What the Energy Transition Needs Now is a Good Plumber
Cleantech investment is ready to flow… but the pipes of progress are clogged.
2022 was a watershed year for federal climate change legislation. The Inflation Reduction Act (IRA) directed $369 billion toward clean energy technology, infrastructure, and climate mitigation. The energy-related parts of the Infrastructure Investment and Jobs Act add another $75 billion. This feels like progress.
This level of federal investment has the potential to be transformative. Widely cited modeling exercises (see here, here, and here) project that IRA incentives will induce *major* increases in technology deployment. For example, the REPEAT project estimates over 590 installed GW of utility solar and over 470 GW of onshore wind by 2030 (compared to 97 GW and 136 GW today) and incredible accelerations in the adoption of EVs, heat pumps, etc. This all adds up to large projected reductions in US GHG emissions (~40% below 2005 levels by 2035).
If you’re climate-concerned like I am, it’s easy to get excited about these big numbers. But it’s important to remember that the models behind these projections make some big assumptions. For example, it’s assumed that the main barriers standing between us and a clean energy future are high technology investment costs. Households and firms are, implicitly or explicitly, assumed to operate like perfectly-informed cost-minimizers. When government incentives make renewable energy cheaper to build and EVs cheaper to buy, the model quite sensibly builds/buys more.
Decarbonization hairballs
Largely missing from these models are other “non-cost” barriers such as permitting gridlock, NIMBY challenges, behavioral biases, land use restrictions, skilled labor shortages, supply chain issues, information problems, culture wars, to name but a few. We have seen repeatedly how these kinds of obstacles can delay or defeat clean tech deployment in the real world.
Riffing on my bad plumbing metaphor, these obstacles are like hairballs in the pipes of decarbonization progress. They are idiosyncratic and messy and hard to build into our models. But a failure to account for them means that our modeling projections will almost surely overstate the real-world climate impacts of new federal legislation.
If we want to bring clean tech deployment anywhere close to these optimistic modeling projections, we’ll need to figure out how to replumb or remove the hairball obstacles. In other words, we need some industrious “policy plumbers” who understand how the system works, why it’s getting clogged, and how we can get things moving.
Where are the policy plumbers?
The federal government is uniquely positioned to direct many billions of dollars toward clean energy investments. But it is not in a great position to engage in the weedy trouble-shooting that will be required to clear a path for clean tech deployment across localities with different zoning restrictions, permitting requirements, local building codes, and political nuances. States and local governments are arguably in a better position to act as creative policy plumbers.
With many billions of federal dollars ready to flow, state and local governments should be looking for ways to direct this flow into their energy systems and their economies. And if any state should be working to clear the way for decarbonization investments, it’s California.
California’s recently adopted Scoping Plan charts an ambitious path to significant GHG emissions reductions by 2030. The plan calls for a rapid scale-up of building electrification, a four-fold increase in wind and solar investment, a doubling of electricity generation, and the list goes on. There are mounting concerns about how this plan will be implemented, what this will cost, and who will pay the price.
In the past, California has relied to a significant extent on retail electricity rate increases to pay for power sector decarbonization costs. We’ve blogged before about the inequities and inefficiencies baked into this approach. Federal incentives for clean technology and infrastructure deployment under the IRA are more progressive distributionally because they are funded by increasing the corporate income tax. If California can attract these federal dollars, this will shift some of the decarbonization cost burdens off of California utility customers and onto a more progressive base.
California has situated itself on the bleeding edge of decarbonization efforts. So we are hitting the hairballs before other jurisdictions. This has spurred some notable, and often controversial, plumbing efforts in the Golden State. Here are a few that I’m following:
- Land use/local permitting: California recently issued “emergency regulations” (AB 205) that delegate blanket authority to bypass local permitting for siting of solar, wind, and certain battery backup projects.
- Grid integration of renewables: Last week, the California Independent System Operator (CAISO) approved the Extended Day-Ahead Market (EDAM) proposal. Western grid integration/coordination will help support higher levels of renewable penetration.
- Utility rate reform efforts are exploring ways to address affordability concerns and leverage demand response.
- Building code restrictions: Some California cities have started requiring homeowners to install electric appliances when they replace gas equipment or undertake renovations.
- Information campaigns are trying to convince grandpa Max that a heat pump will keep him just as warm and an electric range will crisp his schnitzel just as nice.
That’s my list. I would be interested to hear from blog readers about the initiatives you’re tracking. And the hairballs you’ve spotted before the rest of us.
Learning by plumbing?
New federal climate initiative will go a long way toward removing the investment cost barriers to decarbonization. But there are other obstacles to reckon with. In the past, green states have provided an important laboratory for experimenting with climate policies like renewable portfolio standards, tax credits, consumer subsidies, and carbon pricing. It seems the next frontier in this experimentation should be more focused on non-cost barriers. These obstacles will manifest differently across states and localities. But there are generalizable lessons to be learned from state and local-level trial and error. Let’s get plumbing.
