In a step forward in modernising the domestic energy law, the US Senate Energy and Natural Resources Committee (ENR), in February 2020, released the draft American Energy Innovation Act (AEIA). The key objectives of the act are providing clean energy at affordable prices, strengthening grid security and increasing competitiveness through various technical innovations.
The AEIA or S. 2657 is a compilation of more than 50 energy-related measures considered and individually reported by the ENR in 2019. The act has been divided into two sections – Innovation, which focuses on research and development (R&D) of innovative energy technologies, and Security and Workforce, which aims to improve the national security in key areas and facilitate workforce development.
The draft AEIA aims at improving the efficiency of everything from schools to data centres, while promoting weatherisation (weatherproofing) and smart buildings. Further, the draft AEIA supports wind and solar technologies, extends hydropower incentives, modernises marine energy research and advances geothermal energy. So far, the main focus areas of renewable energy have been solar and wind, which got major attention from investors. The draft AEIA has tried to highlight other sources of energy such as hydroelectric and geothermal. To this end, it has extended incentives for hydroelectric production and efficiency; modernised the Department of Energy’s (DoE) R&D work for marine and hydrokinetic renewable energy; directed the US Geological Survey to update its geothermal resource assessment; and boosted technical innovations for geothermal development.
The draft AEIA has a separate section for nuclear energy, given its importance in energy supply chain management. Along with a provision to improve the functioning and performance of the existing nuclear power plants, the draft AEIA amends the Energy Policy Act of 2005 (EPAct05) to authorise an advanced nuclear energy research programme for developing innovative technologies to improve safety, functionality and affordability. It further authorises the Secretary of Energy to carry out a research programme on next-generation light water reactor and advanced reactor fuels through financial year 2025.
Energy storage is key to overcoming the variability of many renewable resources and will help stabilise the electric grid. The AEIA promotes promising storage technologies and facilitates pumped storage from clean hydropower. Section 1301 of the AEIA on battery storage is more robust, and will establish a research, development and deployment (RD&D) programme to advance energy storage technologies. It has directed the Secretary of Energy to carry out at least five demonstration projects, as well as a competitive pilot project grant programme; establish a joint long-term demonstration initiative with the Secretary of Defence; facilitate a technical and planning assistance programme for rural electric cooperatives and municipal utilities; establish an energy storage materials recycling prize competition; and has directed the Federal Energy Regulatory Commission (FERC) to issue a regulation on energy storage cost recovery.
While promoting R&D activities, the AEIA proposes additional responsibilities for the DoE as per the requirements of the current situation. It also renews essential programmes like Advanced Research Projects Agency-Energy and provides strategic direction in groundbreaking areas such as high performance computing. The AEIA includes provisions to modernise federal carbon capture, utilisation and storage (CCUS) R&D efforts and promote direct carbon removal to establish US primacy in these key fields. It supports technological innovations in the industrial and vehicle sectors, which have been the main sources of greenhouse gas emissions, especially through smart manufacturing.
Security and workforce
Bringing all that clean energy and storage on to the national electricity grid requires new investments in planning and infrastructure. The AEIA takes the first step by authorising research and demonstration in two key areas, in addition to grid storage. The first area is performance improvement of power distribution systems across the country that would help grid operators demonstrate that they can integrate and operate multiple forms of energy and storage technology, along with efficiency and flexibility. The second priority is microgrid and hybrid renewable-conventional energy systems, acknowledging that the grid of the future will be a mosaic of interconnected and stand-alone power systems that need to provide clean and reliable energy. Under the AIEA, the federal government will provide state, local and tribal governments with support in demonstrating the feasibility of microgrid and hybrid systems.
Along with securing a healthy power supply chain, the AEIA also focuses on its security. The US’s critical infrastructure, including the electric grid, faces millions of ever-evolving cyberattacks each day. Since a successful attack could have devastating consequences, the AEIA provides new mechanisms and incentives to protect its cybersecurity and modernise the domestic grid. Section 2201 of the act amends the Federal Power Act to include a new section 219A entitled “Incentives for Cybersecurity Investments”. This new section requires the FERC, in consultation with the Secretary of Energy, the North American Electric Reliability Corporation, the Electricity Subsector Coordinating Council, and the National Association of Regulatory Utility Commissioners, to establish incentive-based rate treatments to encourage utility investments in advanced cybersecurity technology and participation in cybersecurity threat information sharing programmes, especially for rural and municipal utilities. The AEIA also focuses on public-private partnerships to promote and advance the physical security and cybersecurity of electric utilities.
The AEIA also talks about the security of the mineral supply chain. The US imports at least 50 per cent of its 46 minerals, including 100 per cent of 17 minerals. This could pose an insidious threat to the national security and international competitiveness. The AEIA complements the administration’s actions and will help rebuild a strong domestic minerals supply chain for the American military and manufacturers.
The key to a gradual shift towards a new and innovative technological era is the availability of skilled human resources. A well-educated workforce to fill jobs in key sectors is crucial for affordable energy. The AEIA addresses the pressing need of both energy-related companies and the National Laboratories to ensure that the US has the best and most highly skilled workers in the world. Section 2304 of the act establishes a 21st Century Energy Workforce Advisory Board to propose a strategy for the DoE to support the development of a skilled energy workforce. In developing the strategy, the board is required to conduct outreach to institutions serving minorities, veterans, and displaced and unemployed energy workers.
The AEIA is a major step towards ensuring the decarbonisation of the economy and could provide incremental building blocks towards progress on an issue where bipartisan support has been evasive. However, in March 2020, the AEIA failed to secure the required senators’ votes as several senators were eager to attach amendments to the act, including a provision on hydrofluorocarbons under CCUS R&D efforts, which sparked the impasse. However, ENR was expecting the act to be passed quickly as it is process-driven and consensus based. ENR will try again to get the AEIA passed on the Senate floor. However, the time frame for this is yet to be specified.