Technology and Policy Stacking for Energy Affordability Across the U.S.

• In Event: Advances in clean energy under federal policy shifts: dynamic pricing, supply chains and non-targeted incentives

Abstract

The evolution of technologies and the stacking of policies are key determinants of energy affordability, but their impacts are complicated because technologies and policies interact in numerous and complicated ways. This complexity is amplified when situating energy affordability within the broader scope of energy security, considering access (in time and space), acceptability (environmental and intergenerational impacts), and availability (both reliability and fuel diversity). As a result, policymakers often sidestep rigorous analytics and instead offer an array of facts and figures, illustrative anecdotes and logical deductions. To disentangle these complexities, computable general equilibrium modeling can be helpful. Using the National Energy Modeling System, we identify an array of opportunities that benefit from technology/policy stacking.
First, we provide evidence that the addition of subsidies for renewable energy lowers electricity prices when added to an array of alternative future stacks – boosting economic growth and household income and reducing pollution. Second, by 2035, the introduction of small modular reactors helps meet the electricity needs of AI expansion and places further downward pressure on energy prices if accompanied by policies to promote demand-response, which could build on the ability of AI to assist with spatial and temporal targeting. Third, support for increased domestic fossil fuel supplies decreases oil imports and energy burdens and increases household incomes and GDP (even when accounting for the social cost of carbon). Finally, electric vehicle (EV) standards decrease gasoline consumption and prices, making mobility more affordable, particularly to low- and moderate-income households who cannot afford EVs, and reducing oil imports. The geography of these impacts differ across U.S. Census Divisions. The EV policy exhibited the most regionally variable effects: in the Pacific, it drove the largest expenditure reduction of any single policy in both 2035 (−$1,254) and 2050 (−$776), while in the West South Central and East South Central divisions it increased expenditures by $129-$194 in 2035, reflecting regional differences in vehicle fleet composition and fuel price dynamics. The oil and gas expansion policies consistently delivered the largest single reduction in household energy expenditure (in homes and for mobility), with household annual savings ranging from approximately $114 (Mountain) to $391 (West South Central) in 2050. AI growth with SMR policies contributed comparatively modest and generally negative incremental effects on energy costs across most divisions. By 2050, our overall policy stack with accompanying technology advances could reduce household energy expenditures well below 2025 levels in all Census Divisions and particularly in New England and the Pacific region, where energy burdens could decline by 40%.
Our results confirm the hypothesis that scenarios that "stack" both renewable subsidies and nuclear and fossil fuel investments significantly outperform all others. In particular, they boost GDP, lower electricity prices, curbing oil imports, and enabling fuel diversity and carbon mitigation with renewables and small nuclear reactors. The findings suggest that energy affordability, economic growth, and decarbonization are not mutually exclusive but can be simultaneously advanced through hybridized policy stacking.

Author

• Marilyn A. Brown, Georgia Institute of Technology
  Presenting Author