Keep up with Energy Institute blog posts, research, and events on Twitter @energyathaas.
Suggested citation: Fowlie, Meredith, “What the Energy Transition Needs Now is a Good Plumber”, Energy Institute Blog, UC Berkeley, February 6, 2023, https://energyathaas.wordpress.com/2023/02/06/what-the-energy-transition-needs-now-is-a-good-plumber/
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The California Public Utility Commision, with the recommendation of California’s three largest utilities, just dumped and whole lot of lard and fat into the Grid tied Rooftop solar energy pipeline trap and it will harden up on April 15, 2023. NEM 3.0 will end grid tied rooftop solar in California and sets the stage for it to end Grid Connected Rooftop Solar in many other states. I own “off grid” solar panel system with batteries and have powered most of my 120 volt needs since 2010 with my own micro grid because I knew, NEM would not last, and the utilities would cut its value to ZERO if they could. Fortunately, all new installations will have Islanding inverters with batteries and transfer switches to disconnect the grid. Both string inverters and micro inverters now have the islanding features needed to cut the cord to the utilities so they may inadvertently have just spelled the end of “grid tied” residential homes and lost millions of customers sooner than expected.
America’s power needs will not be provided by wind turbines & solar panels; it’s a joke. The upshot of your meddling with our existing power grid will be millions of people living in the dark, utility bills very few can afford, and citizens freezing to death in the winter. I doubt if you’ll be able to play make-believe much longer, no matter how many billions of worthless dollars you can con out of the American people.
Two thumbs up!
Indeed we do need a good plumber: to install millions of heat pump water heaters that can operate flexibly when the sun is shining or the wind is blowing to provide our hot water.
We also need a good electrician: to install the power service for millions of heat pumps, heat pump water heaters, and induction ranges that will displace fossil fuel use.
We also need robot technicians, a combination of mechanical and electrical skills, to maintain the increasing number of machines that will operate our fast food restaurants, work in care facilities to assist in patient care, and facilitate efficient e-commerce.
We need communications technicians, to install and maintain the 5G networks that will enable autonomous robo-taxis to help us get around without covering the nation in more parking lots, and to enable 3-D telepresence with smell-o-vision, the next big upgrade to Zoom.
Despite generating a record number of “new jobs” in the US economy over the last two years, we have 11 million jobs unfilled, and most of these are in skilled trades, from plumber and electrician to nurse and medical technology. The Federal and State governments remain woefully inadequate in their attention to technical education. Our trade schools and apprenticeship programs are not receiving the funding needed to produce the workforce of the future.
While enrollment in construction trades is up about 5%, enrollment in other trade programs such as communications technology, transportation and materials moving, nursing, and physical sciences are not. Those are skills we desperately need if we are to prosper in the information age. https://www.npr.org/2022/03/28/1086454046/2-year-skilled-trades-programs-booming
I’m thinking the problem is so big that we need to approach electrification from both the supply side and the demand side. Lots of folks are talking about supplying more peaky power to our buildings. But we can met our electrification needs in less peaky ways like with the new 120V plug-in 500 Watt heat pump water heaters (not always the 4500 Watt needs-a-new-hard-wired-circuit 240V models that put a strain on the work force). And consider more incentives for the workforce-extending 120V battery integrated cooktop and similar slide-in range solutions. The CEC is working on implementing SB 68 that will promote information on more efficiently using the existing buildings’ wiring to fully electrify our lifestyles. Until then you can see some ideas at this site and consider how utilities could focus their programs towards these more power-efficient approaches that let more homes electrify on the same panels, transformers, wires and workforce. https://www.redwoodenergy.net/watt-diet-calculator
So good you mention the culture wars. Prying all those gas ranges from cold dead Republican hands is going to take a while.
Hi Meredith,
Thanks for this insightful and clever article. “Plumbing problems” are no big deal—-until you have them. I remember some years ago when our house connection to our Sewage Main exploded in cold weather. I wanted that problem gone NOW.
Two sources of “slow drains” for clean energy that seem to have been around forever are: 1) Slow interconnect process for behind-the-meter renewables; and 2) Standardized financing models for C&I renewable projects. I’ve had two conversations in the last month with senior executives at Clean Energy firms, asking the question: “Haven’t we been talking about these issues for 5 years?” We have, and that’s too long……IRA or not.
Time to get the Pipe Wrench out.
James,
Know the pain and urgency in rectifying sewage and potable water line breaks. Nothing like a polar vortex to test how robust your systems are. We had nine water line brakes back in 2009 when the temps dropped quickly from the mid 50’s to 16F with 50 miles winds gusts. The well water in the inch and a half-galvanized pipe leading into the pressure tank at the house froze solid. When the power went out the heat strips at the pressure tank and went out. The wind chill was down to something like minus 15 or so for 24 hours if I don’t recall. Hope the break in your sewage line happened on the other side of a back flow preventer as I’d hate to think how much effluent could have ended up in your yard and house!
