It’s a dry panel discussion that happens at hundreds of industry conferences every year — until a Google representative decides it’s time to unleash.
“It’s personal to me,” Jamie Goldin, Google’s energy regulatory attorney, told attendees at a May conference on renewable energy in the Southeast in Atlanta. He said he grew up on a ridge called Plant Bowen, a coal-fired power plant northwest of Atlanta owned by Georgia Power, the state’s dominant electric utility. On the panel: “You got a lot of coal running in there, a lot of smoke going into the air.”
Reversing the system that puts nearly all power generation in the Southeast in the hands of utilities like Georgia Power “will get more renewable energy online and a lot of that dirty electricity offline,” Mr. Goldin added.
But the outbreak was more than personal. It was part of Google’s visionary campaign to power its operations with large amounts of electricity from wind, solar, and other non-carbon-emitting production sources.
The likes of Google, Meta, Microsoft and Apple have made zeroing their carbon emissions a major corporate goal — and set a not-too-distant deadline to get there. Google wants to buy enough carbon-free electricity to run all its data centers and campuses around the world without interruption by the end of this decade.
The corporate quest to quickly secure new levels of renewable energy faces big challenges, however — not least in the Southeast, one of the nation’s fastest-growing regions. Google’s battle in a region with a major concentration of data centers raises a question that applies to energy transitions everywhere: Is what’s good for a few companies good for all?
At the heart of their campaign, Google and its tech giant allies want to dismantle a decades-old regulatory system in the Southeast that allows a handful of utilities to generate and sell the region’s electricity — and replace it with a market where many companies can do it. Compete to do so.
Such markets exist in some form in most parts of the country, but Southeastern utilities are firmly guarding the status quo. Senior utility executives say their system better insulates consumers from rising prices for commodities like natural gas, improves reliability and supports the long-term investments needed to develop clean-energy technologies.
Georgia Power’s parent company Southern Company CEO Thomas A. Fanning said in an interview.
A revolution was averted
Most electricity in the United States has long been produced and distributed by highly regulated monopolistic utilities in each state. But shortly before the turn of the century, lawmakers and regulators argued that competition would bring efficiencies, make it possible to structure electricity markets and end the dominance of utilities — a revolution that went beyond the Southeast.
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Google and others argue that markets have brought cost savings, innovation and the capital needed to increase clean power generation through wind and solar power. Among the Western bloc, the most recent move toward a form of power market has saved nearly $3 billion since 2014. According to the market operator.
Self-interest also plays a role: In energy markets, large companies can enter into contracts with independent producers that give them more room to negotiate prices and secure more clean energy. Google entered a keyword Agreement It’s in a broader market called PJM, which last year provided clean power to its data centers in Virginia.
Now proponents of the approach have an opportunity to seize applications in the Southeast. South Carolina passed legislation in 2020 to explore setting up an electricity market, which is considered significant because of the influence of utilities in state capitals; Similar legislation was not advanced in North Carolina last year.
Tom Davis, a Republican state senator from South Carolina who spearheaded the bill, said the current regulatory system financially rewards mistakes even when they happen. “It doesn’t encourage them to go out there and find someone who can build a better mousetrap and generate electricity cheaply,” he said.
Setting up an electricity market within South Carolina is one option, but Carolyn Collin, Google’s global head of energy market development and policy, went further at a legislative hearing in July that raised the possibility of South Carolina opting out of the Southeastern utility system and joining. PJM.
“We can be a model for other regions, really a model for the rest of the country,” he said.
Markets and renewables
Big utilities in the Southeast are now building more solar projects, but market pushers in the region say it’s not enough.
In the region, the generating capacity of proposed solar projects equals about one-fourth of total capacity, well below PJM’s 80 percent, according to an analysis by Tyler Norris, senior executive at solar company Cypress Creek Renewables. agency, and a special adviser on energy during the Obama administration.
“Project developers are attracted to open wholesale electricity markets with price transparency, independent oversight and the ability to trade with many potential customers,” Mr. Norris said.
Proponents sometimes point to Texas, whose energy market, ERCOT, is one of the least regulated in the country, to show how markets can spur the growth of renewables. Last year, wind power accounted for nearly 23 percent of Texas’ generation, up from 8 percent in 2011.
Critics say the Texas market system leading to extreme weakness It caused power outages during winter storms More than 200 deaths In 2021. But others note that ERCOT is structurally isolated from neighboring power markets, preventing plants in the ERCOT market from drawing power from those areas when they freeze during storms.
Additionally, some experts question the extent to which markets are driving the growth of renewables, given that some states’ geography and weather lend themselves to wind and solar power. With its vast and sparsely populated areas, Texas is naturally set up for wind power.
“We’ve seen more wind and solar in areas where markets have been deregulated,” said Severin Borenstein, a professor of business administration and public policy at the University of California, who specializes in the economics of renewable energy. “But I think it’s more of a geographic and political phenomenon than a market phenomenon.”
And there is evidence that government mandates can do more than markets to encourage the development of renewables in the Southeast.
In North Carolina, where lawmakers have long championed the growth of solar power, the power source accounted for 7.6 percent of net generation last year, higher than the national average and double that of market neighbor Virginia.
“We expect North Carolina to continue to be a leading state in solar,” said Erin Culbert, a spokeswoman for Duke Energy, a major utility operator in the Southeast.
A question of credibility
One criticism of regulated utilities without market competition is that they reward the build-up of unnecessary productivity because it increases the base on which rates are set. Ms. Collin said that based on Google’s experience in areas with power markets, a market could remove that incentive and reduce costs without affecting the system’s resilience under pressure.
But executives at Southeastern utilities say their reserve capacity contributes to their high scores on a National Assessment of Reliability – Growing concern as climate change creates more extreme weather events.
One of the biggest failures of power markets, they say, is not supporting the operation and construction of nuclear power plants, which executives say would provide unfettered carbon-free energy that would further increase the reliability of their grids. Intermittent renewable energy is introduced. Revenue streams in a highly regulated system provide financial stability to support nuclear plants, they argue.
“We are the only utility in the U.S. to build a nuclear power plant,” said Southern Chief Executive Mr. Fanning said. “It couldn’t have been built in PJM or ERCOT.”
Southern nuclear projects in Georgia and one in South Carolina have been plagued by cost overruns and delays. The project was shelved It went over budget after the development of two applications — state senator Mr. Davis said the regulatory body encouraged utilities by allowing ratepayers to inevitably provide a holdback.
But operating nuclear power plants give the region one of the highest carbon neutral scores in the country. According to the Institute for Energy Economics and Financial Analysis, more than 60 percent of South Carolina’s generation by 2021 would be carbon neutral.
“There’s a disconnect between Google relying on clean nuclear power for their data centers, while pushing for markets to phase out nuclear construction wherever they’re implemented,” said Mark W., managing director of Radiant Energy Group. Nelson said. Energy Consulting. “What’s faster and cheaper for Google isn’t necessarily best for society in the long run.”
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