The year 2020 ended on a promising note for the US energy sector. The Energy Act of 2020, which is a comprehensive update of the US federal energy policies over 13 years, was signed into law by the former US President as part of the Consolidated Appropriations Act 2021.
Significantly, the Energy Act of 2020 embodies bipartisan provisions from the Senate’s American Energy Innovation Act (AEIA) or S. 2657 and the House’s Clean Energy Jobs and Innovation Act or H.R. 4447. In all, it includes parts or all of 37 different Senate bills across its 11 titles. Broadly, the Energy Act establishes or reauthorises various programmes envisioned to facilitate innovations and breakthroughs in renewable and clean energy technologies, authorising an investment of USD35 billion in clean energy research, development and demonstration programmes over the next five years. The idea is to reduce greenhouse gas emissions from the power sector, industry and buildings while keeping the country’s energy affordable and globally competitive.
The legislation focuses on energy storage; advanced nuclear; carbon capture, utilisation and storage; carbon removal; renewable energy; critical minerals and materials; fusion; industrial technologies; smart manufacturing; and grid modernisation, among other areas. It reauthorises essential programmes like Advanced Research Projects Agency-Energy (ARPA-E) and Weatherization Assistance. It also includes various measures intended to bolster energy efficiency and brings administrative reforms to improve the Department of Energy (DOE).
The following are some of the key provisions of the Act.
Energy efficiency: The Act aims to improve the efficiency of everything from schools to data centres while promoting weatherisation and smart buildings. It contains several technology-oriented and technology-neutral measures to boost energy efficiency. It directs the Secretary of Energy to establish a rebate programme to encourage the replacement of energy inefficient electric motors and transformers.
Nuclear energy: It requires the Secretary of Energy to establish a programme to support the availability of high-assay low-enriched uranium (HA-LEU) for civilian domestic research, development, demonstration (RDD), and commercial use; and reauthorises DOE’s nuclear energy RDD and commercial application (CA) activities. The Act amends the Energy Policy Act of 2005 (EPAct05) to update the definition of advanced nuclear reactor, ensure coordination with other DOE activities, and include a biennial budget plan update. It authorises an advanced reactor demonstration programme, funding for the versatile test reactor, educational programmes, as well as an international coordination effort.
Renewable energy and storage: The Act reauthorises DOE’s marine, hydropower, geothermal, wind and solar energy RDD and CA programmes and establishes a wind technician training grant programme and an advanced solar manufacturing initiative to enhance domestic manufacturing capabilities. It has extended incentives for hydroelectric production and efficiency (up to 2036); directed the US Geological Survey (USGS) to update its geothermal resource assessment; and boosted technical innovations for geothermal development. It requires the Secretary of the Interior to set national goals for wind, solar and geothermal energy production by September 1, 2022 and to permit at least 25 GW of electricity from such sources by 2025.
It requires the Secretary of the Interior to set national goals for wind, solar and geothermal energy production by September 1, 2022 and to permit at least 25 GW of electricity from such sources by 2025.
The Act establishes an RDD programme to advance energy storage technologies and directs the Secretary of Energy to carry out demonstration projects, as well as a competitive pilot project grant programme; establish a joint long-term demonstration initiative with the Secretary of Defense; facilitate a technical and planning assistance programme for rural electric cooperatives and municipal utilities; and establish an energy storage materials recycling R&D programme. It authorises USD1 billion over five years for federal innovation investments in energy storage technology and RDD.
Carbon management and carbon removal: The Act directs the Secretary of Energy to conduct RDD and CA activities for carbon capture, storage, large-scale sequestration, utilisation and high efficiency turbines. It also establishes an RDD programme to examine the methods, technologies and strategies to remove carbon dioxide from the atmosphere on a large scale.
Grid modernisation: The Act reauthorises the smart grid demonstration programme in the Energy Independence and Security Act of 2007, and adds the commercial application of distribution automation technologies to the programme goals. It also authorises RDD and CA on development of grid architectures for a modern grid; operation and controls of the grid; interoperability of emerging technologies with existing electric grid infrastructure; and underground transmission and distribution lines. Further, it authorises DOE RDD activities on integrating renewable energy and electric vehicles into the electric grid. It directs the Secretary of Energy to submit a 10-year strategic plan on integrated energy systems; establish a grant programme to carry out grid modernisation projects, including for distribution system technologies; and establish a programme to promote development of integrated micro-grid systems for isolated communities and micro-grid systems to increase critical infrastructure resiliency. The Secretary can award grants up to USD15 million annually to assist municipal governments, rural electric cooperatives and isolated communities in overcoming identified barriers.
It requires the Secretary of Energy to prepare and submit a report to Congress on the evaluation of the performance of the grid and a description of the costs and benefits identified in grid modelling and visualisation work. Meanwhile, the National Academies will conduct an evaluation of the current challenges associated with net metering and report on new and alternative technologies to improve net metering. The Act authorises over USD1,335 million over five years for federal investments in grid modernisation technology and RDD.
DOE Innovation: The Act establishes a new Office of Energy Technology Transitions, the mission of which will be to expand the commercial impact of the research investments of DOE and to focus on commercialising technologies that advance the missions of DOE. The Act amends the EPACT05 to defer collection of fees and other expenses from applicants until financial closing, and expand project eligibility.
The industry response to the Energy Act of 2020 has been quite positive. The Act is a major step towards ensuring decarbonisation of the US economy by fostering innovation across the spectrum of technologies that are critical for the country’s energy and national security as well as long-term economic competitiveness.
The article has been sourced from Global Transmission and can be accessed by clicking here