Don’t keep doing what you’re already doing

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You’ve probably heard by now that Senator Joe Manchin (D-West Virginia) reportedly won’t sign on to climate legislation that penalizes utilities for burning fossil fuels.

What does that mean for U.S. climate policy? Canary Media’s Jeff St. John tackles that question in a new story about fresh research from think tank Energy Innovation.

The short version: Stripping the penalties undermines the key driver of President Biden’s carbon-reduction strategy. If legislators excise the utility carrot-and-stick policy known as the Clean Electricity Performance Program, they’ll forfeit more than a third of the legislation’s carbon-reduction potential, according to the study.

Indeed, the very effectiveness of the CEPP at restructuring the power sector puts a target on its back. 

A Manchin spokesperson told Coral Davenport of The New York Times that the senator’s opposition comes down to good stewardship of taxpayer dollars:

“Senator Manchin has clearly expressed his concerns about using taxpayer dollars to pay private companies to do things they’re already doing.”

That’s misleading. It’s true that many utilities already build clean energy. Indeed, clean power plants dominate nearly all new power plant capacity coming online in the U.S.

But building new plants is not the same as shutting down dirty old ones, Jeff explains.

The big problem with eliminating the penalty side of the CEPP is that it’s the sole federal policy mechanism being contemplated to push utilities to close coal and natural-gas power plants faster than they would otherwise be shuttered under business-as-usual conditions. It’s the only stick that’s proposed to do the job. 

“Business as usual” includes bountiful opportunities for utilities to prolong the life of old fossil plants, even when they cost customers more to run than new clean power. Monopoly power, outdated market rules and compliant regulators all create openings for this sort of uneconomic behavior.

It’s a clear case where utility profit motives don’t align with what’s good for the climate. That’s because policy hasn’t given them a reason to. Now it looks like that situation will persist.

Doing what nobody else is doing

That Washington, D.C. news ultimately upholds the status quo, but our next story is all about disrupting it.

Did you see the video I made a few weeks ago about the company turning old Nissan Leaf batteries into grid storage?

That developer, B2U Storage Solutions, self-funded its project to show it could do what nobody’s really done on a commercial level: repurpose electric vehicle batteries as cost-effective secondhand storage.

Now I’ve learned that the company just raised $10 million to grow the concept. Japanese trading firm Marubeni led the Series A.

“Marubeni believes B2U’s business model demonstrates how the auto industry can turn potential challenges into compelling business opportunities in a very eco-friendly way,” said Minako Wakayama, head of Marubeni Power International.

Outside investment means we should start seeing more power plants putting used car batteries to work as low-cost energy storage. Now the question is whether this technology stays on the fringes of the storage industry or gets picked up by the developers that build hundreds of megawatts of storage.

Winning those customers will take data and real-world experience, which B2U is generating now.

This kind of work is the opposite of private companies doing things they’re already doing. It’s a business taking a bet that more conservative peers aren’t ready to make. This makes the industry more dynamic, not to mention more interesting to cover.

I’m reminded of LS Power, which self-funded its Vista battery in 2018 to figure out how to make money in California’s power markets.

• That was at a time when developers wouldn’t build anything without locking down ironclad revenue commitments from utility contracts. 
• LS Power then used what it learned from Vista to build Gateway, the biggest battery in the world when it debuted in 2020.

We’ll have to wait to see if B2U’s pilot really does lead to bigger and better things. But at a time when cleantech companies are going public without having commercially operating projects to point to, B2U’s walking the walk — and then going out to raise money.