We bought a big generator after that storm- we sold it with the CA house back in 2020. The PSPS’s in the area seemed worse than the polar vortex’s in retrospect given all the fires PG&E keep starting. We bought some fire hose and an inch and a half value to tap into the fire hydrants at southern edge of the property. During the first PSPS in the state emergency responders had a few challenges making it east of Placerville due to the traffic messes around the city and the 50 corridors.
Labelling, and more to the point treating, those who resist implementation of a policy vision as benighted “hairballs” may not be the best way to convince them of the rightness of the vision. As a general rule.
This is just spot on! As a utility commissioner, the barriers you mention are exactly what I am seeing. I would just add that workforce is a huge barrier as well, especially the highly skilled jobs like electric linemen and system operators. If you have any good ideas about how to get more trained workers, I would love to hear them. My own inquiries suggest that labor unions tend to be a barrier (as they do not want to train workers not in their union and different utilities work with different unions) and apprenticeships are also a huge barrier – the training burden falls on the utility and so does the risk of losing a newly trained worker. I would love to see state/federally funded 4 year programs to address this urgent need.
Thanks for your awesome blog! Lauren
“I would just add that workforce is a huge barrier as well, especially the highly skilled jobs like electric linemen and system operators. … My own inquiries suggest that labor unions tend to be a barrier (as they do not want to train workers not in their union and different utilities work with different unions) and apprenticeships are also a huge barrier.”
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Commissioner Segal, I think you’re missing something here. In California, apprenticeships are generally union-business partnerships to train workers, and over many years, they have a pretty good track record — far from perfect, for sure, but the well-trained worker shortage would certainly be worse without them. And unionized utilities offer good pay and benefits compared to other non-union electric companies. So if a utility “loses” a newly trained worker, it may well be that it’s to another utility; but that works both ways. What the unions don’t like — and this generally applies to any apprenticeship/training field — is training workers in an apprenticeship partnership and then “losing” that worker to a non-union firm that lands a big electric project contract but paid nothing (in dollars and time) to train that person.
When I worked for Gov. Jerry Brown and his long-time confidante Marty Morgenstern at the California Labor and Workforce Development Agency, they strongly supported apprenticeship programs, and rightly so. Having said that, I too would like to see “state/federally funded 4-year programs” to get more well-trained workers. But Good luck with THAT.
Finally, I do agree that Meredith’s blog does a great job highlighting the many clogs in the energy transition process. After the initial California Renewable Portfolio Standard was enacted in 2002, there were a number of clogs for a while as well, but for the most part, they were unclogged. I hope that proves true now, but there are a lot more moving parts in this process — the non-cost barriers, as Meredith calls them. Indeed, It’s going to take a lot of work and focus!
The lack of skilled trades people is a big problem. All the trades people who have worked on our house in the Bay Area recently immigrants, mostly Spanish speaking but one from Israel. This seems to be because there is too much emphasis on on a college education and not enough on the skilled trades. I was at a High School reunion recently and was told by alumni association that every time there is a new school board member, the first thing they try to do is cut vocation education in favor of college prep. Apparently vocation education is till kept at the school due to the effort of one retired graduate who takes the new school board member through the classes and to the competitions the students are engaged in. This convinces the board member to support vocation education. Without this effort that school would have cut vocation education long ago. This high school is in a district with three high schools of choice, and has a waiting list for admission. Shouldn’t our high schools be putting more emphasis on the skilled trades?
Paul:
The problem you’re describing here goes back to Gov. Jerry Brown’s Local Control Funding Formula for K-12 that was enacted in 2013. That gave local school districts much more control over funding for certain programs by getting rid of mandatory “categorical” spending that had to go to vocational training. Gov. Brown didn’t like the fact that many districts de-emphasized vocational skills and directed the Labor and Workforce Development Agency and his Department of Finance to find ways maintain funding for certain programs, especially apprenticeships. By the time I left the Labor Agency in 2015, the results of that effort had yielded a mixed bag of results. I’m not sure where things stand now in terms of money for vocational programs, but you hit the nail on the head in noting that most school boards are fixated on college prep, and that has permeated the prospects horizon for most high school students, parents and district board members. In addition to a shortage of skilled utility/electrical workers, we need more skilled labor in a wide range of fields — including actual plumbers!
Career technical education (CTE) is gaining traction and funding around the state. Our school district which is heavily oriented toward the college found (e.g., almost two dozen AP classes) is now spending millions on new CTE facilities. The fall off in state college and community college enrollment indicates students are rethinking this as well.