TVA will soon give bonuses to its executives for adding solar, batteries to the Valley

The Tennessee Valley Authority is changing the way it pays its executives. 

For the first time ever, TVA will be rewarding its leaders for adding renewables and batteries to the grid, according to a report filed to the U.S. Securities and Exchange Commission last week. 

“I think this holds some hope that it will boost renewable energy production in the Valley,” said Gabby Sarri-Tobar, the energy justice campaigner at the Center for Biological Diversity. 

The announcement comes months after the center found that TVA’s top executives banked millions of dollars in the past few years for decisions to build more gas plants.

More: TVA executives made $90 million since 2020 while pushing fossil fuels. Your electricity bill paid them.

At the end of each year, the top executives are paid bonuses that constitute the majority of their salaries. Take last year: John Thomas, TVA’s chief financial officer, made 80% of his $4.5 million salary from bonuses — and about $90,000 came from fossil fuel incentives, according to the center’s report. This information is known for some executives, as TVA is only required to disclose the salaries of its top five highest-paid employees to Congress.

The new bonus structure considers renewables and batteries added to the grid and the energy taken off the grid, either through demand response programs or energy efficiency projects. 

(Demand response programs generally involve companies or customers reducing their electricity use during peak periods for a financial incentive. Energy efficiency projects include improving or replacing air conditioners, water heaters, windows and insulation to cut electricity needs.) 

The report laid out two three-year bonus cycles. For the 2024-26 period, TVA will need to add about .9 gigawatts of renewables and storage to the grid by 2026 for executives to get the full bonus. TVA will also need to shave off about 2 GW of electricity use. By 2027, TVA must reach about 1.3 GW of renewables and storage and 2.2 GW of reduced electricity use. Since both targets start from the same baseline, that equates to .4 GW added and .2 GW subtracted between 2026 and 2027, if TVA hits the first goal. 

These goals seem to align with targets TVA had already set. Last year, for instance, TVA launched an energy efficiency and demand response program with a goal to reduce power consumption by 2.2 GW by 2027. TVA also has a goal to add 10 GW of solar to its system by 2035. 

Sarri-Tobar said the new bonus structure is encouraging, but the utility’s regulator, the TVA Board, needs to rethink bonuses related to new sources of pollution. 

“We obviously cannot forget that there are still incentives tying TVA to the fossil fuel past,” she said. 

While some regions are moving away from gas dependence, TVA is building more fossil fuel infrastructure than any other electric utility in the nation this decade. 

Since 2020, TVA has built, proposed or begun construction on nine methane gas plants, which will cause significant air and climate pollution each year. The federally-owned utility could soon rely on gas for more than 50% of its capacity. 

The gas buildout may also be increasing people’s monthly electricity bills. TVA has raised its rate for two consecutive years to a combined total of 9.75%, and TVA will spend about 90% of its capital expenditure funds next year on gas projects.