The “mobile-plus-cloud” app ecosystem is thriving. Worth more than $950 billion, the app economy brings new value to our smartphones and enables us to engage with the world in new and rewarding ways. But this growth would not be possible without innovations in cloud computing and the energy resources that support it. Not only has cloud computing significantly lowered overhead costs for startups and tech small businesses, but it has also supported a vibrant marketplace for mobile innovation that fosters competition and benefits businesses, consumers, and our economy. In the most fundamental way, this intertwined app ecosystem depends on access to affordable and reliable energy resources, but new federal policies may jeopardize our community’s access to this resource and subsequent growth.
Recently, the Trump administration began to implement a set of highly-specialized policies designed to make the U.S. power grid more resilient. Specifically, the administration tapped the Department of Energy (DOE) to use emergency national security protocols outlined in the 1950 Defense Production Act and the Federal Power Act to prevent coal and nuclear plants from shuttering. Though these laws have traditionally been used during times of war, the DOE argued that traditional energy plants are at risk of closing due to competition from natural gas resources and laid out its approach to keep coal and nuclear plants afloat in a memo to the White House.
The energy resilience policies put forth by DOE require energy purchasers and distributors to prioritize coal and nuclear power sources over others, even if alternative power sources are offered for cheaper prices on the energy market. Stifling the ability to pursue a variety of energy options at the lowest available prices will raise costs for energy purchasers, and those costs will be passed down the production chain to businesses and consumers.
This is not the first time the use of this policy has been proposed. In fact, the Federal Energy Regulatory Commission (FERC), which regulates wholesale power markets, rejected a similar proposal from the administration in January. Utility companies, gas producers, businesses, and environmentalists quickly and unsurprisingly responded to the implementation of these policies with sharp criticism, especially because many coal and nuclear companies will still shut down their energy facilities despite these efforts.
At first glance, the app economy and U.S. power grid resilience may seem unconnected. However, these policies will increase the average energy cost for, and have deep and lasting impacts on, businesses. Software developers and mobile-based companies rely heavily on cloud computing and cloud servers to deliver products to customers around the globe. In addition, cloud computing companies depend on reasonable overhead costs to power the energy-hungry cooling technology that supports and maintains their high-capacity server farms for cloud storage. Should energy costs rise due to market intervention by the administration, it will become more expensive for cloud companies to cool their servers, and that cost will ultimately be passed down to software developers and their customers. Small developers like our members will be particularly hard-hit because these raised costs will disproportionately increase their overhead costs.
These energy policies risk imposing unanticipated costs on businesses of all sizes and will ultimately take a bite out of their bottom lines. The funds to cover these costs will have to come from elsewhere and may take away core resources from a developer’s business. For example, we recently outlined in a testimony before Congress the labor shortages plaguing the software development industry. Between lacking the necessary employees for production and facing higher costs for the use of energy-dependent cloud servers, there isn’t much small developers can do to offset these costs. App innovation will take a hit, along with job creation and consumer satisfaction.
We recognize the vital importance of a secure energy grid, but it should not come at the expense of viable, reliable, and affordable energy options on which so many aspects of our app ecosystem depend. These market interventions would have serious implications for the broader app economy, the 4.7 million Americans it employs, the businesses and industries it supports, and the billions of consumers it serves. We hope the Trump administration and DOE seriously consider the impact these policies will have not just on the energy market, but on the mobile software developers, innovative businesses, and consumers who depend on this vital energy resource.