The Grid Is a Force Multiplier for Decarbonization

Deep decarbonization is no pipe dream. But it demands a focus on the most powerful lever for transformation in our energy system: The electric grid.

Electricity is responsible for 28 percent of U.S. greenhouse gas emissions. Much of the rest comes from other sectors now powered by fossil fuels. But vast swaths of these sectors can be electrified.

As the electricity system gets cleaner, so too does every car and appliance connected to it. The integrated and networked grid that delivers this electricity can be a decarbonization force multiplier.

In an era dominated by platform businesses, the electric grid is the ultimate platform: capable of rationalizing assets, matching consumers and producers of energy, and animating new markets.

A decarbonized electricity system requires more affordable carbon-free resources and energy storage technologies with expanded capacity. We are on our way. Twenty percent of U.S. electricity demand is already met by carbon-free nuclear energy, and the prices of solar, wind, and storage are all down more than 70 percent since 2009. The size of the global energy storage market is projected to double six times over by 2030.

But accelerating these trends — in the most optimally economic and socially equitable way — will require even more ambitious and creative policymaking.

In this energy transformation, technology may lead, but policy rules. Decisions made by policymakers and regulators will direct hundreds of billions of dollars in capital investment and determine whether deep decarbonization is achievable in the time frame our climate challenge demands.

Let’s be clear about what’s required: We are reinventing and redesigning the energy system that fueled the U.S. economy and our quality of life in the last century to ensure the success of our nation’s economy and quality of life in the 21st century. If the United States gets it right, we can be a model for the world.

An economic, equitable, and ultimately carbon-free reinvention requires more connection, not less. We need the power of networks. We need to drive change at scale. In a world where more power sits on roofs and batteries sit in basements; where there are more electric vehicles on the road; and where power is coming from and going to many different places, the grid becomes the most important platform in the economy.

The policy to spur this energy reinvention is tough. The politics can be even tougher. Witness the street protests that wracked France last year over the government’s proposed fuel tax increase. One way to mitigate this kind of backlash could be returning funds raised from a national carbon tax back to the public as a dividend. Exelon announced our support for such a proposal last year.

Many states and cities have committed to reduce carbon emissions 80 percent by 2050 and are taking varying regulatory approaches to get there. California has relied on policy mandates to incentivize the transition to renewables, smart grids, and distributed energy resources. New York has relied more on market incentives. Illinois’s approach falls somewhere in between.

Each state will find the model that works best for its citizens. But every state should see the grid as indispensable to its decarbonization goals.

Exelon has developed a multi-step maturity model that envisions the evolution of the grid from the starting point of functional modernization to a future where the grid is the essential connective tissue for communities taking on the interrelated challenges of climate change, economic development, and improved quality of life.

Many utilities — empowered by innovative regulatory frameworks — have already made the foundational investments in smart-grid infrastructure to progress through the first two stages of this model: modernizing for reliability and improving resiliency and security against threats likes cyberattacks and extreme weather events.

Now, a new wave of policy innovation is needed to enable utilities to take the next steps to expand customer choice and accelerate the adoption of distributed resources — and to achieve decarbonization through growing amounts of carbon-free supply resources and more rapid electrification of transportation and manufacturing.

When Thomas Edison devised a power-distribution system for lighting bulbs in millions of homes, he remarked there “was no precedent for such a thing.” Over 100 years later, the IPCC described our climate challenge in similar terms, saying it requires a scale of economic and societal transformation with “no documented historical precedent.”

Over a century ago, the right technology and policy enabled us to invent a new energy system. Today, with the right technology and policy, we can reinvent it, to achieve deep decarbonization.