It was the kind of dry table that takes place at hundreds of industry conferences each year, until a Google representative decided it was time to unleash it.
“This is personal to me,” Jamey Goldin, Google’s energy regulatory attorney, told attendees at a May conference in Atlanta on renewable energy in the Southeast. He said he had grown up on a ridge overlooking Plant Bowen, a coal-fired power plant northwest of Atlanta owned by Georgia Power, the state’s dominant electric company, and then directed his comments to a lobbyist of the company’s parent company. on the panel: “You’ve got a lot of coal running up there, a lot of smoke rising into the air.”
Overturning the system that puts nearly all power generation in the Southeast in the hands of utilities like Georgia Power “would get a lot more renewable energy online and a lot of that dirty energy offline,” Mr. Goldin added.
But the outburst was more than personal. It was part of a far-reaching campaign by Google to power its operations with increasing amounts of electricity from wind, solar and other carbon-free generation sources.
Google, Meta, Microsoft and Apple, among others, have made eliminating their carbon emissions a prominent corporate goal, and have set not-too-distant deadlines for getting there. Google wants to buy enough carbon-free electricity to power all of its data centers and campuses around the world without interruption by the end of this decade.
The corporate quest to quickly secure large amounts of renewable energy faces major challenges, however, particularly in the Southeast, one of the nation’s fastest-growing regions. And Google’s battle in the region, where it has a large concentration of data centers, raises a question that applies to the energy transition everywhere: Is what’s good for a few companies good for all?
At the heart of their campaign, Google and its tech giant allies want to dismantle a decades-old regulatory system in the Southeast that allows a handful of utilities to generate and sell the region’s electricity, and replace it with a market in which many companies can compete to do so.
Such markets exist in some form across much of the country, but businesses in the Southeast are staunchly defending the status quo. Top utility executives say their system better insulates consumers from price spikes for commodities like natural gas, promotes reliability and supports the long-term investments needed to develop clean energy technologies.
“We are absolutely superior in every respect to these markets over time,” Thomas A. Fanning, chief executive of Southern Company, Georgia Power’s parent, said in an interview.
A revolution averted
Most electricity in the United States was long generated and distributed by highly regulated monopoly utilities in each state. But just before the turn of this century, lawmakers and regulators, arguing that competition would bring efficiency, allowed energy markets to be established and utility dominance to end, a revolution that bypassed the Southeast .
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- Goal: John Carmack, a pioneer in virtual reality technology, is leaving Meta after more than eight years with the company.
- Foreign workers: As cutbacks hit the tech industry, some foreign nationals on work visas face the daunting prospect of having to leave the U.S. unless they are hired within 60 days of being fired.
Google and others say the marketplaces have brought cost savings, innovation and the capital needed to increase clean energy generation from wind and solar. The most recent move to a form of electricity market, in a group of western states, has saved nearly $3 billion since 2014, according to the market operator.
Self-interest also plays a role: in electricity markets, big companies can strike deals with independent producers that give them more room to negotiate price and ensure more clean energy. Google signed a landmark deal last year to provide clean energy to its data centers in Virginia, which is in an expanding market called PJM.
Now supporters of the approach have a chance to usurp public services in the South East. South Carolina passed a law in 2020 to explore the creation of an electricity market, a move considered notable for the influence that utilities have in state capitals; similar legislation failed to advance in North Carolina last year.
Tom Davis, a Republican state senator in South Carolina who spearheaded the bill, said the current regulatory system financially rewarded utilities even when they messed up. “There’s no incentive for them to go out there and try to find somebody who has built a better mousetrap and can generate cheaper energy,” he said.
Creating an electricity market in South Carolina is one option, but Caroline Golin, Google’s global head of energy market development and policy, went further at a legislative hearing in July, raising the possibility that South Carolina be removed from the Southeastern public service system and join. . PJM.
“We can be a model for the rest of the region and indeed be a model for the rest of the country,” he said.
