Renewable Energy

The Biden administration has unveiled plans to dramatically ramp up the nation’s offshore wind industry to help fulfill U.S. climate pledges. How realistic is the roadmap?

President Lopez Obrador’s plan to renationalize electricity generation will make it more expensive, dirtier and less reliable and jeopardize the inclusive economic growth he says he wants. 

With its clean energy matrix, the region could capitalize on the green transition—if leaders in Mexico and Brazil get with the program.

Katie Auth is policy director at the Energy for Growth Hub and former deputy coordinator of Power Africa at USAID. Todd Moss is executive director at the Hub and a former deputy assistant secretary of State for African Affairs. Rose Mutiso is research director at the Hub and former senior fellow at the Department of Energy and at the U.S. Senate. The new U.S. Climate Finance Plan aims to double contributions to climate funding for developing countries. A renewed emphasis on emerging economies is good news for the climate, but in presenting support as “protecting the world’s poorest” and helping “communities in need,” the plan reflects old thinking.  Climate finance is not charity to help the vulnerable or an incentive to reduce emissions. It is a rare opportunity to drive innovation and job creation across the world’s poorest economies. Portraying developing countries merely as victims in need of protection shortchanges both them and the window climate policy provides to recast international development, reframe climate justice, and advance U.S. diplomatic, development, and national security goals—particularly on the African continent.  Africa is home to the world’s youngest and fastest growing population, which is increasingly urban and digitally connected. Countries across sub-Saharan Africa need to build economies prosperous and diversified enough to create 12-15 million new jobs each year, and cope with worsening climate impacts. The future of U.S. relations with the continent—and its ability to effectively help address security, migration, and economic challenges there—depend largely on whether it can help catalyze ambitious energy transitions to meet dynamic and evolving needs. China, Russia, and other strategic competitors have already caught on.  Fortunately, the United States has a ready response: Power Africa. The multiagency initiative has bipartisan support and an eight-year track record. But a transformative impact requires taking Power Africa to the next level. To date, U.S. support for African energy has been most successful in catalyzing new (mostly) renewable generation and supporting off-grid solar companies in (mostly) rural areas. Both of these are valuable. But simply doing more of the same will not deliver a prosperous climate-resilient future. Many countries, hindered by limited grid systems, can now generate more power than their systems can absorb. And while off-grid solutions provide great value to certain populations, economy-wide job creation requires far larger-scale systems that can power cities, industry, and digital infrastructure. The Biden administration should strengthen Power Africa and similar programs in Asia and Latin America to meet the climate challenge and support U.S. foreign policy objectives. First, development capital must be focused in the countries where it will have the greatest effect. The U.S. International Development Finance Corporation (DFC), a new agency with a $60 billion war chest, is Power Africa’s main source of capital. The DFC’s current strategy aims to put at least 60% of all projects in low- and lower-middle income countries or in fragile states, and at least $10 billion in the global energy sector by 2025. The DFC could also commit to specific targets in the African energy sector, where additionality and impact are especially high. A development-forward, risk-tolerant approach will ensure that climate finance drives investment not just in more advanced markets like Kenya, Ghana, and South Africa, but in economies where raising capital is hardest—like Niger, Liberia, or Malawi.  Second, in many low-income regions, climate resilience poses the most immediate and severe threat to lives and livelihoods. The U.S. Climate Finance Plan pledges to triple adaptation finance by 2024, but its impact will ultimately depend on whether funds are truly “new and additional.” Resilience programs should consider energy itself as a tool for adaptation. Rising temperatures, for example, require air conditioning and cold storage that depend on abundant reliable electricity. The International Energy Agency expects residential cooling demand in Africa to increase by at least factor a 5 by 2040.  Third, the administration’s plan recognizes that a global energy transition will require more than wind and solar plants. The Department of State is tasked to drive cooperation on energy storage and low-carbon transportation—both critical for emerging economies and a chance to expand opportunities for U.S. firms. The DFC should consider creating a specific early stage venture capital window for new clean energy technologies, just as the DFC’s predecessor agency seeded early private equity funds.  Fourth, the United States must get into the grid game. In most African countries, efforts to bring more renewable power online are hindered by inadequate transmission and distribution. The Millennium Challenge Corporation could scale up grant funds for grid infrastructure (as it did in Senegal), while the DFC could consider replicating the British CDC Group’s promising transmission investment platform. USAID could increase its technical assistance for grid performance and management, and identify early opportunities for DFC to invest in private utility concessions, rural electrification, and utility services companies. Power lines and computer systems may not make for glossy photo-ops, but they are essential building blocks for a clean energy future.  Finally, the United States needs to meet countries where they are. This means less finger wagging, a bit more humility, and a lot more financial support for the ambitious energy transitions African countries themselves have proposed. Many—including Senegal, Ghana, Mozambique, and Nigeria—see their domestic natural gas resources as key to expanding energy supply and shifting away from more carbon-intensive fuels. The U.S. Climate Finance Plan seeks to end international investment in fossil fuels, but acknowledges that “in limited circumstances, there may be a compelling development or national security reason” for continued U.S. support. Those reasons and the framework for evaluating them need to be clear.  For Africans, reliable abundant energy is the foundation for creating decent jobs and tackling climate change—just as it is for Americans. Achieving a clean energy transition will be the preeminent global challenge of the next half century. An ambitious U.S. effort to support this work in Africa and other emerging regions is smart policy for the climate, for national security, and for a prosperous and inclusive global economy.

