Can "Race to the Top" Work for Energy Innovation?
Reprinted from The Energy Collective - April 27, 2013
by Scott Bittle and Jean Johnson
Improving the nation's power grid is a huge task. Is "Race to the Top" the right model?
Imitation, they say, is the sincerest form of flattery. But is duplicating “Race to the Top” the way to get a new energy grid up and running?
If you don’t keep track of education policy, Race to the Top is the Obama administration’s signature schools initiative, with $4 billion in federal grant money awarded to states in a competition for the best education reform plans. In effect, the plan offers a carrot rather than a stick to states that implement broadly-backed reforms such as “common core standards,” new data systems for measuring progress, and overhauls in how teachers and principals are judged.
Since the Obama administration views Race to the Top as a successful approach, it’s no surprise that the president proposed budget includes $200 million for a similar program to improve the nation’s power grid. Overall, the nation’s electricity grid is aging, and without significant improvements it won’t be able to keep up with current demand, much less make full use of renewable and other new technologies.
So the goal is worthy – but so far the plan is short on specifics. Here, in fact, is everything the president’s budget says on the subject:
Challenges States to Cut Energy Waste and Support Energy Efficiency and Modernize the Grid. Modeled after a successful Administration approach in education reform designed to promote forward-leaning policies at the State level, the Budget includes $200 million in one-time funding for Race to the Top performance based awards to support State governments that implement effective policies to cut energy waste and modernize the grid. Key opportunities for States include: modernizing utility regulations to encourage cost-effective investments in efficiency, including combined heat and power and demand response resources, and in clean distributed generation; enhancing customer access to data; investments that improve the reliability, security and resilience of the grid; and enhancing the sharing of information regarding grid conditions.
Even putting the bureaucratic prose aside, this is obviously going to need to be fleshed out quite a lot before anyone can judge how effective it will be. But here are a few questions based on the education world’s Race to the Top that are worth considering:
Do the states have enough skin in this game? There’s no question that education is a state government responsibility. State and local governments put up the lion’s share of the money for public schools, set the standards, hire the teachers, and face the voters when things go wrong.
The electricity grid, by contrast, isn’t something state governments run directly. It’s something states regulate, with most of the money and the management handled by private utility companies. And it’s more questionable whether voters hold states accountable for the grid. Race to the Top could directly affect decisions made in schools. With the power grid, state policy is one step removed from those actually doing the work. The impact may play out differently.
Is there enough of a consensus on what needs to be done? While Race to the Top could be controversial, generally speaking it promoted ideas that many governors and educators already accepted. States had to implement certain policies even to participate – for example, states couldn’t have any laws preventing them from using test scores to evaluate teachers. Even so, some states, like Texas and Virginia, passed on the federal competition in order to implement their own school plans. And of course, the debate over the state role in health care reform, where many states resisted participating in different elements of “Obamacare,” shows what can happen if states don’t buy into a federal program.
There are certainly models to follow here – the Energy Department’s Strategic Plan for Grid Modernization presents a compelling example. But have governors bought into these plans on what can and should be done about the grid?
Is this enough money to make a difference? In education, Race to the Top dangled a tasty enough carrot in front of state governments to make it worth their while to change policies and develop plans to participate. New York state alone got $700 million in federal money. But $200 million in energy grants spread out over multiple states isn’t going to go very far. The task before us is massive. Some 30 percent of the grid is 40 to 50 years old, in a network that connects more than 15,000 power plants, 220,000 miles of high voltage lines, and another 5 million miles of distribution. Private utilities spend about $5 billion a year on upgrades, and it isn’t enough. New Jersey’s PSE&G alone has proposed spending $3.9 billion over 10 years to strengthen its system after Hurricane Sandy. Overall, the Electric Power Research Institute estimated we need up to $476 billion to modernize the grid nationwide.
Maybe the $200 million could be effective if focused on crucial sticking points in state government policies. But we still need to leverage those changes to encourage the necessary private investment in the grid.
The idea of a “race to the top” for the energy grid is certainly appealing. There’s no question we need new and compelling methods to get states and utilities to the starting line. But it still isn’t clear whether the federal government is envisioning a dash or a marathon – or whether states will want to run the race at all.