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Today's Supreme Court Ruling on Demand Response "gives clean energy a huge boost"

3 min. read

The Supreme Court issued an important ruling earlier today in a case that affirmed FERC Order 745, which "calls for demand response to be compensated like other generators in wholesale energy markets." The 6-2 verdict in favor of the Federal Energy Regulatory Commission (FERC) was, among other things, a major victory for U.S. providers of energy conservation services (e.g., EnerNOC, whose "jumped as much as 84 percent in New York trading"). It is simultaneously a major defeat for big power producers such as "NRG Energy Inc., FirstEnergy Corp., Talen Energy Corp., Calpine Corp., Public Service Enterprise Group Inc. and American Electric Power Co."

For some excellent background on this case, see David Roberts' 2014 post, "Radical judge kneecaps clean electricity under cover of boringness." As Roberts explained at the time, the consequences for FERC Order 745 losing at the Supreme Court could have been severe.

But this ruling could be a serious stumbling block. In a brief before the court, the Maryland Public Service Commission said: “To separate demand response from market participation will increase prices, confuse operations, and make planning unnecessarily complex.” Wellinghoff calls the ruling “devastating.” An analysis by GTM research found that it could cost the demand-response industry $4.4 billion in revenue over the next 10 years...

Customers will suffer too. An analysis by Navigant found that if all demand-response resources were removed, prices in the PJM capacity market (which covers several east-coast states) would jump three-fold, resulting in substantially higher prices for consumers.

Given all that, today's ruling was a big deal -- and a big victory for the cleantech industry, the environment and consumers. According to the Natural Resource Defense Council:

The Supreme Court’s decision is great news for consumers and the environment. It gives consumers more opportunity to save, and even make, money through smarter electricity use. Also, because demand response is flexible and fast-acting, it enables the affordable integration of more wind and solar power into the electricity transmission grid.

Demand response is a critical tool for bringing energy markets into the 21st century by recognizing the value in avoiding carbon emissions and other pollution while maintaining a clean, affordable and reliable electric system.

Today’s ruling gives clean energy a huge boost and keeps America moving forward toward our critical goal of slashing climate-warming emissions while maintaining a clean, affordable, and reliable electric system.

Or, as former FERC Chair John Wellinghoff explains over at Greentech Media, the Supreme Court's decision is "going to make consumers an equal participant in the market in a way they never were before. That was the intention of Order 745, and that has been vindicated.” Wellinghoff adds that this ruling "is not just a win for large-scale demand response...but also for resources at the edge of the grid like solar and energy storage," as consumers will now be able to "fully play in wholesale markets like a generator."

To put it yet another way, Climate Progress quotes a Sierra Club expert that demand response not only helps reduce wasteful energy consumption and pollution, but "is helpful for integrating wind and solar into the grid, it’s “critical for implementing things like the Clean Power Plan and renewable energy standards in a way that keeps electricity prices stable and affordable.” In sum, as the headline at Climate Progress puts it, "Supreme Court Rules In Favor Of Renewable Energy and Cheap Electricity." Not a bad day at the Supreme Court for the cleantech industry, in other words.

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Topics: Public Affairs