverawidegeographicarealeveragesthediversityofwindandsolaroutput,increasingreliabilitycontributionsfromwindandsolar,reducingrenewableintegrationcosts,andreducingtheneedforfossilreserves.BoththeU.S.andChinahavemadesignificantprogressinthisregard,buttherearemoreopportunitiestoleveragethebenefitsofregionalintegration.

Regionaltransmissionorganizations(RTOs)intheU.S.featurecompetitivemarketsandeconomicdispatchofelectricityinreal-timeoverlargegeographicareasanddemonstrateasubstantialtrackrecordofregionalcoordination.Abouttwo-thirdsoftheU.S.areservedbythesemarkets.ThesoutheastandwesternpartsoftheU.S.currentlylackRTOs,althoughthewesternU.S.hasbeengraduallymovinginthisdirectionandhasestablishedinterimregionalmarketmechanisms.TheSoutheasthaslaggedbehind,althoughnascenteffortsareafootinthatregiontoincreaseregionalcoordination.RegionswithRTOshaveseensubstantialbenefits,includingreducedconsumercostsandreducedemissions.Inthesemarkets,renewableenergyinvestmentandlowgaspriceshavecontributedtocompetitivepressureoncoalpower,promptingrapidcoalretirements.However,increasingrenewableenergyinvestmenthastestedtheabilityofRTOsandstatestoadequatelyplanandsitenewtransmissiontointegratethe1,000GWofcleanenergyresourcesthathaveappliedtointerconnecttothegrid.

China’spowersystemhasmadeimpressivestridesinabsorbingfast-growingamountsofwindandsolarenergy.AsintheU.S.andothercountries,however,muchworkremainstobedonetoensurethatthegridcanintegratemuchhighersharesofvariablerenewablegeneration.Largeinvestmentsinthecountry’stransmissionnetworkhavehelpedlinklargegeographicareasandbalancevariablesupplyanddemandacrossgreatdistances.PolicymakersinChinahavealsointroducednewpoliciesincludingmarketstohelpensurethatthismoderngridnetworkisoperatedefficiently.TheJanuary2022policyona“NationalUnifiedElectricityMarketSystem”isaveryimportantstepforward,althoughopportunitiesremaintoimprovethisvisionandensuresuccessfulimplementation.

Systemflexibility

Withgrowingamountsofwindandsolargeneration,maintainingreliabilityrequiresmanagingincreasedvariabilityatvarioustimescales.Windandsolargenerationincreasevariabilityduetodependenceonweatherpatterns,andtheyneedresourcesabletoadjustoutputtocompensateforthisvariability–atraitknownas“flexibility.”Thisincludesshort-term(seconds,minutes,andhours)tolong-term(e.g.,weeks)fluctuationsinsupplyanddemand.Managingthisvariabilityrequiresidentifying,constructing,andorchestratingacost-effectiveportfolioofresourceswiththerightcharacteristicstosupportacleanenergygrid.Inturn,thisrequiresawell-designedsetofpolicies–andassociatedmarketmechanisms,planningprocesses,andregulations.(Seefigure2.)

5

|and

Figure2InterventionPoliciesRelativeCost

Source:EnergyInnovation,adaptedfromNRELFlexibilityin21stCenturyPowerSystems

TheU.S.hassignificantlyimprovedgridflexibility.Economicdispatchandimprovedforecastinghavebecomewidespreadbestpractices,withmoreopportunitiestoincreaseinterregionaltransmissionandtakeadvantageofregionaldiversity,particularlybetweenthethreemajorinterconnectionsintheWest,East,andTexas(ESIG2022).Demandresponseisanothermajoropportunityforimprovement.U.S.demandresponseparticipationhasremainedmostlystagnantdespitewidespreadadvancedmeterdeployment,widelyavailabletime-of-usepricing,andrulesallowingdemandresponsetoparticipateinwholesalegenerationmarkets.Federal-statecoordinationremainsproblematic.Existinggasandhydrocapacityhavesupportedrenewableenergyintegration,andbatterystorageisquicklybecominganeconomicoptiontoincreasesystemflexibility.However,muchworkremainstounlockthefullpotentialofvariouslow-costsourcesofflexibilityincludingdemandresponse(DupuyandLinvill2019).

InChina,thepowersystemhasbecomeincreasinglyflexibleandpolicymakershavebeenlayingthefoundationforfurtherimprovements,butimplementationchallengesremain.Theefforttodesignandimplementspotelectricitymarketswillbeveryimportantforflexibility.Ifdesignedwell,thesemarketswillhelpsendbettersignalsonthesupply-anddemand-sideaboutthevalueofflexibilityacrosstimeandlocation.Inaddition,recentnationalpolicystatementsregardingtime-of-usepricing,virtualpowerplants,anddemandresponseopenthepossibilityforgreatlyimprovedpowersystemflexibility,ifimplementationofthesebroadstatementsproceedswellattheprovincialandlocallevels.Chinaisaworld-leaderinuptakeofelectrification,particularlyintransportation–presentingamajoropportunitytounlocktheflexibilitytheycanprovide.Inaddition,theChinesegovernmenthasannouncedambitiousgoalsforpumpedhydroprojectsandretrofitofexistingcoalplantsformoreflexibleoperation.

