Howard Learner makes the argument that the electricity market of the future will be driven by more pro-competitive policies and accelerating technological innovations. Investors should take note that innovation is no longer funded strictly by public R&D. Change is being driven by market forces. Based in the heartlands, Howard A. Learner is a soft spoken lawyer and a keen observer of energy markets. 

The Clean Power Plan will spur innovations and, over time, price carbon pollution. The high-decibel battles being waged in the courts and Congress miss the quiet revolution in renewable energy and efficiency technologies that is rapidly transforming the electricity market. Wind and solar energy combined with battery storage, advanced lighting, and other improvements are game changers. They are disruptive technologies that will change the electricity system just as wireless technologies reshaped the ways that we live and work. Better still, energy solutions developed in the United States can be marketed to emerging economies and the developing world to reduce carbon pollution.

Solar power is making great advances through policy drivers and technological innovations. Energy efficiency improvements are saving people and businesses money on their utility bills, creating installation jobs, keeping money in local economies, and reducing pollution. Distributed generation and storage, continually improving efficiency technologies, smart energy management systems, demand response approaches, and microturbines lighten the load on the grid and enhance reliability and resilience. A more decentralized system is also less vulnerable to extreme weather events and terrorism.

Commercial photovoltaic panel efficiencies are improving about? 1 percent annually, and inverter technologies improved from 80–85 percent efficiency to 98 percent efficiency. PV panel costs have dropped to 80 cents per watt. The pace of technological change for solar energy reflects experiences with computers, smartphones, and digital cameras. 2014 was the third consecutive year of more than 50 percent growth in the residential solar market.

Energy efficiency is the best, fastest, and cheapest solution to climate change problems. There is a quiet revolution of more efficient lighting, heating, and cooling technologies, more efficient refrigerators and other appliances, more efficient industrial pumps and motors, and better building design.

LED lighting is rapidly gaining mass consumer market share. LED bulbs last longer and are 85 percent more efficient than incandescent bulbs. Federal efficiency standards for many household appliances and business equipment, and voluntary industry actions, reduce overall electricity use even as people use more gadgets.

For Commonwealth? Edison’s 3.5 million customers in Northern Illinois (including Chicago), weather-normalized? retail electricity sales?decreased an average of? 1.1 percent in the past ?four quarters compared? to the previous year.? Meanwhile, Chicago’s regional economy is growing 2.5–3.0 percent annually. The economy is growing, but more efficiently.

Fewer large central coal and nuclear generating plants will be needed. Both the power markets and financial markets are recognizing this emerging reality. Many older coal plants and some nuclear plants are shutting down as clean energy accelerates, natural gas prices are lower, and electricity demand is flat or declining. Coal producer Peabody Energy’s (NYSE:BTU) stock price has declined from $73.95 in 2011 to $1.21 at press time.

Some new transmission is needed, for example, to connect the wind-rich Great Plains to the Midwest urban and industrial load centers, and to the West. However, the more distributed electricity system and decentralized electricity market of the future will need less large, new, expensive transmission lines. As coal and nuclear plants shut down, that also frees up some transmission-line capacity.

The electricity distribution? grid, with its transformers, substations, and capacitors, is aging and stressed in many places. Repairs and upgrades are costly. Distributed generation and energy efficiency lightens the load on the system and improves reliability.

Smart public policies drive electricity markets. The electricity market of the future will be driven by more pro-competitive policies and accelerating technological innovations. State policies should open up 100-year-old utility monopolies to more competition from distributed technologies, lower regulatory barriers to new market entrants competing on both price and services, and nudge and incentivize capital investments accelerating modern, clean energy. 

This article was first published at The Environmental Forum http://www.eli.org/the-environmental-forum

Howard A. Learner is executive director of the Environmental Law & Policy Center, a public interest environmental legal advocacy and eco-business innovation organization headquartered in Chicago and focused on the Midwest. He is also a professor at the University of Michigan Law School and at Northwestern University Law School.