China’s carbon emissions threaten global efforts to fight climate change. Its broader environmental degradation endangers economic growth, public health, and government legitimacy. Are Beijing’s policies enough?

This is a guest post by Zoe Dawson, a recent graduate of The Center for Global Affairs at New York University. She was previously an intern for Energy and Climate Policy at the Council on Foreign Relations. Approximately thirty-nine U.S. states have renewable or alternative portfolio standards (RPS), mandating a certain share of renewable power generation within a particular time frame. A small yet increasing number of states have set targets for 100 percent renewable generation. Eight states, including Washington DC and Puerto Rico, have committed to 100 percent clean generation by 2050 or earlier. The most ambitious target, recently set out by Rhode Island seeks to achieve 100 percent by 2030. In comparison to the European Union’s most recent announcement aiming to reach carbon neutrality by 2050, the overall percentage of US states pushing for 100 percent is still low. As we enter the 2020 election year+, it will be interesting to see whether support for renewable energy targets could play a role in the election campaigns. According to the Pew Research Center, a majority of Americans support a range of energy policy priorities; 71 percent in favor of increasing reliance on renewable energy sources and 69 percent who are in support of reducing dependence on foreign energy sources. Not surprisingly, democrats and democratic leaning independents give priority to protecting the environment as well as increasing reliance on renewable energy sources, while a larger share of Republicans put priority on reducing U.S. dependence on foreign energy sources. The midterm elections in 2016, highlighted greater concern for promoting more ambitious renewable energy targets. This was evident in Nevada, with Governor Steve Sisolak calling to increase Nevada’s 50 percent renewable generation by 2030 target to 100 percent by 2050. In Colorado, Jarded Polis is calling for 100 percent renewable energy by 2040. Even more notable, in Michigan, the state’s RPS became a selling point in the campaign. Gretchen Whitmer defeated the states Republican attorney general, Bill Schuette, renowned for his lawsuits against the Environmental Protection Agency (EPA) and opposition to clean energy and energy efficiency. Reflective of Schuette’s electoral defeat, Michigan’s two largest utilities committed in 2016 to boost the fuel mix to 50 percent renewables by 2030. Subsequently, in Illinois, Connecticut, Minnesota. Wisconsin, and New Mexico, elected officials are calling for the increase and establishment of 100 percent RPS targets. Since the midterm elections of 2016, a wave of state level clean energy policies are moving ahead through the eleven new Democratic governors that were elected, seven of which flipped previously from Republican seats. Wisconsin’s governor-elect, Democrat Tony Evers, defeated Scott Walker through a campaign that included pledging to join seventeen other governors committed to the goals of the Paris climate agreement. As more politicians and elected officials in the U.S. push to attain 100 percent renewable power generation, the next big question is around how this can be achieved? Over the last decade, the price of renewables has fallen dramatically. Wind energy has reduced in cost by some 70 percent since 2009 and solar has reduced by an extraordinary 88 percent. This has improved the economic viability of transforming the power sector, allowing the levelized cost of energy for wind and solar to become competitive with that of coal, natural gas and nuclear. However, the biggest challenge with increasing dependency on renewable energy sources such as wind and solar is their variability. Solar energy is only available during sunny daylight hours while wind supply can be intermittent at times. Currently, the state closest to meeting its renewable goals is Vermont, with in state electricity generation coming almost entirely (99.7 percent) from renewable sources, 60 percent of which comes from hydroelectric power. Vermont relies primarily on electricity imports, with the largest share of electricity consumed coming from hydroelectric generators in Canada. Behind Vermont follows Idaho, Washington, and Maine, similarly these states have cleaner power systems as a result of access to hydroelectric generating capacity. Hydropower differs from variable renewable energy resources such as wind and solar, given that is more consistently available with stable output and production. Excess hydro-capacity can be called upon at times of day or seasonally to supplement renewables, though its turbines, like natural gas peaking plants, have technical limitations and adjustments are not instantaneous. Thus, hydro is often used to help balance the grid, as a complimentary source to faster responding energy storage, solar or other power electronic based generator systems. Beyond extra capacity at existing hydroelectric plants, water sources can provide the possibility of pumped hydro storage. Pumped hydro operates through the use electricity-powered turbines, potentially solar for example, to pump water uphill in order to fill a reservoir. Then when electricity is needed, the water is released to flow through downhill turbines to generate electricity. To back up solar power, water is pumped uphill during the day using solar energy and then released when solar energy is no longer available. To the extent that water can be pumped uphill at nighttime --for example, using excess wind power--it can shift the availability of power from overnight generation to serve daytime loads, which adds significant value. Pumped storage hydroelectric power plants are the largest source of electricity storage technology used in the United States. This is both in terms of capacity and number of plants. While there are local variations of hydro inflow as a result of weather patterns, a large share of production capacity is flexible. The usage factor each month for pumped storage usually follows the pattern of electricity demand, a large peak during the summer, smaller peak in winter and the lowest use throughout the rest of the year. Hydropower in the United States currently makes up 7 percent of power generation and 52 percent of current renewable power generation. Roughly half of U.S. hydroelectric generation capacity is concentrated in Washington, California and Oregon. Across the U.S.