Markets and renewables
Major utilities in the Southeast are now building more solar projects, but those pushing a market in the region say it’s not enough.
In the region, the generating capacity of proposed solar projects is just over a quarter of total capacity, which is well below PJM’s 80 percent, according to an analysis by Cypress Creek senior executive Tyler Norris Renewables, a solar company. company, and a special adviser to the Department of Energy during the Obama administration.
“Project developers are attracted to open wholesale electricity markets with price transparency, independent oversight and the ability to negotiate with multiple potential customers.” Norris said.
To show how markets can fuel the growth of renewables, supporters sometimes point to Texas, whose electricity market, ERCOT, is one of the least regulated in the country. Last year, wind power accounted for nearly 23 percent of Texas’ generation, up from 8 percent in 2011.
Critics say the Texas market system caused much of the fragility that caused power outages during the winter storm that was responsible for more than 200 deaths in 2021. But others point out that ERCOT was structurally isolated from the markets neighboring electrics, which prevented him from drawing energy from them. areas where ERCOT market plants froze during the storm.
In addition, some experts question the degree to which markets drive the growth of renewables, saying that the geography and climate of certain states lend themselves to wind and solar power. With its vast, gusty open spaces, Texas is naturally ripe for wind power.
“We’ve seen more wind and solar in areas where markets have been deregulated,” said Severin Borenstein, a professor of business administration and public policy at the University of California, Berkeley, who specializes in energy economics. renewable “But I think this is more of a geographic and political phenomenon than a market phenomenon.”
And in the Southeast there is evidence that government mandates can do more than markets to promote the growth of renewables.
In North Carolina, where lawmakers have long pushed for solar energy development, the power source accounted for 7.6 percent of net generation last year, well above the average national and twice the share of neighboring Virginia, in one market.
“We expect North Carolina to continue to be a leading state for solar energy,” said Erin Culbert, a spokeswoman for Duke Energy, which is a major utility operator in the Southeast.
A matter of reliability
One of the criticisms of regulated utilities that lack market competition is that they are rewarded for building unnecessary generation capacity because it increases the basis on which rates are set. Ms. Golin said a market would remove that incentive and reduce costs without affecting the system’s resilience under stress, based on Google’s experience in areas with electricity markets.
But executives at Southeast companies say their reserve capacity contributes to their higher scores on a national reliability assessment, a growing concern as climate change produces more extreme weather events.
And they say one of the biggest flaws in electricity markets is that they don’t support the operation and construction of nuclear plants, which executives say will provide uninterrupted carbon-free power that will bolster the reliability of their more intermittent grids. renewable energies are introduced. Revenue streams from the more regulated system provide the financial stability to support nuclear plants, they argue.
“We are the only company building a nuclear plant in the United States,” said Mr. Fanning, South’s chief executive, said. “I couldn’t have built it in PJM or ERCOT.”
There have been cost overruns and delays at the Southern nuclear project in Georgia, and a South Carolina project was shelved after the two utilities developed it well over budget, problems Mr. Davis, the state senator, said the regulatory system encouraged itself by allowing utilities to assume that taxpayers would inevitably provide support.
But operating nuclear plants are giving the region some of the highest carbon-free ratings in the country. More than 60 percent of South Carolina’s generation was carbon-free by 2021, mostly from nuclear plants, compared with 35 percent in Texas, according to the Institute for Energy Economics and Analysis financial
Google includes electricity from nuclear plants as clean energy when calculating carbon-free scores for its data centers, which mostly appear cleaner in the Southeast than in the Texas power market.
“There’s a disconnect between Google relying on clean nuclear power for its data centers while pushing for markets that have virtually halted nuclear construction everywhere they’ve been deployed,” said Mark W. Nelson, CEO of Radiant Energy Group, an energy consultancy. “What’s faster and cheaper for Google isn’t necessarily best for society in the long run.”