Utilities have shown tremendous leadership in their response to the COVID-19 crisis and have the opportunity to re-emerge stronger. However, they’re finding a lot has been published on the policy changes that will allow them to accelerate economic recovery through energy transition. So how do they cut through the noise and make sense of it all?

The energy policy environment is unique, and the responses numerous…

We’re in a unique policy environment, with COVID-19 drastically affecting energy investment and employment. While GHG emissions and air pollution have declined in the short term (the IEA points to a 66% reduction in NO2 in New Delhi during the first weeks of lockdown)—how will stimulus responses affect both the economy and the energy transition? And what does all of this mean for jobs, health and society in the round? Over recent months, utilities have shown that, when the chips are down, they can really lead. But to continue to lead, they’re going to need clarity.

A huge amount has been published, with Accenture meta-analysis identifying more than 110 individual policies or policy recommendations across just 13 organizations. From these, over half were market mechanisms, including:

  1. de-risking financing of renewable builds or emerging technologies
  2. reductions in fossil fuel subsidies
  3. contracts for difference to be used in procurement

Investment in infrastructure and technology development were evenly split.

Meanwhile, the Oxford Smith School found that policy experts recommended focusing on infrastructure and investment in clean energy research and development. Both are perceived as effective on climate goals and long-range economic recovery.

So how do utilities unpack and evaluate the options?

First, let’s reflect on value and how to quantify it. “System value” may be the right lens for policymakers and energy system stakeholders to make decisions about economic recovery. Why? Because system value is broader than the levelized cost of energy (LCOE) and includes the societal value that a clean energy transition will deliver. And that means reducing emissions and water usage; improving air quality and health; creating jobs; constructing a system that is scalable, resilient and reliable—and delivers energy to areas that cannot easily be connected to a central grid. Shifting the narrative of the energy transition to system value is critical to achieving a green recovery.

So, what does that mean in practice? An example of a policy that delivers on system value is transmission investment in the USA—further connecting wind rich areas with demand, stimulating job creation, unlocking congestion and driving up renewable capacity (while delivering net benefits for consumers). We have estimated up to 110,000 net jobs benefit per annum, alongside a >3.5% reduction in GHG emissions by 2025.

India provides an example of an equivalent policy in another market. Our analysis suggests renewable energy zones that facilitate the land acquisition, grid connection, and development of utility scale solar, wind, and storage (an evolution of India’s Solar Parks and Ultra Mega Renewable Energy Parks) coupled with transmission investment that expands the Green Energy Corridors could increase utility scale solar renewable penetration to over 85GW and create more than 50k jobs by 2025.

And economic and green recovery are entirely aligned…

Stimulus packages and the path to net zero are coming together like never before. Utilities have a unique chance to combine economic recovery and emissions reductions. And policy-makers are creating an increasingly favourable climate for delivering on both outcomes. For instance, multiple European countries have announced they will be flexible about commissioning deadlines for new wind projects in 2020. (And several have also extended auction dates)

Jobs must be central to any policy answers. And some of the biggest job creators are inherently green—energy efficiency, for one. The IEA Sustainable Recovery Plan estimates that energy efficiency measures could create 1.9m new jobs annually. And our analysis predicts that energy efficiency programmes in the USA alone could create 550k jobs by 2025.

Energy efficiency has the potential to take on a new environmental dimension– demand optimization. This includes retrofitting buildings, upgrading the distribution system and creating markets for flexibility services to actively manage load and allow more renewable sources to be integrated. (And the GHG emissions benefits are big)

Now it’s up to utilities to capitalize on this newly-dynamic environment, in which jobs, climate, societal value and investment come together like never before. It’s a unique chance to hit all the success criteria at once. Utilities have shown they can lead. They’re poised to re-emerge in partnership with policymakers to accelerate the transition to net zero.


Stephanie Jamison

Senior Managing Director – Strategy & Consulting, Europe

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