–Canadian border, 37 major two-way transmission connections between Canada and New England, and Canada and the Pacific Northwest imported and exported 82.4 million mega watt-hours of U.S. and Canadian electricity in 2016. New England and New York accounted for 60 percent of total electricity imported to the U.S. from Canada in 2014, representing 12-16 percent of the regions retail sales of electricity, according to the U.S. Energy Information Administration (EIA). The Pacific Northwest is a net exporter to Canada due to its hydroelectric capacity generating electricity in excess of the region’s needs during high water periods. In 2017, Professor and Director of the Atmosphere/Energy Program at Stanford University, Mark Jacobson released a report which suggested that all U.S. electricity generation could be met with mainly hydropower, wind, solar and storage to achieve 100 percent renewable generation. The study noted that hydropower, in addition to other storage systems like batteries, can be used to balance the variability of other renewable energy sources such as solar, which is not available in the nighttime, and wind that is sporadically intermittent. Battery storage is more cost effective and valuable at providing small amounts of stored energy over a short time at high power levels, while pumped hydro storage is more cost effective at storing and releasing larger amounts of stored energy over longer periods of time. A subsequent study questioned whether stationary energy storage solutions like batteries and the addition of turbines to existing and new hydroelectric dams or storing excess energy in water, ice and rocks could be sufficient to deliver a 100 percent renewables U.S. energy system.  The second study noted that multi-week battery storage systems have yet to be developed and suggested that the ability to develop swing hydroelectric electricity supply could be difficult since addition of turbines could require major reconstruction at existing facilities and the addition of additional supporting infrastructure. In some cases, competing uses for water and environmental constraints might prevent such expansion in hydroelectric capacity, according to the second study authors.   Another challenge to hydroelectric capacity is the possibility that dam removal is sometimes needed for ecological reasons. Given the geographical concentration of U.S. and Canadian hydropower, a decarbonized grid in many locations in the United States will have to rely heavily on wind and solar generation paired with energy storage including batteries. While the declining costs and technology maturation of lithium ion batteries is contributing to energy storage becoming a viable option throughout the United States, unresolved challenges persist for balancing solar power on a seasonal basis in some northern states where hours of sunshine are reduced in wintertime. Other grid organizational models are under study to solve this problem including conversion of renewable energy to hydrogen fuel that can be stored for later use and small-scale distributed energy models that allow smaller batteries to be deployed widely to individual users with diverse usage needs to enhance flexibility to the system. Australia has utilized such a system to stabilize electricity shortages in the Western part of the country. In the case of hydrogen conversion from renewable energy, the technology is still nascent, and some applications remain commercially too expensive to be competitive in today’s markets. Hydrogen fuel also requires special infrastructure given its chemical properties. The Nord Pool, which is a market based power exchange made up of nine Northern European countries is a good example of how increasing interconnectivity can serve as a way to integrate greater amounts of variable renewable energy on the power grid. Most notably, Denmark, which has nearly twice as much wind capacity per capita than any other nation (making up 43 percent of electricity generation) has been extremely successful in facilitating such a high penetration of weather dependent generation through enhancing grid flexibility and interconnectivity. Growing interconnectivity has allowed Denmark to increase its wind energy build. When Denmark is overproducing, it can sell excess power to neighboring countries including Norway, and when the wind is not blowing it can purchase power from its neighbors. The trading of wind and hydropower between Denmark and Norway, above all else, presents a good business case. On average, Norway usually has about a 10 percent hydro surplus every year. When Denmark is experiencing strong winds and/or Danish power demand is low, the price of Danish wind drops, providing profitable arbitrage opportunities for Norway. The planning for scale and encouragement of healthy competition has been critical to the growth of renewables in Europe. As individual states in the United States seek to advance their renewable energy targets, lessons should be drawn from cross-border coordination taking place in Europe and the leveraging of planned transmission infrastructure to provide resource flexibility and take advantage of economies of scale. In comparison, existing interconnectivity between United States and Canadian power markets has seen similar benefits; includes contributing to economic growth through delivering low cost power to formerly underserved regions in the Pacific Northwest. In New England, electricity imports from Quebec and New Brunswick have lowered wholesale power costs and deliver annual economic benefits in the range of $103 million to $471 million. As the U.S. presidential election approaches, election outcomes could be critical to the future pace of deployment of renewable energy in the United States. GOP efforts on carbon emissions have mainly been focusing on carbon sequestration rather than incentives for clean energy. Carbon Sequestration is favored by the fossil fuel industry but yet to be widely commercially deployable at scale. In addition, most Republican plans focus on free market solutions to the climate crisis as opposed to strictly regulating carbon emitters. Recent details on Republican climate plans places emphasis on planting trees, a natural method to sequester carbon. By contrast, the leading democratic Presidential candidates including Bernie Sanders, Joe Biden, Elizabeth Warren, and Amy Klobuchar have all pledged to achieve 100 percent renewable electricity by 2050 or earlier. Democratic contender Michael Bloomberg, a long-time climate activist, released his plan for 100 percent clean energy. Bloomberg’s plan includes extending and expanding solar and wind tax credits and creating new tax incentives for private companies to improve clean energy technology, including battery storage and green hydrogen. No matter the result of the 2020 election, federal policy may not be the leading indicator in the United States where climate and energy policy has been propelled by states and cities. Given the popularity of renewable energy among U.S. constituencies and the falling cost of deployment, renewable energy expansion is likely to remain a major feature of the U.S. energy system in the coming years, catalyzed by state and local policies.  

