Electricity is the connective tissue of the information age, powering everything from toasters to giant data centers and making possible virtually every transaction in daily life. Yet while the “information economy” creates new value by innovating to meet diverse consumer preferences, the electricity system remains slow to respond and reluctant to adapt. Electricity driven by the speed of IT is needed.
Freeing America from its dependence on vast amounts of fossil fuels is impossible without transforming the electricity sector. Currently, non-renewable resources generate 85 percent of the nation’s electricity—in particular, 50 percent from coal, 20 percent from nuclear, and 20 percent from natural gas—and accounts for about 40 percent of total U.S. carbon emissions.
A 2010 study by the Clean Air Task Force estimated that air pollution from U.S. coal-fired power plants accounts for more than 13,000 premature deaths, 20,000 heart attacks, and 1.6 million lost workdays in the U.S. each year. The total monetary cost of these health impacts is over $100 billion every year. Blackouts and power failures are conservatively estimated to cost U.S. businesses and residents up to $160 billion annually.
In “Reinventing Fire,” RMI outlined a vision for a 2050 U.S. electricity system that is affordable and reliable, but also environmentally sustainable and secure. Our analysis shows that, after efficiency, at least 80 percent of the remaining electricity needed can be produced from wind, solar, and other renewable sources, at comparable costs to business as usual.
To make that vision a reality, RMI is working to accelerate the transformation from an aging, centralized electricity system reliant on fossil fuels to one that is efficient, affordable and customer-centric, with renewable resources widely distributed into local communities rather than concentrated in big power plants far away.
What we learned through Reinventing Fire is that electricity is an important enabler of change in buildings, in transportation, and in industry. The changes we make in electricity are probably the most important leverage point for shifting the U.S. economy as a whole. Renewing our electricity system creates the ultimate clean energy carrier that will power our passenger cars and light trucks in addition to our buildings.
Significant Barriers Stand in the Way
The aging electricity system—facing a perfect storm of needed major infrastructure investments, financial constraints, stagnating or falling demand, and a fundamentally altered competitive landscape—will require at least $2 trillion of investment over the next few decades.
And, while we believe this transition is possible, it won’t be easy:
- The feasibility of integrating very high levels of distributed renewables like rooftop solar or electric vehicles into the grid has not been widely proven.
- The costs of some renewable and distributed resources are still higher than the alternatives, and the costs and values created by distributed resources are not widely understood or recognized.
- Powerful incumbent interests are risk averse and slow to change, yet new regulations, pricing structures, and business models are needed to enable a shift.
The rules of the game that govern the U.S. electricity system are still largely based on early 20th century needs. Previous reforms have led to a convoluted tangle of regulations and regulatory bodies, which discourages innovation and misaligns the profit-making incentives of conventional utilities with societal demands.
Democratizing the Electricity System
A transformed electricity system requires new operating and planning mechanisms, rules, and market structures.
The Electricity Innovation Lab, or " e-Lab," is a forum for collaborative innovation, consisting of thought-leaders and decision-makers across the U.S. electricity sector. The group is identifying key challenges the industry needs to overcome, developing innovative and practical solutions, and working to apply those solutions.
eLab is focused on the distribution edge—a microcosm where the electricity system interfaces with actors and assets on the customer side of the meter and where technology is changing most rapidly. It’s also the point where investment may bring the most fundamental change to the character of the electricity system, offering opportunities and competition between distributed resources and the traditional large-scale, centralized assets dominating the electricity system.
A multi-year program, e-Lab will regularly bring together key actors to identify, test, and spread practical innovations to critical institutional, regulatory, business, economic, and technical barriers slowing the transformation of the U.S. electricity system towards efficiency, renewables, and distributed resources.
A new, more distributed, smarter electricity paradigm would mean a more resilient system; where blackouts caused by weather or cyber terrorism needn’t result in the kind of economic hardship they do now. We can create a system that innovates clean technologies, helps mitigate the global climate challenge, creates more and better jobs, and results in economic renewal for our country.
If we can achieve this vision, it would change the world. Are you on board?