Attracting Economic Development with Clean Energy
Can a state spur economic development and attract businesses by increasing access to clean energy? Kentucky thinks so. The state is hoping its ideas will attract the attention of companies who are looking to meet their sustainability goals.
Evolving economic trends, technological advances, customer preferences and policy changes have been reshaping the electric power sector across the country. In December 2016, the National Governors Association (NGA) partnered with four states, including Kentucky, on an 18-month effort to help those states consider ways to modernize their power systems and align energy sector investments with state policy goals. The project, known as the Policy Academy on Power Sector Modernization, enabled governor-designated teams from Kentucky, Oregon, Rhode Island and Washington to work closely with each other, leading experts from across the country and NGA staff. State teams collaborated to identify strategies, scope best-practice policies and create in-depth work plans to advance their states’ power sector.
The Kentucky Energy and Environment Cabinet, the Public Service Commission (PSC) and the State Energy Office worked to navigate the issues involved in the power sector’s on-going transformation. The Kentucky team focused on ensuring the state’s economic competitiveness as a manufacturing state by continuing to provide affordable electricity and on meeting the needs of businesses that want to use clean energy to meet their sustainability goals without shifting costs to others.
Through regular consultations with NGA, participation in NGA workshops, interaction with national experts and other states and in-state retreats, the Kentucky team discussed the latest trends and policy ideas, developed and honed project goals and received feedback on an action plan. Throughout the process, the team engaged stakeholders in discussions about the changes occurring in the electricity sector as a starting point for ongoing collaboration and a mutual understanding of the issues. This included hosting six stakeholder workshops with Kentucky’s utilities, industrial and commercial customers, trade groups, consumer and environmental advocates, renewable energy developers and others to hear their thoughts about the changing electricity landscape and suggestions for moving forward.
The effort has already resulted in several important outcomes: Based on their information gathering and analysis, Kentucky published a Consumer Energy Management and Access Guide, recognizing the importance of providing companies seeking to locate within Kentucky with information on ways to access renewable or alternative energy. The Kentucky team examined green energy tariffs and is considering drafting a guide through the PSC to help utilities figure out how best to structure such tariffs. Teeing off of that effort, in late September 2018, Louisville Gas & Electric (LGE) and Kentucky Utilities Company (KU) proposed green tariff options that are currently being reviewed by the PSC (Case: 2018–00295). The Kentucky team also plans to assess tariff design options to support companies seeking to install distributed energy resources — including combined heat and power (CHP) systems — and develop a marketing plan for business recruitment that reflects all the state’s energy sources.
In addition, the Kentucky team will continue their conversations with diverse stakeholders to jointly navigate changes in the electricity landscape. Possible areas of exploration include the potential for renewable energy in the state, the future of utility efficiency and demand-side management programs, electric vehicle charging, ratemaking, and distributed energy resources and microgrids as part of long-term utility distribution planning.
Though Kentucky’s efforts are still in progress, this state provides an example to others that are interested in promoting economic development while grappling with the opportunities and challenges posed by power sector modernization.
Jessica Rackley is a Senior Policy Analyst in the Energy, Environment & Transportation Division of National Governors Association’s Center for Best Practices