This guest post is co-authored by Joshua Busby, associate professor of public affairs at the Robert S. Strauss Center for International Security and Law at the LBJ School at the University of Texas at Austin, Sarang Shidore, a visiting scholar at the LBJ School at the University of Texas at Austin, and Morgan Bazilian, director of the Payne Institute and a professor of public policy at the Colorado School of Mines. Increasing interconnection of electricity systems both within and between countries has much promise to help support clean energy power systems of the future. If the sun isn’t shining or wind isn’t blowing in one place, an electricity grid with high voltage transmission lines can move electricity to where it is needed. This shared infrastructure and increased trade can possibly serve as a basis for peace between neighbors in conflict, but it may also serve as a tool of coercion if the electricity can be cut off by one party. Cross-border trade in electricity is currently dominated by Europe – 90% of the $5.6bn electricity trade market happens there, but in the future increased trade in electricity, particularly in Asia, is set to grow dramatically. The boldest proposal comes from the Chinese organization GEIDCO which has, with the backing of the State Grid Corporation of China (which reportedly has over 1 million employees), promoted regional and even global grid integration. On the one hand, such grid integration could foster greater interdependence in conflict zones and facilitate more shared interests. But there is another concern, what we call a strategic denial of service. This would be a form of what Farrell and Newman refer to as “weaponized interdependence,” a situation where one country uses a shared relationship asymmetrically to extract political concessions from another party. Emerging economies China is providing ample financial support for electricity and energy initiatives through the Belt and Road Initiative (BRI) and the Asian Infrastructure Investment Bank (AIIB). As much as two thirds of BRI projects, worth some $50 billion, has been invested in the energy sector. Some observers have already raised concerns about what China’s overtures in this space might mean for its neighbors. Phillip Cornell, writing for the Atlantic Council, warned that despite the benefits of grid integration: "Even if local grids are independently operated, deep interconnection means that supply and demand will increasingly be      matched across the super-grid, making them more interdependent. It may be managed by 'international rules and operation code' as Liu [Zhenya, GEIDCO's chairman] insists, but those will be defined by a regional authority where China is bound to have major influence." The scope for cross-border trade in electricity isn’t only Chinese-led. Even as India has been trying to integrate its domestic grid through what it calls green energy corridors, the country is also supplying electricity to some of its neighbors. India already exports some 660MW to Bangladesh, and Indian firms are building power plants which could meet as much as 25% of Bangladesh’s electricity needs. While India is currently supplying power to Nepal, Nepal has the potential capacity to supply hydroelectric power to India. Nepal and Bangladesh are also considering electricity trade through the intermediate Indian network. Hydro plants in the Mekong Delta from Laos already supply electricity to neighboring Thailand, making it its top source of foreign exchange. Other projects include CASA 1000, a proposed power line to link the Kyrgyz Republic and Tajikistan as well as an interconnection linking a hydro power station in Malaysia’s Sarawak to West Kalimantan that should diminish Indonesia’s dependence on imported oil. Can electricity be used coercively? Can a state use electricity as a coercive tool like the way Russia has used natural gas? Is this technically possible? What are the limits? In the case of gas, you have a product that can be physically stored for periods of time, whereas electricity is a much more ephemeral product that, absent viable storage at scale, is lost as waste heat if not transmitted to end users. Though a breakthrough in storage might take away some of the urgency of the threat of service denial, it wouldn’t remove it in the event of a prolonged outage. Technically, the process of denial of electricity service is not all that difficult. Shutting down power service across a transmission system is just a matter of operations control (in the absence of good governance, power markets, contracts, etc. that are all in place to avoid disconnection of service). It can be done virtually instantaneously to disconnect power from any node on the system. Think of “rolling blackouts or brownouts” when different parts of a service area are shut down for various technical or economic reasons. Curtailing electricity to another country is potentially costly for the coercer. Curtailing electricity transmission to a neighbor does mean foregoing payments for the electricity (provided the neighbor was paying their bills). But, it could be one that states will use to generate benefits such as higher rates of payment for electricity or, more broadly, to extract concessions on other matters of political importance. For some energy sources like hydro power, the water has other potential uses. This could enhance the attractiveness of using service denial as a coercive tool since the owner of the hydro could presumably monetize its water in another way. A state might try to insulate its vulnerability to service denial through widespread conservation or building in extra reserve capacity, but in some settings and seasons, demand reduction might not be so easy to achieve. A country might be able to find alternative sources of electricity either from other neighbors or by powering up more expensive domestic sources of generation, though those arrangements could take time or prove much more costly than the existing cross-border arrangement. The flipside of denial of service would be demand curtailment, which a state might pursue if it was attempting to punish a neighboring electricity supplier by reducing its revenues.  Has this been done? During the Cold War, the Soviet Union was able to maintain dominance over Eastern and Central Europe by tying their energy supplies to the Soviet energy grid, reducing their scope for independent action. Though privatization in the early years of the break-up of the Soviet Union provided these countries with more independence, Gazprom made a conscious effort to acquire assets back under Russian control, sometimes under commercial conditions that could be construed as coercive, particularly in the natural gas space. Baltic states and Poland remained tethered to the Russian electricity grid. It was not until 2018 that Estonia, Latvia, Lithuania, and Poland completed an agreement to decouple from Russia and transition to the EU grid by 2025 at the cost of $1.2 billion. Fears of potential Russian service denials helped them overcome remaining obstacles. There have also been some examples in the post-Cold War era of denial of service and other forms of coercion related to integrated grids and interdependence. In July 2018, Iran cut off a portion of power to Iraq over unpaid fees in the midst of a summer a heat wave. While this may have merely been to ensure Iraq paid its balance, other states have employed similar tactics for more expansive purposes. In February 2019, the Trump Administration threatened secondary sanctions on Iraq to discourage its purchase of imported Iranian electricity and natural gas. Here, the service denial is not by the generator but by an influential third-party who has its own political axe to grind with the Iranians. In June 2019, the United States provided Iraq with a temporary four-month sanctions waiver to allow Iraq to get through the summer by importing products from Iran, lest the country experience a wave of unrest as it did in 2018 when Iran cut the power.  