Equitable Adaptation Legal & Policy Toolkit

 

Resilient Energy & Utility Industry Measures

Introduction

Two men stand on a rooftop by a recently installed solar energy array.
(Credit: D.C. Department of Energy & Envrionment)

The United States is in the process of transforming how it produces, transmits, and uses energy to produce electric power. This transition presents an opportunity to support and benefit frontline communities that have disproportionately suffered from asthma, among other illnesses caused by toxic emissions and water pollution from electric generation powered by fossil fuels. This transition is being driven by several forces, including a shift away from coal because of old and retiring facilities, the cost of complying with air pollution regulations, flat or declining demand for electricity in some regions from improved energy efficiency, and increased penetration of renewable energy as the costs of solar and wind energy decline. Some state and local governments are also providing policies and incentives for cleaner energy, including renewable portfolio standards and tax credits for cleaner technologies.

Governments and utilities are making significant investments in renewable and clean energy in response to the transformation of the energy system. Investments are being made to modernize the grid, which entails improving transmission infrastructure to make it “smarter” and more resilient through the use of cutting-edge technologies, equipment, and controls that communicate and work together to deliver electricity more reliably and efficiently. Transforming energy systems can include efforts to protect electric power infrastructure against the impacts of climate change by limiting the frequency and duration of power outages, reducing storm impacts, and restoring service faster when outages occur.See footnote 1 These measures can also reduce the output of greenhouse gases (GHG) and pollution by energy systems by introducing more renewable energy. Renewable energy is energy that is collected from renewable resources, which are naturally replenished, such as sunlight, wind, rain, tides, waves, and geothermal heat.

Despite these positive trends, the power sector’s over-reliance on fossil fuels continues to contribute to climate change impacts and unhealthy air pollution in frontline communities. The impacts of climate change — including more extreme heat, sea-level rise, more intense storms, and other climate impactsSee footnote 2 — increasingly threaten all aspects of the energy system that include generation, distribution, and performance.See footnote 3 For example, flooding can cause blackouts by affecting key infrastructures such as substations or transformers, high winds can down above-ground power lines, and extreme heat can cause electricity demand to exceed system capacity.

Reliable energy systems are also critical to sustaining the stability of communities when disruptive climate events occur. Nearly every service that citizens depend on — from medical treatment, to shelter, food, and clean water — is heavily dependent on reliable electricity. In October 2012, communities along the northeastern coast of the U.S. experienced overhead electric wires coming down in Superstorm Hurricane Sandy’s path, which subsequently opened the door for more conversation on what energy resilience really means in the face of climate change. The Superstorm left millions of customers without power weeks after the storm hit and left many low-income, elderly, and disabled residents of New York City’s public housing complexes and high rises stranded without heat and power. In many cases, these residents were unable to leave their homes due to elevator outages or simply due to not having anywhere else to go nor a means of getting out of their homes.See footnote 4 Unfortunately, the need for more resilient energy systems is often deemed most critical only after major climate change impacts devastate communities.

To avoid the impacts of future extreme weather events, the power sector will require significant investment to enhance its resilience – (i.e., the ability for electricity systems to anticipate, absorb, adapt to, and rapidly recover from disruptive events).See footnote 5 Many electric power companies are already beginning to make investments in physical infrastructure to enhance grid resilience and to expand clean and renewable energy sources. These investments include undergrounding of circuits and powerlines, upgrading poles and towers to withstand forceful winds, and providing flood protection for substations. However, these investments alone will be insufficient to address the increasing risks to electric power systems from climate change. Additional investments in modern grid technologies, such as advanced microgrids, can be used to quickly address outages and substantially decrease impacts from electricity disruptions. Implementing smart policies and allowing much-needed innovation within this sector presents opportunities for cost savings for homeowners, renters, and businesses; for better integrating renewable and clean energy sources, and enhancing grid reliability and resilience.

