Last January President Obama in his State of the Union Address called for a Clean Energy Standard (CES) that would require that 80 percent of the nation’s electricity come from clean energy technologies by 2035.  The goal of a CES is to reduce greenhouse gas emissions and other environmental hazards that are created by the generation of electricity.

A CES will not, however, reduce the environmental hazards of electricity generation by itself.  If all a CES does is incentivize the construction of new, clean generation assets and the deployment of additional transmission and distribution infrastructure, it will fail in its essential purpose.  Simply building new plants while keeping old polluting ones open creates more environmental degradation rather than reduces it.  An effective CES must be part of a broader scheme to retire older generation plants and reduce the amount of infrastructure necessary to generate and transmit the electricity needed by consumers.  In short, a CES must be coupled with an energy efficiency standard.

As I have previously noted, existing environmental efficiency standards are largely deficient because they do not recognize the difference between reducing electricity use at peak and reducing total electricity usage.  An electron that does not have to be generated and transmitted at 6:00 p.m. on a hot August afternoon is a far more valuable savings than one that is saved at 2:00 a.m. on a spring morning.  Any electricity efficiency standard enacted as part of a CES must recognize this distinction.  Utilities should receive credit for reducing their peak ratios in the same way that they are proposed to get credit under a national CES for increasing their ratio of clean to less clean electricity generation.

Electricity storage, of course, will be key to helping utilities reduce their peak ratios.  By leveling load, electricity storage (and in particular distributed energy storage) can help grid operators retire less clean generation assets earlier and reduce the need for deployment of additional transmission and distribution assets.

Energy storage will be one of the most promising and important parts of the smart grid.  Let’s hope that the President’s CES initiative, properly implemented, will give it the attention it deserves.