In May 2019, the United States and the Maduro government in Venezuela clashed over the rightful ruler of the country. Before and after the departure of Venezuela’s diplomats, left-wing U.S. protesters occupied the Venezuela embassy in Washington, D.C. to prevent supporters of the opposition Juan Guaidó from seizing the embassy. In the midst of the dispute, the power to the embassy was cut off by the electricity provider PEPCO, raising questions about political involvement by the Trump administration. If we think of the embassy as sovereign territory of Venezuela, this would qualify as a case of cross-border service denial and speaks to the potential vulnerability of other such enclaves such as military bases that may depend upon electricity grids of host countries. In July 2016, Turkey temporarily cut power to the major US airbase in Incirlik in the wake of the coup attempt against President Erdoğan, underscoring these concerns about base vulnerability. Cyber-security experts have also raised the prospect of denial of service by hackers who might be able to penetrate an electricity grid and take it off line. Given that communications, transport, and health care infrastructure all rely on electricity, the cascading effects of such an outage could have far-reaching consequences. If carried out by shadowy non-state actors, it might also be harder to attribute responsibility to a state actor. In December 2015, in the first known instance, Russian hackers were able to briefly take off line three Ukrainian distribution companies. Which states might deploy this strategy? We are more likely to see strategic denial of service where markets and contracts give private actors limited legal recourse in the event of supply disruptions. Moreover, strategic denial of service may be more common where there are large power asymmetries between neighbors, particularly but not limited to non-democracies. The more powerful state can use the size of its military apparatus or economy as additional leverage to extract concessions. In our view, we are less likely to see a poorer, smaller country like Nepal or Lesotho try to deny electricity to a more powerful neighbor, given the risks of reprisals. Similarly, in the event of demand curtailment, we might see powerful states use this tactic against neighbors that are highly reliant on electricity export revenue. As Farrell and Newman argue, those that control central nodes are likely to possess asymmetric power at key chokepoints: “Specifically, states with political authority over the central nodes in the international networked structures through which money, goods, and information travel are uniquely positioned to impose costs on others.” In a bilateral sense, a small chokepoint would be the ability for one country to deny service to one downstream power importer, but if a single actor exercises control upstream over the entire transmission network, that would provide them with asymmetric power over a wider group of actors. If no state controls a single node but several states together control electricity exports, that would require the kind of collective action that is less likely to occur in most regions of the world. In the event that the ambitious Desertec project moves forward, a study of the scope for North African countries to use renewable energy denial to Europe concluded that it was unlikely to succeed unless all five exporter countries curtailed service. Authoritarian countries may use this tactic more than democracies. In authoritarian governments, private actors may have less arms-length relationships with the government and thus be susceptible to pressure to cut off service to foreign countries. However, powerful democratic countries may also use this tactic against adversaries and non-democracies. Outside the electricity space, we have even seen the United States try to use its control of SWIFT banking system to coerce other democracies to avoid trade with Iran. In the electricity arena, it is less clear when democracies might use denial of electricity as a tactic. That said, if the U.S. government did in fact have a role behind the scenes in cutting off power to the Venezuelan embassy, this would be an example. As countries seek to balance their electricity needs to have the cheapest, greenest source of power when they need it, they may become both importers and exporters of energy. This may reduce the temptation for a state to unilaterally cut off electricity to its neighbor, lest the whole cooperative relationship fall apart. However, in a world of increasing concerns about sovereignty, we may see fewer of these interconnections to start with, absent confidence building measures and institutions. Can this tactic be prevented? To reduce the risks of coercive actions in cross border electricity trade, regional governance treaties and related multinational institutions should be created to oversee the implementation of agreements for the grid's operation. This could be akin to a neutral regional grid operator that has representation from all countries. ASEAN, for example, is helping develop the regulatory framework as the ASEAN Power Grid is built and knits countries together. OLADE -- the Organización de Energia Latinoamerica – is seeking to play a similar role in Latin America. Ideally, markets, contracts, and legal forms of dispute resolution would also help ensure that politically motivated service denials do not happen, but market mechanisms on their own are unlikely to establish confidence in grid integration across borders. Regional institutions remain an important means of regulating the trade, along the lines of transborder water governance that Lucia De Stefano and collaborators write about in terms of institutions to apportion water, deal with shocks, and carry out dispute resolution. Chinese acquisition of electricity assets in Portugal, Greece, and Italy have led Europeans to raise questions about whether existing forums for transmission operators such as ENTSO-E ought to be elevated to a regulatory body. Other regions are likely to be even less coordinated in terms of regulatory oversight. As Cornell points out, the vision for GEIDCO from the founder is one of decentralized, technical administration like the internet, without central control, but that actually betrays how the internet is subject to national level suppression as we have seen in countries like China with the Great Firewall. Other new Chinese-led institutions like the AIIB are subject to multilateral oversight, suggesting a governance model that might attenuate some of these concerns. In the absence of institutions to guard against politically motivated service denials, countries will remain disconnected or even seek to decouple their systems from neighbors deemed too risky. In much of the electricity space where the potential is largely untapped, it would mean foregoing many of the benefits associated with integrated grids. Poorer, weaker countries needing power might have few options and accept the Faustian bargain that puts them at the mercies of more powerful neighbors. At a moment when our collective emissions of greenhouse gases already have tied us together in mutual vulnerability to climate change, it would be a shame if joint efforts to address the problem got caught up in the return of great power politics.  

