This week, Sen. Max Baucus (D-Montana) -- the Senate's top tax writer -- proposed sweeping tax reforms that would favor renewable-energy sources. However, some folks are sounding the alarm that we can't take any more renewable-energy generation without seriously harming our electrical grid. Could that be true?
Our electrical grid was designed a very long time ago, with the aim of providing a steady and predictable power supply. Renewables are neither of those things. They are intermittent energy sources. Consider that sunshine and wind come and go -- so do solar and wind energy generation. Without a place to store that energy, the grid can overload. Similarly, it can come up short during critical demand periods if it relies too heavily on a power source that may not be available at any given moment.
This is not, however, an irreconcilable limitation of the grid itself. Rather, it's the product of a patchwork of inconsistent, confusing, and sometimes contradictory state and federal regulatory frameworks that can inhibit reform and technological advancement.
Catch 22 on the power grid
Consider Entergy's (NYSE:ETR) recent trials and tribulations. The company needed to address the Department of Justice's Antitrust Division's concerns that Entergy had engaged in anti-competitive conduct in certain of its territories. The DoJ was much placated this week when Entergy joined MISO, or the Midcontinent Independent System Operator, a massive regional transmission organization. The DoJ saw this as a strong step toward restoring competition.
The DoJ also wanted to see Entergy sell its grid assets to a third party. Entergy attempted to do so, and struck a deal to spin off its grid assets to ITC Holdings (NYSE:ITC). That deal ran aground last week when the Mississippi Public Service Commission voted it down. The feds and the states are not using the same playbook.
Meanwhile, we're spewing carbon like gangbusters, and we can't go on like this without cooking our planet. Renewables are part of the solution. Doug Arent, executive director of the Joint Institute for Strategic Energy Analysis at the National Renewable Energy Laboratory, co-authored a study showing that we'll have the technical capability by mid-century to rely on renewables for 80% of our electricity. We just have to find a way to get that power on the grid.
Change is coming. Part of it will have to come from our esteemed legislators, but industry is doing its share, too. Improved storage technology will be a critical enabler of expanded renewable grid integration. Duke Energy (NYSE:DUK) is working on it. Duke commissioned the world's largest battery system for its 153 MW wind farm in Texas with a grant from the Department of Energy. If Duke's efforts are successful, it will go a long way toward smoothing the peaks and troughs of renewables' intermittency.
Watch the following video to learn more about the challenges and opportunities associated with getting more renewable energy onto our electrical grid.