The power sector craves stability. Trump has brought it chaos.

The power sector craves stability. Trump has brought it chaos.

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A new survey of utility execs reveals rising bafflement.

One of the premises of conservative hostility to regulation is that it creates “regulatory uncertainty.” With meddlesome liberals creating new rules all over the place, the story goes, businesses just can’t get their bearings, so they are afraid to invest.

It’s a story they’ve been repeating for decades, one that helpfully offers blanket justification for crippling executive agencies and rolling back Obama-era regulations, which is what Trump has been doing since he took office.

It is, by and large, bullshit. Nowhere is it more bullshit than in the area where conservatives most often deploy it: environmental rules.

From the time he entered office, Obama was clear about the direction he intended to push the energy industry. Like the rest of the world, the US would begin accounting for and consciously reducing its greenhouse gas emissions. It would channel new investment to renewables and other clean energy resources and begin phasing out old, polluting plants.

All of Obama’s regulations, across agencies and industries, were part of that strategy. They gave industries a clear sense of the path ahead.

Over the last year, Trump and his agency heads stomped in and started flailing around indiscriminately. Trump issued a bunch of executive orders proclaiming this and that regulation destroyed, but it turns out executive orders have no legal force. So agencies have been trying to reverse rules, but they are rebuked by courts or simply mired in legal fighting as often as they succeed.

A coherent suite of regulations has become a mishmash. Some are reversed, some are weakened, some will be in court for years. No one is sure how long Trump will be in office, whether any of his deregulatory efforts will succeed, or whether the federal government might lurch in the opposite direction again under the next president.

Trump has, in short, created a fog of regulatory uncertainty.

But don’t take my word for it. Let’s hear from folks in the utility industry.

utility workers
(Shutterstock)

The power sector has become less certain of exactly WTF is going on

Happily, Utility Dive has just released its big annual survey of utility executives and professionals, so we can get a glimpse of what, if anything, the transition to Trump has changed for them.

It’s instructive to begin with what hasn’t changed from past surveys. Across regions and types of utilities, there is a high degree of consensus in the new survey that the sector will continue down the road of more renewable energy, more electric vehicles, and the continued retirement of coal plants in coming years. It seems Trump’s truculent-if-ineffective support for coal hasn’t impressed anyone in the industry. Utility executives know renewables are rising and coal is dying because that’s what markets and their customers are telling them.

Some things are changing, though. When it comes to the shifting fuel mix in the power sector, utility folks used to worry most about the technical challenges of integrating renewables, or the financial questions around how to pay for outmoded assets. Now a different worry is creeping up.

industry dive survey
Utility Dive

Utility Dive’s Gavin Bade summarizes:

In the 2016 survey, only 12% of utilities ranked policy and market uncertainty as the top issue with their changing power mix. But when utilities were polled for the 2017 survey — during the transition period between the two administrations — uncertainty had jumped to 35%, leading all power mix concerns.

This year, uncertainty was even more pronounced than in the past, despite the inclusion of more response options for participants. Nearly 40% of respondents named uncertainty as the top issue with their power mix — leading the second-place option by 19 percentage points — and that result was consistent by utility type, size and region.

In other words, the industry has seen a substantial rise in regulatory uncertainty.

Here, plain as black and white, is proof that Trump and EPA Administrator Scott Pruitt et al. are accomplishing the opposite of what they claim. The industry is less clear than ever on how to plan for a transition that they know is unstoppable.

More distributed renewables, maybe not so much natural gas

While I’ve got your attention, let’s look at two other things that are shifting in the eyes of utility professionals.

The first has to do with natural gas. It was not long ago that natural gas electricity was almost universally deemed the winner of the energy transition — its supply is more robust than ever and it is cheaper than its competitors. Recent years have seen an enormous gas renaissance, and, much to climate hawks’ consternation, most professionals expected it to continue.

But, perhaps spurred by stories like this, or this, utility thinking is starting to change. Bade again:

In 2016, 72% of utility professionals said they expect moderate or significant growth in gas, dropping to 64% last year. In 2018, the number is down to 55%, and respondents from the West Coast — home to ambitious carbon goals — are more likely to expect a decrease in gas generation than an increase.

That’s only three years, too little to draw any grand long-term conclusions, but a 10 percent drop in confidence in natural gas per year is at least worth noting. The next big battle in decarbonizing electricity is finding zero-carbon substitutes for natural gas — maybe utilities are farther along in girding for that battle than I had thought.

Finally, there’s distributed energy, i.e., rooftop solar panels, home batteries, electric vehicles, and the like. Confidence in the growth of distributed energy is extremely high:

utility dive survey utility execs
Utility Dive

As you can see, while expectations are highest on the West Coast and in New England, majorities in every region — 91 percent of respondents overall! — believe that moderate or significant growth in distributed energy lies ahead.

Among distributed resources, the three around which there is most consensus are EV charging (90 percent), distributed solar (90 percent), and smart inverters/grid communications (88 percent), though that varies by region:

utility dive - DERs by region
Utility Dive

(Interestingly, despite all the hype around distributed storage, it only made the top two on the West Coast.)

The electricity sector is baffled, but not influenced, by Trump

So that’s where things stand. Electricity sector professionals have a pretty good sense of where things are headed. Coal is dying out. Renewables are coming on strong. Distributed energy and sophisticated grid-edge controls are exploding. Natural gas … well, we’ll see.

Trump’s love of coal, steel, pollution, and other such manly 19th century pursuits is an anachronism and a curio, but it is having little influence on the thinking and plans of electricity-sector professionals. (Remember Trump’s attempted coal bailout? All of 5 percent of respondents supported it.)

His deregulatory flailing, however, is having an effect. Precisely when the industry is getting serious about the transition to a more diverse, sophisticated, low-carbon grid, precisely when it most needs clear signals and expectations, Trump and his crew are throwing everything into chaos. Especially in an industry with 20- to 50-year investment horizons, that makes planning much more difficult.

Regulatory uncertainty is a real problem in the energy industry. But it’s GOP nihilism, not Obama, that brought it about.

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