The wind industry is approaching the end of its federal financial support. Political leaders around the country are debating the best ways to continue supporting the wind industry.

While solar panels, electric buses, and wind turbines emerge, fossil fuel usage and demand for commodities continue to degrade Latin America’s environment.

This guest post is co-authored by Sarang Shidore, a visiting scholar at the LBJ School at the University of Texas at Austin, and Joshua Busby, associate professor of public affairs at the Robert S. Strauss Center for International Security and Law at the LBJ School at the University of Texas at Austin. For four years, we have been tracking the solar sector in India as it seeks to scale up to meet the government’s 100GW target by 2022. Although rooftop additions continue apace, there has been slower growth at the utility scale. The next stage of growth in India will be difficult to achieve without major reform across the electricity sector as a whole. But an upcoming national election in May could bring in a weaker coalition government, adding to the sector’s already large challenges that include land acquisition and problems with the existing auction system. Utility-Scale Slowdown Implies 2022 Goal is a Stretch India’s annualized solar capacity addition was 8.2 GW in 2018, down from the previous year’s all-time high of 9.6 GW. Though utility-scale additions dropped by nearly 20%, rooftop solar showed a remarkable surge of more than 70% over the previous year from a smaller base. However, India’s rooftop growth is focused mainly in the commercial & industrial sectors – residential solar has yet to take off in the country. As of January 2018, India had more than 26 GW of capacity of solar electricity, dramatically higher than the 2.5GW in 2014 when Prime Minister Modi took office. However, as we wrote last year, 100GW is a stretch goal that India likely won’t reach by 2022, and that continues to be the consensus among industry-watchers. The latest forecasts estimate that India will reach 65GW of installed solar capacity by 2022, of which 51GW will be utility scale and the remainder divided between rooftop, open access, and off-grid solar. While that is below the announced target, it is still impressive, especially where such progress was thought unlikely just a few years ago. Constraints, Old and New Given a backlog of approved projects, there will likely be more capacity installed in 2019 than 2018. However, a number of developments have undermined developers’ confidence. Reverse auctions, in which prices are continuously bid down until prices fall no further, have driven solar prices down in India to less than 3 rupees (4.3 cents) per kilowatt hour. A new import tariff as high as 25% kicked in this year, aimed at solar panel imports from China and Malaysia. China accounts for 90% of panel installations in India, so this, along with a depreciating rupee, has raised costs across the board and lowered the returns that developers and investors can earn. The increasingly challenging economics of large-scale Indian solar development has forced consolidation in the market. In 2019, just 4 players Azure, Acme, NLC, and Japan’s SoftBank are expected to provide more than 40% of new utility-scale capacity. Increasingly, there are instances of auctions being run and then canceled after the market-discovered auction price was deemed too high, making the business of bidding for projects more risky for developers.  This has happened both at the state and central level and is damaging the investment environment for solar. Despite these hurdles, significant interest remains from foreign investors from Japan, the Persian Gulf, and Europe. American investors who are earning better returns at home have largely steered clear of the Indian market. Land acquisition issues continue to dog plans for some large-scale solar parks. More than 40 such parks are in various stages of planning and development. Though land forms less than 5% of typical project costs, it is often the most complex and time-consuming step.  For instance, a 500 MW park in the large state of Maharashtra was scaled back this year after a farmer protesting inadequate compensation committed suicide. A large 2 GW solar park, located in the desert state of Rajasthan, is expanding more slowly than planned due to land disputes. Also, developers often opt for acquiring fertile land rather than wasteland, as it is typically closer to existing grid infrastructure. This further increases the chances of farmer resistance. An ambitious “green corridor” project to strengthen the grid between states with large generation potential and centers of high electricity demand is ongoing, and allocations for it increased by nearly 20% this past year to $92 million. Yet, as new renewable energy gets added to the grid, the demand for greater inter-state capacity is also growing. The green corridor is effectively a moving target and is currently lagging well behind additions of new capacity. India’s electricity sector, mostly organized at the state level in India, has undergone major reforms since the 1990s. From being integrated and almost entirely government-owned in each state, the sector was “unbundled” or split up with different companies handling generation, transmission, and distribution. Along with unbundling, privatization was also pushed. However, while generation was substantially privatized, transmission and distribution remain predominantly state-owned. However, electricity subsidies for agricultural use among India’s vast farming population have also increased steadily. What that means is that distribution companies (Discoms) in most large states face significant under-recovery of costs and are saddled with huge debts. This acts as a major constraint on the expansion of solar power, as Discoms are highly reluctant to buy more electricity from renewables in the face of existing long-term contracts with coal plants. The central government launched a key initiative in 2015 to rescue Discoms from their financial distress, called UDAY. However, UDAY is largely a failure. Though stricken Discoms have temporarily regained much of their health by transferring 75% of their existing debt to state governments, the Discoms have not implemented other reforms like reducing grid losses to improve their long-run profitability. The distribution companies’ generally poor financial health thus constitutes a major barrier for renewables penetration going forward. Moreover, there are challenges and costs of grid integration associated with renewable power because of intermittency, the fact that the sun doesn’t always shine and the wind doesn’t always blow. In the absence of affordable energy storage, grid managers have to ramp up other sources of electricity to act as balancers when there is no sun or wind. Hydropower and natural gas are ideal balancing sources for variable renewable electricity. Some states such as Karnataka do have sufficient hydropower to balance their renewables generation. But, many others do not, and, in the absence of viable natural gas plants, coal plants have to play this role. However, ramping coal plants up and down is expensive. As renewables penetration increases in the Indian electricity system, these challenges will get more serious. New Solar Models – Seeds of Change? New innovative approaches suggest a different path forward. While they tend to be smaller scale, they meet the electricity needs of key constituencies and can help overcome problems of land acquisition and below-cost electricity for agricultural users.  