Globally countries are aggressively looking at how they can reduce the climate impacts of their emissions through things like electrification and switching their power sources over to renewable sources.
For many countries like the US, or places like the EU, policy becomes the primary driver in enabling a transition away from fossil fuels. This is where a country like Bhutan can provide valuable insights though it is vastly different in its economic and political structure.
Bhutan is carbon negative and produces 99% of it's energy needs from hydro
Now, this isn’t due to major economic developments or major infrastructure investments. Much of the country remains underdeveloped in rural areas due to the complexity of the mountainous terrain they are situated in (Bhutan is in between India and China in case you’re wondering). Also, 70% of the country is covered in forests which allows it to be a low emitter and still achieve carbon neutrality with ease.
However, Bhutan’s approach to energy policy in the country is fascinating. The memo (linked previously) they wrote back in 2009 has a ton of breadcrumbs on how they approach the export of electricity as a means to drive economic development within the country.
Bhutan gets more than they can ever use – even if they electrified the rural parts of their country – in hydropower which leads them to sell excess capacity over to India. Which allows them to provide electricity to their residents for free, in an effort to incentivize the rural part of their country to switch from burning wood to using the excess hydropower they have available.
The US can accelerate the clean transition by switching to state-owned/subsidized electric utilities.
The complexity in navigating such a move would likely require a full election cycle to even get something through congress. However, it may be one such approach towards incentivizing significant infrastructure and economic development stateside – better yet we already have municipality-owned utilities so there is a potential framework to work within.
Playing within hypotheticals and modeling a world around Bhutan’s “electricity as a public service benefit“ model, we’d see states provide electricity at a significantly reduced rate or entirely subsidized for critical businesses or low-income neighborhoods. In theory, under this model state-owned utilities could recover or benefit from cross-selling state to state within their current ISO under demand response level rates.
For example, If Oregon has excess capacity available and California is dealing with its standard demand response periods it could purchase from Oregon. While this already happens to a degree, moving towards the government setting a price floor on electricity and subsidizing a lot of the cost of supplying that demand through renewable assets it owns can open up the market to new solutions that deliver additional benefits.
People may become willing to pay premiums for additional resiliency or even purchase solar for their home if they used more than their “free baseload” which could drive electrification at a faster rate.
Access and price tend to be the core drivers in which source of power is adopted - as demonstrated in Bhutan
If the US can find a way – similar to Bhutan to publicly fund infrastructure for electricity at a higher rate, beyond the current tax incentives – it could drive significant growth in electrification across the country.
With publicly owned utilities being the primary providers of electricity to the country it allows for infrastructure funding to be wrapped up into bonds backed by the US government and allows for the government to decommission power plants not aligned with the public’s interest even if it results in short term losses. Keeping most of the energy infrastructure in quasi-public/private ownership slows transitions down as many of these assets were invested into using 25+ year projections.
Bhutan shows the benefits of a model that may be applicable in the US. While their situation is far less complex than the US’ decarbonization path it lays the groundwork that shows what a public-owned utility may be able to achieve.
About The Author
Swarnav S Pujari
Founder of The Impact
Swarnav has over 10 years of experience in the energy & climate tech space, holds 2 patents and is active in the tech, climate and media industries. He specializes in Product/Product Innovation as well as Go-To-Market and Growth Strategy.
By training he’s a Materials Engineer with a background in research from his time at Georgia Tech and University of Illinois (UIUC).
He founded TouchLight a utility backed energy company focused on developing IP for utilities and startups pushing electrification forward. He also serves as the appointed Chairman for the Town of Yorktown’s Climate Smart Communities Task Force, where he helps with drafting legislation and enabling sustainability efforts within the town.
Concurrently, Swarnav founded The Impact to help investors, emerging founders and driven climate enthusiasts discover and identify new climate-tech startups, technologies and opportunities before they hit the traditional media sources.