End-useenergyefficiency

Improvementsinconsumerenergyefficiency(EE)isanotherimportantingredientforalow-cost,speedy,andreliableenergytransition.BoththeU.S.andChinahavedecadesofexperienceinthisarea.Thereisoverlapwithseveralotherpapersinthisseries,includingthoseontransportation,buildings,andindustry.WeechotheEEdiscussioninthispaperbecauseinternationalexperience

6

demonstratestheimportanceofintegratingEEpolicywithpowersectorpolicyinordertoidentifyandexploitwaysinwhichEEcandisplaceexpensiveanddirtypowerresourcesandmitigatethegridimpactsofrapidelectrification(Crossley2014).

IntheU.S.,energyefficiencypolicyismostlyastateandlocalissue,althoughfederalpoliciesprovidesomefinancialsupport.Localbuildingcodesdriveefficiencyinnewbuildings,whileamixoffederalandstatepolicydictatesapplianceefficiencystandards.Publicinvestmentinefficiencypartlytakesplacethroughstate-regulatedelectricutilityprograms,butstateexperienceinthisregardismixed.

LeadingstateslikeCaliforniaandMassachusettshaveimplementedenergyefficiencyresourcestandardsandutilityincentives,whichusefinancialincentivesandconsumereducationprogramstodrivemeasurablesavings(Berg,Cooper,andDiMascio2022).Theseprogramsaretypicallyaccompaniedbyrevenuedecoupling,apracticetoreducethenegativeimpactofenergysavingsonutilities’financialhealth(Lazar2016).Somestatesrequireintegratedplanningpracticesinwhichtraditionalpowersectorresourceinvestmentsarecomparedagainstalternativeenergyefficiencyinvestments.Inotherstates,littlepolicyexiststosupportefficiencyinvestments.Therearehugeopportunitiesforstatepublicutilityregulators,statelegislators,andfederalfundingtounlockgreaterefficiencyatthestateandlocallevelandensurethatefficiencyinvestmentsareintegratedwithpowersectorplanning.

InChina,the2021carbonactionplancommittedto“givefirstprioritytotheconservationofenergy.”Thisisaveryimportantpledgewithpotentialtoboostreliabilitybymanagingdemandgrowth,improveenergysecuritybyreducingenergyimports,andreducesystemcostsandemissions.However,thepolicyislargelysilentonhowtointegratethisconservationpledgewithongoingpowersectorreformefforts.Chinaalsohasasignificantdemand-sidemanagementpolicythatrequiresgridcompaniestomeettargetsforinvestinginend-useenergysavings.Althoughthetargetsunderthispolicyaresmallasapercentageofelectricitysales(0.3%),thegreatsizeoftheChinesepowersectormeansthatthisislikelythelargestutilityenergysavingsobligationintheworldintermsofvolumeofannualenergysavings.

RECOMMENDATIONSFORTHEU.S.

TheU.S.federal-statelegalsystemsplitsauthoritytoregulatetheelectricitysectorbetweenthefederalandstategovernment.Federalpolicyisakeylever,andrecentprogressonfederalspendingprioritieswillsignificantlybolstertheeconomicsofcleanenergy,investinemergingcleanenergytechnologies,andincreasethepaceofdeployment.Furtheractionfromstatesimplementingthesepolicies,aswellasfederalagencies,willbecrucialtorealizingthepotentialoffederalcleanenergysubsidiestoreduceemissionsandmeetU.S.climategoals.

Acceleratetransmissioncapacityexpansion

TheU.S.currentlyhasmorethan1,000GWofproposedcleanenergyprojectswhichhaveappliedtointerconnecttothegrid,roughlyenoughtomeetits2030decarbonizationgoals.Thisnumber,whichhasskyrocketedinrecentyears,isdrivenbyeconomicsandconsumerinterestinwind,solar,andbatteries.Asthisinterconnectionqueuegrew,transmissioninterconnectionprocesseshavebecomemorecomplex,andnowtakefouryearsonaverage.U.S.gridoperatorsmustfindawaytosortthroughthequeuetoprioritizethemostviableprojects,whilereformingplanningprocessestoincreaseneededtransmissioncapacity.Thisprofoundlyincludesoffshorewind,anewlyeconomicresourcefortheU.S.TheFederalEnergyRegulatoryCommission(FERC)hasembarkedonrulemakingstoachievethispotential.

USfederalelectricityregulatorsandutilitiesandRTOsshould:

?Passnewregulationsrequiringregionaltransmissionplansandcostallocationrulesthatincreaseaccesstothegridforeconomiccleanenergyprojects.