Madhya Pradesh, a poorer state in the central part of the country, is pursuing demand aggregation to reduce rooftop solar costs and is rolling out solar pumps for farmers. The rooftop program is initially oriented towards public buildings, such as government departments, schools, universities, and hospitals. The unique aspect has been to aggregate demand for would-be developers by bundling sites together Before the bidding process, the state surveyed the sites to estimate their technical requirements and made that information available to developers. This has led to electricity price bids of less than 2 rupees per kilowatt hour in some cases, which is as much as 5 rupees cheaper than standard Discom rates. While significant subsidies of more than 40% helped facilitate lower bids, state officials argue their preparatory work and transparency of information brought costs down even further by reducing investors’ uncertainty. The agricultural sector is responsible for more than 30% of electricity demand in a number of states as many farmers rely on groundwater for irrigation. Because farmers tend to get subsidized power, many of India’s Discoms perennially lose money. However, farmers also get unreliable power for limited hours, often at night rather than during the day. The wealthier state of Maharashtra, which includes the India’s financial capital Mumbai but is also heavily agricultural, is experimenting with solar agricultural schemes to offer farmers more convenient and reliable daytime power and should help Discoms improve their balance sheets. Maharashtra has developed a solar feeder scheme which sets up a small scale solar plant of 1-10MW in the community. Farmers connect to this power plant to run their pumps. The southern state of Karnataka, which includes the national IT hub Bangalore, has innovated a semi-distributed solar model by building smaller scale parks of 10 MW to 100 MW at the taluk level (taluks are clusters of villages). Taluk-level solar plants do not require large parcels of land and can be located more closely to the rural consumers. The model could ease the land challenge, lower grid losses, and reduce Discoms’ financial losses. Karnataka also innovated a land leasing model for its large 2 GW Pavagada solar park located in a poor drought-stricken region. Instead of acquiring farmer-held land outright, it offered 28-year leasing deals. 13,000 acres were acquired this way, with thousands of farmers signing lease contracts. In exchange, farmers are paid an annual rent with a periodic escalation clause. This eased farmer concerns over permanently losing their land and assured them a steady income regardless of the weather. Pavagada helped Karnataka become the leader of all Indian states in net solar capacity. The Current Pathway - More Solar, More Coal From a climate change and air quality perspective, the more important question is whether India’s renewables growth will displace coal as soon as is practically feasible. From that point of view, the growth of the last few years of the solar sector looks less impressive. However, from an energy security perspective (the primary driver of India’s energy policy), solar has provided a welcome, cleaner domestic source of electricity and has significantly alleviated power deficits triggered by uneven supplies of domestic coal in states such as Karnataka. Coal still retains its preeminence in India’s electricity mix, responsible for close to 75% of electricity generation. Even as some old coal burning power plants are being taken off-line, some new coal plants are being built. In recent years, renewables additions have outpaced coal; for example in 2018, renewables additions were 11.2 GW (of which solar was 8.2 GW) compared to coal additions of 4.5 GW. Though the new coal plants are more efficient supercritical and ultrasupercritical plants with greenhouse gas emissions reductions of more than 25%, they are still net carbon additive. In 2018, the Council on Energy, Environment, and Water (CEEW), a prominent Indian think tank, developed scenarios of low carbon development for India. In the most pessimistic scenario where renewables projects have to bear the cost of integrating their power into the grid, the non-fossil share of electricity will rise to at least 48% in 2030, up from around 20% today. In the most optimistic scenario in which renewables do not have to bear any cost of grid integration and coal plants operate under a new market design, the share will be as much as 79%. This is a large spread of possible scenarios, and speaks to the high sensitivity of sector pathways to policy and regulatory initiatives. In other words, much can be done to bend the curve. Peering Ahead In spite of sector headwinds, more than 13 GW of solar will be added this year according to Bridge to India, of which 10.9 GW will be utility scale and 2.4 GW rooftop. This surge is largely due to legacy effects of intense tendering activity in late 2017 and early 2018 coming online in 2019. But the overall trends of 2018 point to serious risks of a solar slowdown. If renewables are going to displace a larger share of coal in the medium-run, then some more transformational changes in how the electricity space is regulated and organized will have to be pursued. As we argue in an article forthcoming in Energy Policy, the significant growth of renewable energy in India since 2014 has very much been a top-down affair greatly driven by policy innovation and high prioritization by the central government and some key states. This policy push was driven by multiple factors including global pressures leading up to the Paris agreement, the leadership of Prime Minister Modi, and energy security and investment factors. However, the upcoming national election will likely return a more fractious coalition government, reducing the appetite for ambitious energy sector reform, all in the context of flagging global climate action. The question of electricity reform in India highlights the challenges for democracies of reconciling diverse interests and voter groups with the need to move to cleaner sources of energy.  This challenge is not unique to India. Witness the prolonged discussions in Germany over the timing and terms of phasing out coal production. The United States, with the deregulatory pushback in the Trump era, is also facing similar challenges. Solving this puzzle will be a key challenge of national and global governance in the years ahead. The authors would like to acknowledge the support of the IC² Institute, the LBJ School, and the Strauss and Clements Centers at the University of Texas.

