The Future of Electric Power in the United States (2021) / Chapter Skim
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4 The Persistent Underinvestment in Electric Power Innovation
4 The Persistent Underinvestment in Electric Power Innovation
Pages 139-163
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From page 139... ...
This system must remain fit for purpose in the face of massive challenges looming on the horizon, most notably the need for deep decarbonization. In the old world -- in which nearly all electric supply came from vertically integrated utilities or publicly owned organizations that performed similar functions -- the entities that owned and operated the electric supply system did not, themselves, do much of the innovation.
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From page 140... ...
According to the International Renewables Energy Association, solar PV costs fell by 82 percent between 2010 and 2019 and onshore wind costs fell by 40 percent over the same time period (See the International Renewable Energy Agency, website at http://irena.org.)
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From page 141... ...
The needs for technological change in the power sector have risen sharply. As explored in Chapter 2, with new societal demands placed on the electric power system, such as the imperative of deep decarbonization, expand the social need for innovation in the electric power industry.
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From page 142... ...
The 2009 American Recovery and Reinvestment Act (ARRA) provided approximately $4.5 billion to the electric sector, which was matched by private sector funding, for one of the largest single federal investments in electric infrastructure.
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public spending on energy technology research, development, and demonstration (RD&D) for select industrialized countries.
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NOTE: 1. The IEA RD&D Budget database is comprised of seven "groups" of energy technologies, primarily organized around fuel source such as fossil fuels, renewable energy, and nuclear.
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Fundamentally, the incentives for investment in grid innovation remain misaligned. Finding 4.1: The United States lags behind international peers in federal investments made in energy R&D per unit of GDP and as a fraction of total public sector R&D.
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From page 146... ...
146 FIGURE 4.3 Department of Energy funding for various research and development areas from 1978 to 2019. SOURCE: Adapted from Gallagher and Anadon, 2019, "DOE Budget Authority for Energy Research, Development, and Demonstration Database."
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SOURCE: Adapted from Gallagher and Anadon, 2019, "DOE Budget Authority for Energy Research, Development, and Demonstration Database." 6 The broader loan guarantee program includes an additional $17 billion in loan guarantees available for advanced technologies vehicle manufacturing and $2 billion for partial loan guarantees for energy projects on tribal lands.
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From page 148... ...
These proportions come from looking at the whole of DOE's energy innovation budget, of which about one-quarter is related to electricity. (The role of the loan guarantee program, however, is disproportionately allocated to electricity -- in particular, clean energy generation projects.)
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From page 149... ...
On a parallel path, LADWP will develop green hydrogen on an adjacent site using over-generation of renewable energy in the spring and fall, and water that is processed through electrolyzers to strip off the hydrogen to be compressed for longer duration storage (potentially not just hours, but weeks and months) and later used at a time that coincides with customer demand.
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Equipment Vendors Two types of electric equipment vendors -- vendors of traditional heavy electric equipment and vendors of modular equipment -- have historically played a role in the electric innovation landscape. Alongside those two,
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Supply chains are global and thus vulnerable to deglobalization, and concerns about state-connected vendors remain acute. 10 A similar, vibrant industry has not emerged in the emerging economies because the price of natural gas is higher and the fuel is less attractive for power generation, although most long-term energy models envision a rise of gas-fired generation in those markets.
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From page 152... ...
innovation systems that are relevant to the electric power sector. Such pulse-taking efforts should look widely at diverse sources of innovation both domestic and international.
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Interpreted expansively, the EO could require removal of equipment sources from foreign supply chains with replacement by onshore manufacturing (U.S. President Executive Order, 2020)
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Scouting and learning about innovations globally could be very important. Finding 4.5: Concerns about decarbonization extend outside the power sector to fuels -- in particular, natural gas.
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In that study, and in all retrospectives on major earlystage investments in innovation, a full assessment of the benefits has proved elusive because successful innovation spills into so many parts of the industry and economy. That NRC analysis concluded that the highest net benefits accrued to programs focused on end-use energy efficiency where the research prompted changes in DOE issued minimum energy efficiency performance standards that boosted adoption of the newly developed technologies and products.
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From page 156... ...
Finding 4.7: Historically, there has been a large social benefit from public and private sector investments in innovation that affects the electric power system. Those benefits have far exceeded the costs, and it is highly likely that the logical case for investment in innovation will grow as society places greater requirements on the power sector (e.g., deep decarbonization, electrification of more energy uses)
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From page 157... ...
These experiences help define a playbook for best practices in public sector innovation. In addition to the challenges of cultivating successful models for developing new products and getting them to market, the sector also faces important operational challenges as it moves toward deep decarbonization and integrating large amounts of variable and intermittent renewable resources as well as monitoring and integrating distributed renewables and other behind the meter resources often undetectable by grid operators.
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The question of the performance the national laboratory system is a perennial topic in U.S. innovation policy and highly relevant to improving the efficacy of federal investment in energy-related R&D (DOE, 2017)
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energy technology RD&D spending FY 1978–2019, plus multiple studies, most completed a half decade ago, suggesting future spending levels over the decade from 2015 to the middle 2020s. SOURCE: Adapted from Gallagher and Anadon, 2019, "DOE Budget Authority for Energy Research, Development, and Demonstration Database."; Projections from IEA (2015)
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From page 160... ...
Those include research to support planning, design, operation, and control of grid systems as they face new challenges such as deep decarbonization and the need for resiliency against natural, man-made and cyber hazards. The consortium and multiyear approach of the Grid Modernization Initiative (GMI)
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From page 161... ...
2020. "Strategies for Acceleration: Strengthening User Pull." Presented at the Enhancing Federal Clean Energy Innovation: A National Academies Workshop Series: Session 2: Strategies for Acceleration: Strengthening User Pull.
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2020. "Strengthening User Pull: Thoughts from New York State Policy." Presented at the Enhancing Federal Clean Energy Innovation: A National Academies Workshop Series: Session 2: Strategies for Acceleration: Strengthen ing User Pull.
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2019. Community Choice Aggregation: Chal lenges, Opportunities, and Impacts on Renewable Energy Markets.
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