7

?Clarifytheintentiontoreduceinterconnectionqueuetimesanddevelopcriteriaforfast-trackingprojectswithsufficienttransmissioncapacity.

Increasingregionalintegrationandimprovingmarkets

RecentextremeweathereventsincludingextremeheathavetestedtheresilienceoftheU.S.electricitysystem.Asthegridbecomesmoredependentonweatherconditionstoproduceelectricity,morelinkagesandcoordinationoverbroadergeographiesiscrucialtoimprovingreliabilityatalowcost.Thistakestwoforms.

First,WesternandSoutheasternstatesstillhavefragmentedmanagementofthetransmissionsystemandpowerplants,similartoprovincial-levelapproachtosystemoperationinChina,butoftenatanevensmallergeographicscale.Asaresult,statesandutilitiesarenotabletotakeadvantageofreliabilityandcostbenefitsofcheaperenergyinneighboringstates.

Second,eveninareaswithregionaltransmissioncoordination,interregionalcapacitywouldhelpimprovereliability,accesslow-costrenewableenergy,andridethroughsevereweather.ANationalRenewableEnergyLaboratorystudyindicatesincreasinginterconnectionbetweenthethreenationalgridswouldyielddramaticnetbenefitsandincreaseresilience(Bloometal.2022).

Toimprovereliabilityandresilienceinahigh-renewablesfuture:

?Atstateandfederallevels,developresourceadequacymetricsandmarketproductsthatrecognizeandpreservethereliabilityvalueofportfoliosincludingrenewables,storage,demand,anddispatchablecapacity.

?WesternandSoutheasternStates,underFERCguidance,shouldjoinunifiedRTOswithunifiedspotmarketsandsharedreliabilityobligations.

?TheU.S.DepartmentofEnergyshouldstudythefeasibilityofanational“macrogrid,”linkingkeyrenewableresourceregionsandquantifyingthebenefits,includingresilience.

?DOEshoulddesignatehigh-voltageinterconnectionsbetweenregionsasNationalInterestElectricTransmissionCorridors,unlockingauthoritytofinanceandsitethesevitallines.

?FERCshouldcreategreaterrequirementstostudyandplannewinterregionallines.

Updatingstateutilityplanningprocesses

U.S.statesretainsignificantauthorityunderexistinglawtodeterminetheirownelectricityresources.Itiscommonpracticeforregulatedutilitiestopropose,andregulatorsapprove,15to20-yearresourceplansandupdatethemperiodically.Manyoftheseprocessesareoutofdate,orarecontrolledbyutilitieswithavestedinterestinmaintainingthestatusquo.Newsubsidiesforcleanenergyresourcesmeanutilitiesandtheirconsumerswillneedtoupdatetheseplanningprocesses,integratingup-to-datetechnologycostsaswellasusingmoderntoolstoassessthereliabilityneedsofhigh-renewableelectricitysystems.Unlesstheseprocessesevolve,stateswillbetooslowtoadopteconomicwind,solar,andstorageresources,leavingcostsavingsonthetableandthreateningtheU.S.abilitytomeetitsclimategoals.

U.S.utilitiesandtheirregulatorsshould:

?Opennewrulemakingstoassesstheeconomicsofcleanenergythroughcompetitivebidding,andplanforafasterelectricitytransition.

?Developnewcleanenergygoals(andrequireassociatedprocurement)thatalignwithnationalandinternationalstandardsforclimatemitigation,suchas80percentcarbon-freeelectricityby2030.

?Coordinateplanningprocesseswithregionalactivitiestoplanforandexpandtransmissioncapacity.

8

?Adoptstate-of-the-artmodelingtoolsthataccuratelymodelelectricitysystemswithhighlevelsofstorage,wind,andsolar.

?Linkutilityprofitabilitytoperformanceoncostandcleanenergyadoption.

Fossilretirementsandcommunitytransition

WhilecoalfiredpowerplantsaredecliningintheU.S.,theyarestillakeyreliabilityresourceandaneconomiccontributortolocaleconomies.Newcleanenergyresourcesandgreatersystemflexibilitycanreplacethereliabilityservicescoalprovides,andthesesamesolutionscanrevitalizecoal-dependentcommunities.Forexample,thetransmissioncapacityleftbyretiredcoalfacilitiescanhelpfast-tracklocalcleanenergydevelopment.ExamplesofgoodpolicyunderwayincluderecentfundingunderthefederalInfrastructureInvestmentandJobsActof2021providinggrantsandtaxcreditstolocatecleanenergymanufacturingincoal-dependentcommunities,andtheestablishmentofa“JustTransitionOffice”inthestateofColorado.

Torevitalizecoalcommunitieswithcleanenergydevelopment,federalandstategovernmentsshould:

?Authorizestatepublicutilitiescommissionstocreateratepayer-backedbondsthatsecuritizeandretireuneconomiccoalandgasuni