As many cities and electricity companies pursue new approaches to enhance energy resilience, they are also more urgently recognizing the need to consider equity in this work. First, many of the communities that suffer from lack of access to clean, affordable energy are also those that have historically been overburdened by pollution from electricity generation. In many cases, these are the communities that would most benefit from investments in clean, renewable energy sources. Second, as evidenced by Superstorm Sandy and other recent extreme weather events, frontline communities suffer “first and worst” from grid outages and have the least resources and capacity to avoid or cope with impacts. Third, increasing heat waves due to climate change will have dramatic consequences for the health of frontline populations, particularly in urban areas that produce and retain more heat because of high concentrations of impervious surfaces — a phenomenon known as the urban-heat-island effect.See footnote 6 In some cases, redlining — the historic housing practice of restricting lending or insurance in certain neighborhoods based on racial criteria — has concentrated poverty and heat island impacts for low-income residents and communities of color.See footnote 7 As past hot weather events have shown, heat waves are fatal when people lack access to air conditioning due to expense or grid failures.See footnote 8 

Goals for Resilient Energy & Utility Industry Measures

Thus, as cities experience more impacts as a result of climate change, equity should be centered as new investments are made to enhance the resilience of energy infrastructure and to accommodate the increasing demand for energy.See footnote 9 This chapter describes equitable approaches to enhancing energy resilience while focusing on equity, including approaches designed to accomplish the following goals:

  • Ensure energy affordability — Policymakers need to ensure that frontline communities have access to and are benefiting from energy resilience and clean energy programs. Low-income homeowners and renters often lack access to energy efficiency, weatherization, and renewable energy retrofit programs to reduce energy costs for their households. The costs of modernizing and enhancing the resilience of the grid are often perceived as a financial burden for many frontline communities. An equitable approach to transforming, modernizing, and enhancing the resilience of the grid will benefit communities that face the greatest risks to climate impacts and will help to facilitate lower costs to make sure these investments are not disproportionately borne by those who can least afford increasing rates. To ensure equitable solutions, programs should be designed to provide those on the frontlines of climate impacts with access to resources that can help residents reduce energy costs, install or participate in renewable energy programs, and minimize risks from climate-related energy disruptions.
  • Minimize the consequences from grid outages for low-income communities Equitable solutions will also require policymakers to take steps to minimize the consequences from grid outages. For example, grid outages and lack of access to affordable energy can have significant public health consequences, particularly in low-income communities — as shown, for example, in the aftermath of Hurricane Maria in Puerto Rico.See footnote 10 When Hurricane Maria left many communities throughout Puerto Rico without power for months, extended power outages disrupted medical care and contributed to many of the almost 3,000 deaths attributed to the storm.See footnote 11 Minimizing grid outages is essential to community resilience and will protect communities from disruptive climate impacts.
  • Ensure meaningful participation of community residents in energy-related decisionmaking processes & control in outcomes To develop truly equitable and resilient energy systems, community input and greater community control should be prioritized in decisionmaking about how to transition energy systems to address climate change. Community-based organizations around the country are advocating for “energy democracy,"See footnote 12 which will result in the empowerment of the community to have greater input and control in the decisionmaking process. This will in turn create community “ownership” and more public control of energy systems.

The chapter also provides case study examples of how cities and utilities are advancing equitable energy resilience solutions, as well as summaries of the legal and policy considerations that decisionmakers may need to address as they work to advance solutions on the ground. With equity being a twofold approach of process and outcomes, climate adaptation solutions do not always follow equity principles of community engagement. Even in some of the substantively equitable examples cited in this chapter (i.e., outcomes are more equitable than a one-size-fits-all policy), community engagement is not always as deep or meaningful as it can be. Where possible, we have highlighted case studies with strong community engagement practices or made suggestions on how a case study could be replicated in a slightly different way, taking an innovative idea and deepening the strength of the community engagement.

Background

Electricity is generated from the conversion of primary sources of energy — like coal, natural gas, oil, nuclear power, and renewables such as wind or solarSee footnote 13 — and is transmitted through a complex transmission system called the grid. The grid consists of electricity substations, transformers, and power lines that connect electricity producers and consumers. In some regions of the U.S., flows of wholesale electric power are coordinated by an independent system operator or regional transmission organizations (ISOs and RTOs), which may control the dispatch of electricity generation across multiple companies. In other regions, a single “vertically integrated” company may control both the generation of power and the distribution of power to customers.

