Cost

With budget battles heating up in Washington, Congress and the Obama administration are squaring off to debate energy policy legislation. While Democratic leadership favors a clean energy standard, Republican lawmakers are focused on blocking administration initiatives to regulate greenhouse gas emissions. A compromise approach might bring substantial changes to America’s national energy strategy.

While it’s theoretically possible to keep the lights on with a much smaller reserve than the U.S. utility industry historically has maintained, the costs of doing so might be higher than some analyses suggest. As demand response plays a growing role on the grid—and as system planners reconsider reserve margins and reliability standards—quantitative risk analysis will guide resource adequacy decisions.

Policy makers in the E.U. and the United States are taking different approaches to facilitating smart grid development. While both regions are setting standards that the rest of the world likely will follow, they also face difficult challenges in resolving issues around cost recovery, customer engagement and workforce preparedness.

The case backlog of unprocessed electric reliability violations is growing out of control, threatening to “swamp” the industry — a sign, perhaps, that when Congress and FERC modernized the electric reliability regime to serve a more market-based industry structure, and for the first time gave enforcement authority to North American Reliability Corp. (NERC) as the nation’s official electric reliability czar, no one gave much thought, apparently, as to whether NERC’s very idea of what constitutes reliability might have needed modernizing as well.

Market rules could evolve to compensate gas suppliers for pressurizing pipelines when needed on short notice. Enhanced ancillary services will require innovative strategies using line pack in interstate pipelines and stepped up communication among gas and electric market participants to preserve reliability objectives in gas and electric markets.

Unlike the first generation of domestically sourced plants, new reactors being built in America will draw from a global supply chain for a wide range of materials, equipment and services. This poses a more complex set of challenges, from obtaining talent and material to qualifying and validating product sources.

The California ISO is going its own way with its proposal for transmission planning, virtually ignoring FERC’s proposed rules on transmission planning and cost allocation. California wants to bring method to the madness of developing transmission projects, and its approach has raised hackles in the industry. The dispute defines the battle over America’s most attractive market for rate-regulated investment.

With Yucca Mountain declared dead, America’s nuclear power industry needs new solutions for managing spent fuel. Although the task is complicated, examples of siting success provide hope that a collaborative approach can close the nuclear fuel cycle.

In some states, transmission projects have slowed to a halt as regulators attempt to substitute their own need determinations for those of RTOs. The federal framework encourages cooperation, but Congress and the courts have given FERC clear authority over interstate transmission systems.

With incentives under the Treasury grant program set to expire at the end of the year, green-power development once again seems to be entering the bust phase of its perennial boom-bust cycle. Statutory deadlines presage a surge in new construction beginning between now and the end of the year. What happens after that depends on Congress.