The Supreme Court (SCOTUS) and its role in the everyday lives of the America people has been on full display as the justices declined to hear the appeals case challenging the authority of the Federal Energy Regulatory Commission (FERC). (Oh, and there was something about healthcare.)
What’s really on stage in the former case is the contrast between Congressional policymaking and the distinct authority of the FERC. The Commission is driving innovation through relatively discreet policymaking that is developing new markets for the cleantech space, despite roadblocks and partisan wrangling in the U.S. Congress.
The strategic wielding of policy instruments, whether regulations, taxes, or subsidies, can encourage markets, and for cleantech technologies from solar to advanced batteries can change their value proposition dramatically. The German feed-in-tariffs (FITs) – which were recently cut – developed one of the most robust markets for solar photovoltaics (PV) in the world; their success is likely to help PV reach grid parity in the next several years. Conversely, subsidies in Japan are just starting to kick off.
What’s unique about the United States’ approach is the long demonstrated preference for business-based market advances, rather than mandate-based advances (e.g., the European Union’s renewable energy directives). The FERC’s role, and perhaps more accurately, that of chairman Jon Wellinghoff (as Forbes has rightly pointed out) is to open markets to competition and provide market parameters that reward technological innovation. As a result, select segments of the power industry in the United States are undergoing dramatic changes through mechanisms like real-time pricing and pay-for-performance compensation. While subsidies and government support aren’t completely absent in the U.S., these more discreet policy changes are enlivening the cleantech industry in more subtle ways.
Here is a highlight of recent developments that have resulted from the FERC’s regulatory authority:
- Advanced batteries such lithium-ion chemistries are being deployed to provide frequency regulation services through lucrative business models – this AES Energy Storage project at Laurel Mountain Wind Farm is one of the largest installations in the U.S. (See FERC Order 755.)
- Energy efficiency is now counted as a viable generation resource and compensated as such through demand response programs. Viridity Energy and others have spearheaded viable business models based on saving consumers energy.
The global cleantech industry is one still dependent on policy direction; but discretion is often the best policy.
Article by Brittany Gibson, appearing courtesy the Matter Network.