As electricity infrastructure ages and climate change impacts grow worse, new technologies are being introduced to enhance efficiency and reliability around energy systems, resulting in initiatives around modernizing the grid throughout the country. Grid modernization is a mix of policy changes and infrastructure investments that will allow communities to transition to using more clean and reliable renewable energy sources. The federal government, through the Federal Energy Regulatory Commission, regulates interstate power sales and services, while state governments, through their utility regulatory bodies, regulate retail electric service as well as facility planning and siting.See footnote 14 In order to modernize technologies around energy systems in a sustainable manner, numerous parties are working in concert to incorporate renewable energy sources into the system, adapt and integrate the use of advanced digital technology for enhanced operational intelligence and connectivity, support activities to improve microgrid functionality, and support improvements around energy storage. Transparency and accountability amongst key players will be key to ensuring that equity is centered in decisionmaking at all levels around grid modernization and resilience.

Legal Considerations

Creating a more resilient energy system will present legal considerations that must be navigated to ultimately make more equitable decisions. A few legal concepts that appear throughout the featured case studies are explained below.

Renewable Energy Certificate

A renewable energy certificate (REC) is a market-based instrument that represents the property rights to the environmental, social, and other non-power attributes of renewable electricity generation.See footnote 15 RECs are issued when one megawatt-hour (MWh) of electricity is generated and delivered to the electricity grid from a renewable energy resource. RECs are the accepted legal instrument through which renewable energy generation and use claims are substantiated in the U.S. renewable energy market.See footnote 16 Solar Renewable Energy Certificates (SRECs) are specific to solar incentives.

Virtual Net Energy Metering

Under a typical net energy metering (VNM or VNEM) system, customers who generate their own solar energy can receive a financial credit on their electric bills for any surplus energy sold back to their utility. The CPUC defines virtual net energy metering as “a tariff arrangement that enables a multimeter property owner to allocate the property's solar system's energy credits to tenants.”See footnote 17

Key Players

Creating a more resilient energy system will require collaboration among different stakeholders that include electric system owners, operators, regulators, and consumers who must navigate numerous technical, legal, and policy issues to make decisions. This requires those that will be affected by, and will have roles to play in, advancing equitable solutions to energy resilience. Key players include the following:

  • Ratepayers and community stakeholders Residents, businesses, and ratepayers will be directly affected by grid outages and energy cost increases and will be the direct beneficiaries of investments in grid reliability and clean energy technologies.
  • The UtilityThe electric utility is an investor-owned company or a publicly owned entity that controls the distribution of energy in a city or region and often has a monopoly (by virtue of franchise agreement) to supply energy within a service area or region.See footnote 18 In some states, a utility may also generate the electricity that it distributes, while in other states, separate companies are responsible for generation. Electric utilities will be responsible for making investments in grid resilience and clean energy and for recommending rate increases to pay for these improvements.See footnote 19
  • The Utility Regulatory BodySee footnote 20 – Utility commissions or boards are the governing bodies that regulate utilities and are charged with protecting the public interest. These entities regulate the services provided by public utilities and set standards and provide oversight for safety and reliability. To protect consumer interests, utility commissions also have the authority to approve the allowable rates that utilities can charge and the rate increases needed to recover costs for grid enhancements.See footnote 21 Many utility commissions and boards can play a role in requiring utilities to invest in resilience and grid modernization. (For example, see the case study of the New York City Parties to the Storm Hardening and Resiliency Collaborative Report: Joint Agreement).
  • City AgenciesCity agencies (including, for example, environment, sustainability, and public works agencies) will also have roles to play in advancing energy resilience; however, these roles will vary by city based on the statutory mandate of agency authorities and the parameters of existing programs. City agencies often administer funding programs or offer incentives that support investments in weatherization, energy efficiency, renewable energy, and other technologies and services that can be used to enhance energy resilience. Elected officials (mayors and city councilmembers) often also have some authority to appoint utility commissioners and to pass legislation governing how commissions regulate the electric utility.

