Lessons learned from New York REV: A roadmap to reduce emissions through utility reform

The aftermath of extreme weather events calls for action. Recently, devastating hurricanes, wildfires in California, and the “bomb cyclone” in the northeast have reminded us of our vulnerability to climate change and the strength it takes to rebuild our communities. Months after the effects of Hurricane Maria, much of Puerto Rico remains without power – a painful reminder of the extent to which we rely on electricity, and the work required to maintain the electric grid.

Ensuring reliability of the electric system is integral to protecting our cities and states in the future. After restoring power to millions of New Yorkers in the wake of Superstorm Sandy, Governor Cuomo planted the seeds of overhauling the state’s electric system, which lead to the Reforming the Energy Vision (REV) initiative, an effort to build a cleaner, more reliable, and affordable grid. REV looks to create effective market mechanisms that lead to long-lasting solutions for utilities, customers, and a carbon-free environment.

Part of achieving this vision is decarbonization, or eliminating the use of dirty fossil fuels, which emit more than two-thirds of the United States’ carbon pollution. Environmental Defense Fund’s new whitepaper, “Driving Environmental Outcomes through Utility Reform: Lessons from New York’s REV,” looks at how electric utility reform, specifically New York’s REV, can accelerate decarbonization. The paper outlines fundamental criteria for electric utilities’ modernization efforts to bring about environmental benefits, mainly: building smart platforms to deploy clean energy resources cost-effectively, aligning utility earnings with environmental outcomes, and engaging customers as market participants.

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A state’s vision

New York aims to reduce carbon pollution from the electric sector by 40 percent from 1990 levels, with 50 percent of its electricity coming from clean, renewable sources by 2030. Significant investments are being made to ensure these goals are achievable within the next 13 years, but the state’s commitment to reducing emissions 80 percent from all sectors of the economy by 2050 will require transformations in how energy is used and where it comes from. REV reforms establish a framework that firmly positions the electric sector to play a key role in how these changes take place.

To achieve this, a significant reduction, or outright cessation of fossil fuel use is the path forward. As the electric system grows increasingly cleaner, it’s poised to support decarbonization by converting fossil fuels’ traditional uses, such as transportation and heating, to carbon-free electricity.

REV is providing a great opportunity to implement these changes and reduce harmful emissions. Leveraging increasing levels of utility-scale renewable energy, targeted investments in energy efficiency, and the effective integration of distributed energy resources, such as rooftop solar, allow the state to pull multiple levers and influence different parts of the economy to stimulate market opportunities that will bring benefits to people, private industry, and utilities.

Accelerating the elimination of fossil fuels

Looking through the lens of New York’s experience, the whitepaper highlights the three foundational components necessary to ensure reform efforts can produce favorable environmental outcomes.

The first component is the creation of an intelligent, transactional platform to accelerate the transition of today’s grid from one-directional, to multi-directional. Through this platform, referred to as the Distribution System Platform, customers and private industry will have access to electricity use information previously known only to the utility. This platform will open the door for new and innovative solutions that would not have been possible before. This can help utilities and the market deploy energy resources to maximize efficiency and minimize costs.

Finally, customers should be viewed as more than just meters at the end of a wire. They should be treated as active participants in the health and wellbeing of the electric system. Individuals who can generate electricity (like through rooftop solar) or reduce their demand (through energy efficiency) will collectively play a significant role in the reliability of the system. Market signals and timely access to electricity-use information will be essential to ensure their participation. To fully decarbonize the system, all electricity users will need opportunities to participate and be rewarded.

An electric grid for the future

The electric grid of the future will deliver more than just electricity. It will deliver new business opportunities and policy outcomes to a wide array of stakeholders, while operating in a sustainable and environmentally-conscious way. It will be flexible and able to manage the intermittency of some renewable energy resources, and ultimately be the foundation of our transition away from dependency on fossil fuels.

Reform efforts such as REV will play a key role in helping utilities build this future, and EDF will continue advocating for ways to ensure the electric grid’s transformation is most beneficial to the environment and all stakeholders involved.