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US renewable power consumers seek market change, lower prices

13 November 2020 Keiron Greenhalgh

In the same week pricing in one segment of the drive for decarbonization upset the apple cart at the US Federal Energy Regulatory Commission (FERC), a collective of American consumers demanded improvements in markets the regulator already oversees and an expansion beyond those regional entities.

The Renewable Energy Buyers Alliance (REBA) issued a call to arms in the first week of November, seeking wholesale markets across the US as well as improvements to existing markets run by regional transmission organizations (RTOs).

The Buyers' Principles on Wholesale Market Design demand "critical design components necessary to reduce energy costs for all customers, improve reliability of the power grid, drive innovation, and provide energy customers more options to meet ambitious clean energy goals."

"REBA's vision is that every organization has a viable, expedient, and cost-effective pathway to renewable energy," said Miranda Ballentine, CEO, REBA.

REBA said there were three underlying themes in its 10-point plan:

  • Unlocking wholesale market competition to catalyze clean energy by ensuring a level playing field, large energy buyer participation, and services that provide actual value for energy customers.
  • Safeguards for market integrity through independent and responsive governance structures, transparency, and broad stakeholder engagement and representation.
  • And design to scale to the future by ensuring operational scale, customer-oriented options to meet decarbonization goals, alignment with federal and state public policy, and predictable investment decisions.

According to IHS Markit data, some 220 companies operating in the US are already procuring renewable energy or soon plan to do so.

Of these "active" companies, more than 160 have renewable targets and over 140 are targeting 100% renewables by 2050, the data show.

Corporate renewable demand is projected to rise from 3.3% of total US corporate electricity use this year to 8.4% in 2030, according to analysis by IHS Markit.

REBA's membership constitutes more than 200 companies with a market cap of $3.8 trillion in revenue.

"Wholesale markets support GM's overall commitment to protecting the environment by providing a platform that hastens the deployment and procurement of cost-effective clean energy as we pursue our vision of an all-electric, zero-emissions future," said Rob Threlkeld, Global Manager of Sustainable Energy, Supply & Reliability at General Motors.

"We are committed to using our scale and resources to grow clean energy demand and availability in support of our accelerated renewable energy commitment to power 100% of our US facilities with renewables by 2030 and global facilities by 2040," he added.

In March, the global automaker debuted its "Ultium" battery technology, which it believes will allow "GM to offer an EV for everyone." Among the company's efforts to pivot to electric vehicles will be EV versions of its super-sized, gas-guzzling Cadillac Escalade and GMC Hummer models.

And in Europe

Of course, carbon pricing, the topic that led to the demotion of former chairman Neil Chatterjee at FERC, is somewhat old news in Europe.

But with the EU Emissions Trading System (ETS) now 15 years young and moving into its fourth phase come 1 January 2021, the availability of free credits is set to decline and consumer organizations are worried about prices.

At the end of October, the Bureau Européen des Unions de Consommateurs (BEUC) - an umbrella group for 44 consumer organizations from 32 countries - sought to ramp up the pressure on lawmakers, especially as the European Commission considers extending the ETS to road transport and buildings.

BEUC laid down some markers to Brussels. It argued there were seven principles that must be borne in mind:

  • costs should be distributed fairly;
  • the impact of carbon price changes on different socio-economic groups should be assessed;
  • transparency in the use of revenues was required;
  • revenues should be used to alleviate any burden of carbon pricing measures and/or provide alternative lifestyle choices;
  • make carbon pricing a complement to, not a substitute for, sector-specific climate policies;
  • don't displace CO2 emissions to other parts of the world; and
  • ensure consistency across all pricing measures.

Players in energy-intensive industrial sectors - from oil refineries to cement manufacturers to power generators - must cover their emission allowances, either through receiving allocations or buying them.

But the consumer groups are also growing more worried about energy pricing itself. In the middle of October, with help in the not inconsiderable form of the Council of European Energy Regulators, issued a call to arms.

The two groups issued a roadmap in which "a future where effective policies deliver on both our climate objectives and consumer rights protection," calling on governments, industry, regulators, consumer bodies and authorities "to deliver for consumers."

The roadmap for energy prices consists of six segments: affordability, simplicity, protection, inclusiveness, reliability and empowerment.

"Looking ahead to 2030 and the EU's 2050 sustainability and climate neutrality objectives, we envision a future where effective policies and frameworks ensure that consumer rights are promoted and protected, whilst delivering these objectives," it said when launching its "vision."

"For the energy transition to be successful, consumers will need to be informed, supported and nudged throughout this transformation. It is, therefore, key that all relevant stakeholders (i.e. governments, regulators, consumer protection and enforcement authorities, consumer organizations, as well as companies) work closely and effectively, across sectors, to ensure that consumers engage with and benefit from the opportunities of the new developments," it added.

Posted 13 November 2020 by Keiron Greenhalgh, Editor, Climate & Sustainability Group, IHS Markit

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