Policy Tools

This chapter explores different ways that cities are enhancing energy resilience and equity by engaging the community, giving community stakeholders control in the decisionmaking process, and focusing on the following policy options:

  • Enhancing Access to SolarPrograms and policies can help reduce energy cost burdens and lower GHG emissions by prioritizing access and funding for solar programs for lower-income homeowners and owners of affordable multi-family housing, including by expanding opportunities for community solar. Cities can also combine funding sources to ensure that other needed housing retrofits can be made when, for example, roof conditions, building code violations, or lead remediation issues that currently present a barrier to solar installation.
  • Implementing Equitable Investments in Grid Resilience Utilities can develop investment plans for upgrading and modernizing the grid centered in equity and considering socioeconomic vulnerability to enhance energy resilience.
  • Supporting the development of resilience hubsClean-energy powered “resilience hubs” with battery storage can provide critical emergency response services in areas with greater socioeconomic risk, while also providing broader grid modernization benefits. The Urban Sustainability Directors Network (USDN) defines resilience hubs as “community-serving facilities augmented to support residents and coordinate resource distribution and services before, during, or after a natural hazard event” and has stated that they are designed to “reduce the burden on local emergency response teams, improve access to emergency services, foster greater community cohesion, and increase the effectiveness of community-centered institutions and programs.”See footnote 22
  • Enabling Public Purpose MicrogridsCommunities are increasingly looking to develop or encourage the development of public-purpose microgrids, powered by distributed energy resources with energy storage, which can maintain power for critical community assets (e.g., hospitals, senior care facilities, schools) during a wider grid outage by islanding off from the main grid.See footnote 23 Microgrids can provide a range of resilience and equity benefits, including ensuring that critical services for frontline populations are not disrupted during power outages, increasing community ownership and control of energy generation and storage, reducing energy costs for critical community assets, and enhancing broader grid resilience.See footnote 24 States and local governments can adopt programs and policies to create incentives for microgrids, to reduce legal barriers to deployment, and to support efforts to capitalize on both the adaptation and mitigation benefits from microgrids.

 

Tools

Enhancing Access to Solar Energy

According to several studies, onshore wind and solar are the cheapest energy sources, so when working to create equitable resilient energy solutions for cities all over the country, creating access to solar can be a cost-effective priority for communities and local governments looking to introduce more readily accessible renewable energy resources. Cities can provide financial resources to help increase access to solar energy for lower-income homeowners and renters. Programs and policies to expand access to solar programs for low-income homeowners and owners of affordable housing can help reduce energy cost burdens and lower GHG emissions. Cities can also combine funding sources to ensure that other necessary housing retrofits can be made when, for example, roof conditions, building code violations, or lead remediation issues present a barrier to solar installation.

Implementing Equitable Investments in Grid Resilience

Efforts to modernize the grid provide a critical opportunity to integrate new technologies and enhance energy resilience, while also addressing considerations of equity and socioeconomic vulnerability. The high costs of investments in grid resilience are often passed on to ratepayers and must be weighed against the value of future benefits to the public. By explicitly considering and centering equity, utilities and other key players can help to address historic underinvestment, pollution burdens, and the disproportionate climate risk in frontline communities, and can work to minimize or avoid rate increases for lower-income and fixed-income ratepayers. 

Supporting the Development of Resilience Hubs

Clean-energy powered “resilience hubs” with battery storage can provide critical emergency response services in areas with greater socioeconomic risk, while also providing broader grid modernization benefits. Resilience Hubs are defined by USDN as “community-serving facilities augmented to support residents and coordinate resource distribution and services before, during, or after a natural hazard event.” At a minimum, a resilience hub should be able to provide emergency services during extreme events — including offering the community a place to gather to obtain information, receive emergency supplies, store and refrigerate medical supplies, receive basic medical care, charge electronic devices, and access the internet.

Enabling Public Purpose Microgrids

Communities are increasingly looking to encourage the development of public-purpose microgrids that, powered by distributed energy resources with energy storage, can maintain power for critical community assets (e.g., hospitals, senior care facilities, schools) during a power outage. Identified as a prominent solution to modernizing the grid, microgrids are portions of the electric grid which are powered by distributed energy resources (DER), like solar and energy storage, that can operate either independently, or as part of the larger grid.

Funding Tools for Resilient Energy

Depending upon which options municipalities, utilities, or individuals implement or take in an effort to utilize equitable resilient energy and electric power sector measures, financing or funding options may be made available through the federal government, nonprofits, private businesses, local governments, and other sources. 

  Funding Tools for Natural Resilience Enhancing Access to Solar Energy