Today is my last day at CFR. I’m joining ReNew Power, India’s largest renewable energy firm, as their CTO. I’m excited for a new adventure but sad to leave the Council, which has given me support and autonomy to study the innovations needed for global decarbonization. As I leave, I wanted to share a new article in the energy journal Joule that I published along with John Dabiri at Stanford University and David Hart at ITIF and George Mason University. In it, we write: Solar energy, wind energy, and battery energy storage are widely regarded as the three most prominent clean energy technology success stories. In 2017, the International Energy Agency listed them as the only technologies being deployed rapidly enough to help limit climate change. Power from solar and wind farms is now routinely sold at prices below that of electricity from fossil-fueled generators, and cheaper batteries are fueling rising sales of electric vehicles as well as a building boom of grid-scale electricity storage projects. Governments around the world might conclude that innovation in solar, wind, and storage is no longer a priority. Such a conclusion would be a mistake. The impressive performance and promising projections for these three technologies obscure an underlying stagnation. In each case, a single dominant technological design has emerged, which private industry is presently scaling up. As Figure 1A reveals, crystalline silicon panels have strengthened their near-monopoly in solar photovoltaic energy in recent years. Figure 1B demonstrates that a similar trend is emerging in grid-scale energy storage, as lithium-ion batteries relentlessly increase their market share. And in wind energy, horizontal-axis wind turbines have enjoyed a virtually 100% market share for decades. Figure 1. Global Market Shares of Dominant Designs in Solar Photovoltaic and Nonhydro Grid Energy Storage (A) Percentage of global annual solar photovoltaic panel deployed capacity by technology (Source: Fraunhofer ISE). (B) Percentage of global annual grid-scale energy storage deployed capacity by technology, excluding pumped hydroelectric storage (Source: International Energy Agency, Tracking Clean Energy Progress, 2018). While these ‘‘dominant designs’’ have made clean energy more competitive with fossil fuels in the near term,  they pose a significant risk in the long term: ‘‘technological lock-in.’’ Technological lock-in has been documented across a range of industries in the past—especially in legacy sectors with entrenched incumbent firms and regulatory inertia. Once it sets in, new technologies struggle to achieve commercial traction even if they are superior to existing ones. The warning signs of lock-in are clear across all three fields. Private industry is devoting virtually no investment to the development of next-generation technologies, while making massive bets on the rapid deployment and incremental improvement of existing technologies. If new solar, wind, and storage technologies are ‘‘locked out,’’ global efforts to reduce greenhouse gas emissions could fall well short of those needed to avoid the worst consequences of climate change. To be sure, it is impossible to be certain that new technologies will be needed, but a prudent risk management strategy would be to prepare for the likely scenario that they are. Governments around the world should step in to boost funding for research, development, and demonstration of new solar, wind, and battery technologies that have the potential to outperform the current market leaders. These technologies will not attract substantial private investment without such public support. Well-designed policies would spread public funding across a diverse range of technologies and phase out that support as technologies mature, ensuring maximal return on public investments in innovation. Governments are not the only—or even the primary—entities needed to advance clean energy innovation. The private sector is center stage for the development and commercialization of new technologies, and I’m eager to help my new firm establish itself as a technology leader. Still, I’ve learned through my time at the Council that supportive public policy can unleash private innovation. At the Council, I am grateful to all of my colleagues who have made my time here enjoyable and stimulating. I’m especially thankful to Richard Haass and Jim Lindsay for their support of my work. I’m also indebted to Michael Levi for taking me under his wing (and trusting me with his blog!). None of my work would have been possible without my two superb research associates, Sagatom Saha and Madison Freeman, and our dynamic interns. Finally, I’ve been fortunate to work with world-class collaborators, who have opened my mind to new ways of thinking. I’ll miss the vibrant DC policy ecosystem and would love to host visitors over a cup of chai in New Delhi!