The Electrification Agenda: Separating Fantasy from Reality

As our reliance on electricity grows due to a mix of market forces and government intervention, our ability to reliably generate it is increasingly diminished by poor policy choices that threaten the wellbeing of Americans. Fortunately, as part of our Essential Policy Solutions for 2023, the American Legislative Exchange Council has model policy that can help states on the supply side of the equation, but before we get to that, let’s take a look at what is driving these issues.

Last week, PJM Interconnected, the grid operator supplying energy to 13 states and over 65 million Americans, released a report detailing the growing mismatch between demand and the construction of new power generation sources, particularly intermittent sources such wind and solar. The report also points out that the retirement of traditional power plants, which are being pushed out of the market largely due to the heavy hand of government regulation, risks leaving consumers with an even lower supply while demand is only increasing.

According to the report, demand is increasing due to the increasing proliferation of industrial data centers and general electrification. When it comes to electrification, too many politicians are attempting to use big government to force residential buildings to use electricity-based heat pumps, accelerate America’s transition to electric vehicles, and require property owners to switch from gas to electric stoves.

Although Vermont isn’t part of PJM’s region, the state is a perfect case study in what is happening on both the supply and demand side of this equation. A number of state policymakers are pushing for an electrification agenda by introducing bills such as Vermont’s S.5 bill, the inaccurately named Affordable Heat Act. If passed, the Act would create a new tax on fuel dealers that would then be used to subsidize residents weatherizing their homes and transition to electricity-based heat pumps.

Leaving aside the radically different estimates of how much this subsidization would cost Vermont taxpayers, this bill would negatively impact nearly 60% of homes in the Green Mountain State that rely on fuels to heat their homes. According to the Energy Information Agency, “Although only about 1 in 12 Vermont households use electricity as their primary home heating source, the residential sector accounts for two-fifths of the state’s electricity consumption.”

According to the latest edition of ALEC’s Energy Affordability Report, Vermont ranks 8th worst in terms of least affordable electricity costs in the nation, and creating an artificial increase in demand is only going to increase costs.

Meanwhile, the Green Mountain State shut down the nuclear reactor that once supplied nearly 50% of the state’s electricity generation portfolio in 2014, signed on the Regional Greenhouse Gas Initiative, and, as a result, began having to import more than 50% of their electricity from out of state. They also enacted a Renewable Portfolio Standard, with more than half their electricity generated by renewables and 23% generated by biomass in the form of wood, which, while technically renewable, releases more carbon dioxide than coal. Interestingly, about 1/3rd of all children attend schools that are heated by wood.

So how exactly is the state going to power all of these new electricity-dependent heat pumps, that will be most in-demand during inclement weather when the state’s solar and wind generators are most likely to be offline?

While our reliance on electricity has grown, our ability to produce it has not kept pace. According to the PJM report, the rate of completion for new renewable energy projects hovers around a dismal 5%. On ALEC’s recent trip through four of the six New England states that constitute the region’s power grid, the concerns echoing in the halls of every single one of the statehouses remained uniform: how are we going to move to complete electrification when we cannot even generate enough power now?

Mandating that people in areas with severe weather – especially cold weather – rely on the electrical grid for heat during the winter, in service of a political agenda while ignoring the real-life realities, is simply cruel. This last year at least four people died in Buffalo, New York due to freezing in their homes from a lack of power. Where the rubber meets the road, putting everyone’s eggs in the proverbial electrification basket is simply bad policy.

For lawmakers looking for a legislative solution, ALEC has a model policy called the Electric Generation Facility Closures and Reliability Act. The Act would prevent shuttering traditional power plants before new generation sources that can fully replace the ones being shut down are online and ready to operate.

In Depth: Energy

It is difficult – and perhaps even impossible – to overstate the relationship between readily available access to safe, affordable and reliable energy and individual prosperity and economic wellbeing. This is because energy is an input to virtually everything we produce, consume and enjoy in society. Think for a minute…

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