The Bipartisan Infrastructure Deal: Wins Big and Small for DERs
The day finally arrived. Last week, President Biden signed the Infrastructure Investment and Jobs Act, also known as the Bipartisan Infrastructure Law (BIL), into law after months of debate. Clearly, infrastructure is about more than just energy, and with $555 billion of new spending authorized, impacts of the BIL will reverberate through many sectors. However, several key provisions in the new law continue the trend we’ve seen from the Biden administration putting climate solutions towards the top of the priority list, particularly around renewable energy sources, carbon capture, and, of course, distributed energy resources (DERs).
While many in the climate activist community will rightly point to outstanding wishlist items, this week, we are celebrating this critical piece of legislation and all it might mean for helping accelerate the buildings-as-power-plants future. The energy transition benefits from big and small wins in the BIL, and below are some of the most top-of-mind for us!
Notable Provisions Impacting DERs in the Bipartisan Infrastructure Law
Batteries
Key provisions:
$3 billion in grants for battery materials processing and another $3 billion in grants for battery manufacturing and “second life” battery usage R&D.
Why is it important?:
It’s well documented that batteries are a critical piece of our energy future given the intermittent nature of energy sources like solar PV and wind. We’ve seen some incredible developments in battery technology in the last few years, enabling an explosion of BTM/FTM battery deployment and EV adoption. However, resource constraints across the value chain (particularly here in the US) have bottlenecked development. These BIL provisions will expand US manufacturing competitiveness by shoring up the supply chain for critical natural resources (like lithium, cobalt, and nickel) and offering incentives to grease the wheels of US-based battery manufacturing. Ultimately, we predict batteries, jump-started by BIL incentives, will continue along a trajectory similar to what we’ve seen from solar PVs and wind: maturation of the supply chain, rapid descent down the cost curve, and explosion into the mainstream.
Electric Vehicles (EVs)
Key provisions:
$5 billion towards deployment of EV charging infrastructure; $5 billion in grants and rebates to support the purchase of electric, hybrid, and low-emissions buses; directives to the Energy Information Administration (EIA) to expand data collection on EV integration with the grid and to create policy aimed at reducing friction for consumer EV adoption.
Why is it important?:
EV chargers are just as capable (and just as important) as other DERs of being nodes in the network of distributed power market participants. As Americans undergo the transition from gas to electric in their garages, we will have access to millions of more endpoints by which to deploy energy management best practices and optimize asset monetization. The BIL uses funding and directives to reduce the friction of this transition, and Blueprint is there along the way to help clients reap the full benefits of EV chargers in their DER portfolio.
Smart Grid
Key provisions:
$3 billion expansion to the Smart Grid Investment Matching Grant Program, a DOE program intended to digitize the grid and enhance flexibility.
Why is it important?:
Software and IoT unlock collaboration between the grid and DERs - a win-win for both sides. Full integration enhances grid capacity and flexibility, which in turn functions as a monetization opportunity for DERs. We’re optimistic that efforts to modernize the “brains” of the grid will trigger more policies building on FERC 2222 (which opened wholesale markets to DERs) and allow for optimal collaboration “across” the meter.
Demand Response
Key provisions:
Mandates via an amendment to the Public Utility Regulatory Policies Act of 1978 that state regulators and publicly-owned utilities consider policies promoting demand response and demand flexibility practices, including appropriate rate mechanisms.
Why is it important?:
A few of the more forward-thinking ISOs in the US have implemented demand response programs that are already helping Blueprint clients realize value from DERs. However, much of the country is not covered by particularly robust retail DR programs, a reality that, if amended, could have a significant impact on our nation’s decarbonization journey. DR programs solve challenges for both the grid and the consumer. For a grid that balances supply and demand, a watt-hour saved is as good as a watt-hour produced. Lack of DR programs raise energy costs and serve as a barrier to entry for renewables adoption. Consumers benefit from a cleaner, more reliable grid and have access to compensation for their participation in load management. Ultimately, this provision puts into law the imperative that more markets at least explore the promotion of DR programs. While impossible to say what the result will be, we view the nudge as a vital development in opening up all US markets to DER participation.
Energy Efficiency
Key provisions:
$225 million to assist states and other jurisdictions in updating building energy codes.
Why is it important?:
“Carrots” are abundant in the market for energy efficiency (for proof, spend a few hours getting lost in this database of available rebates, grants, and tax credits by state). But “sticks” are coming, and building owners need to be just as aware of the potential downside risks of non-compliance as the upside potential of decarbonization and load management. Though this provision is small in dollar amount, it points to the forthcoming efforts state and local governments will make towards updating building codes with modern information and modern expectations.
Taking a Step Back
The BIL isn’t perfect. This version of the bill is pared down from the Biden administration’s original goals. Climate advocates and analysts are vocal in their evaluation that more funding is needed to achieve our collective decarbonization and warming targets. We’re hopeful there’s more to come (including from the Build Back Better bill, which in current form promises even more energy-related funding and is currently working its way through Congress - stay tuned for future blog posts on that as details develop).
But, at a high level, we count a number of major accomplishments in the BIL. Spending will catalyze growth and expansion of the DER supply chain. The bill codifies key energy transition priorities into law, which we hope will only be the beginning of real policy and real dollars deployed. And it establishes guidelines by which collaboration across the meter can be further optimized (e.g., researching repurposing of used EV batteries for front-of-meter grid storage).
For that, we remain as excited as ever about the future of our industry and our vision of a modernized, distributed grid.
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