Decarbonizing DC will be dirty work

In 2019, Mayor Muriel Bowser signed an amendment to DC’s electricity law mandating that 100% of electricity sold to DC residents come from renewable energy sources by 2032. Nearly four years later, the District has made no real progress thanks to Pepco, DC’s investor-owned power distribution company. 

Because Pepco resists facilitating a transition to renewable energy, critics have formed a campaign―WePower DC―urging the DC Council to take over Pepco in a process called “municipalization.” Transitioning control of DC’s electric utility from a private company to democratically accountable experts would empower DC residents to control the rates they pay and where their energy comes from―in short, it would help 800,000 people achieve energy justice. Many cities and states across the country have already municipalized their energy utilities for this same reason. But municipalizing Pepco, on its own, does not necessarily make decarbonizing DC’s grid simpler. While removing corporate profit incentives is an important step toward local energy justice, the movement for public power in DC must recognize that the regional energy ecosystem remains resistant to decarbonization.

There is no doubt that Pepco is part of the problem. Bill inserts that Pepco provided customers from 2015 to 2021 testify to the utility’s tryst with carbon. Despite the past decade’s explosion of cheap renewable energy investment across the country, the data show only the tiniest of increases in renewable energy purchases and a sharp shift toward natural gas. Why does Pepco’s electricity remain so dirty?

One reason why is that DC’s 2007 electricity law does not push meaningful decarbonization: it allows Pepco to buy renewable energy credits from solar and wind power generators across the mid-Atlantic region to compensate for the renewable energy that Pepco is supposed to provide to customers but does not.

The 2019 amendment forces Pepco to buy more credits so that, by 2032, Pepco is supplying DC with 100% renewable energy. But, because of the credit loophole, the more likely outcome is that Pepco will supply DC with a cheap, high-carbon energy mix and buy credits to close the gap. In 2021, Pepco’s energy mix for DC residents was 6.47% renewable while DC’s renewable energy quota was 26.25%. Pepco paid the difference in credits and compliance fees. In theory, this scheme should have incentivized Pepco to purchase renewable energy directly to serve DC, rather than buying credits or paying compliance costs. In reality, 93.53% of DC residents’ electricity still came from nonrenewable sources in 2021. A municipally controlled energy utility may be expected to make more honest efforts at decarbonization if that’s what DC residents demand.

But another significant restraint on decarbonization is external: Pepco doesn’t generate its own energy, but instead it buys electricity from generators across the mid-Atlantic “PJM interconnection” distribution grid and sells it to DC customers. So, the renewable energy capacity on PJM’s grid sets an upper bound on the renewable share of Pepco’s energy mix. As of 2021, that share is not high: only 6.1% of PJM’s installed capacity is solar, wind, or hydropower. This capacity, which must ramp up when weather and water permit, can make a substantial dent in PJM’s overall generation mix by forcing nonrenewables to ramp down. But PJM itself is spread across 13 states and DC, and long-distance electricity transmission is not cheap. Although renewables are meeting 12% of PJM’s generation needs as I write this piece, this commendable regional statistic does not mean much for DC.

It should be good news, then, that there are nearly 100 gigawatts of solar projects waiting to be added to PJM’s grid―a 50-fold jump from its current solar capacity, and enough to power almost 20 million homes. But the enthusiasm for renewable energy generation has overwhelmed PJM’s managers according to reporting from Inside Climate News: “In the past, PJM’s energy project queue was dominated by a few large projects like big natural gas power plants. Now, PJM officials said, they are receiving a proliferation of smaller projects, each needing study.”

PJM plans to address this backlog by delaying consideration of more than 1,250 proposed projects for two years to refine their project approval process and to conduct due diligence on each proposal. Managers already know they will fail to meet President Biden’s goal to achieve 100% carbon-free electricity across the country by 2035. In PJM’s defense, safely adding large amounts of renewable energy, which turns on and off given weather and water, to a coal-, gas-, or nuclear-based grid is not easy. But any push to supply DC residents with renewable energy means pushing PJM to streamline project permitting and approval.

Graph Source: S&P Global

Pepco’s holding company, Exelon, was once an obstacle to PJM’s decarbonization. Analysts and commentators alike agreed that Exelon’s 2015 takeover of Pepco would stymie DC’s clean energy goals: cheap renewable energy would threaten the profitability of Exelon’s older fleet of nuclear power plants. Indeed, the company has previously tried to kneecap wind and solar energy development. But Exelon recently divested itself from its entire generation fleet; its COO intends to support PJM’s work to “reduce barriers facing renewable energy and distributed energy sources.” It’s not clear if they are actually lobbying for more renewables, but, at the very least, they are no longer the opponents they once were.

Pepco doesn’t necessarily have to purchase energy from PJM generators because it can also help distribute energy generated by solar power within DC. Although DC is helping subsidize and develop rooftop and distributed solar power installations to secure its own supply, city officials have identified various financial and technical obstacles to scaling up those programs, which—for now—limit the energy available from these systems. Interestingly enough, one financial obstacle is Pepco itself, which charges residents up to $20,000 to connect their solar panels to Pepco’s grid. A municipally controlled utility could lift this barrier, but technical constraints like the shade created by DC’s cityscape will remain.

Any push to municipalize Pepco cannot ignore this overall context. Most importantly, and most uncomfortably, the District cannot go 100-percent renewable overnight. So long as the region lacks sufficient renewable energy capacity, and until the District can sufficiently scale up rooftop solar power, we are stuck with a natural gas and nuclear energy mix. We must work with what we have.

Which means that a DC public power utility must work with other regional distribution companies, Exelon included, to push PJM to permit renewable energy projects more quickly. While we should absolutely build out our own utility-scale solar and wind assets outside DC, doing so likely requires PJM’s assistance. All the more reason for our utility to push distributed and rooftop solar across the city where possible in the meantime to displace imported electricity from natural gas and coal plants.

At the same time, our DC public power utility must wind down those long-term gas and coal purchase contracts. At the very least, it should not renew expiring contracts, especially when expanded renewable energy capacity makes holding those contracts too expensive. It should also make use of PJM’s considerable nuclear energy capacity. There is no other way to quickly secure a green DC without making use of the zero-emissions energy we already use in large amounts.

So long as the District’s renewable energy credit system remains an accounting trick, there is no guarantee that DC actually achieves a 100% clean energy mix by 2032. Instead of paying compliance fees for failing to meet DC’s renewable energy quotas, our DC public power utility should earmark that money for local grid improvements, expanding local renewable energy, financing solar and wind projects across the PJM grid, and, perhaps most crucially, lowering residents’ energy bills. This redirection of finance requires a change in legislation, but has the potential to ensure that our DC public power utility does not deprioritize energy justice.

DC’s campaign for public power―WePower DC―should not shy away from these challenges. By embracing them, we build the expertise needed to actually administer a functioning, equitable, and green municipal utility, and set a model for the rest of the country in the process.

Get involved with WePower DC today! Sign up here. We’d love to have you join our fight for public power. And if you’ve got questions, contact us at our website!

Disclaimer: the views expressed in this blog are the author’s personal opinions alone and do not necessarily represent the views of the Department of Treasury or the United States Government.

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