A customized approach to individual projects and problems is necessary as the world moves to upgrade, expand and in some cases completely rework its energy infrastructure.
“If we’re not going to get federal legislation, then regulations and standards assume great importance,” Alstom Senior Vice President Joan MacNaughton told Breaking Energy following the Economist Group’s Global Energy Conversation in November. MacNaughton participated in the event following her role as Executive Chair of the World Energy Council’s 2011 Energy Policies Assessment Report.
Integrating renewables, operating the smart grid and bringing on line new infrastructure will be made easier and cheaper by a degree of interoperability, MacNaughton stressed, which in turn means establishing standards. The longer governments and professional bodies wait to establish standards, the more it will cost consumers, MacNaughton said; she cited recent work by the International Energy Agency that estimated delayed implementation of new energy infrastructure to tackle climate change would hugely increase the cost of adding that infrastructure in the future.
Looking For Guidance
“Governments are key players” in establishing the mix of standards and incentives that should be applied to new energy projects, MacNaughton said, and in determining which standards should be mandatory. “Generally, if you want to drive efficiency gains, you’ve got to have strong mandatory standards,” MacNaughton said, with careful analysis preceding implementation and trailing action by regulators to follow up.
“The real issue is deciding the most effective mix of risk allocation, standardization and regulation for each individual project,” she said, with land transport, energy efficiency and financing of energy technology the top priorities for government and regulation-led change.
Governments also have a role in paying for new and rebuilt energy infrastructure, MacNaughton said, although program design can be the determining factor for whether new infrastructure is built most efficiently or whether taxpayers end up subsidizing inefficient projects. “In the end paying for [new infrastructure] is down either to the taxpayer or the consumer, and taking risk onto the national, rather than the commercial, balance sheet can reduce costs of capital and could be the most effective [funding mechanism].”