https://qz.com/1490832/two-utilities-promised-to-go-100-carbon-free-last-week/
Two US electric utilities have promised to go 100% carbon-free—and admit
it’s cheaper
[Note, the 'cheaper' is based on simple financials, and does not include
social impacts or costs related to pollution or GHG emissions.
links and images in online article]
By Michael J. Coren
December 13, 2018
Two US electric utilities recently declared something remarkable: It’s
cheaper to tear down their coal plants and build renewable-energy plants
than to keep the old boilers running. For the utilities, the goal is now
to retire their coal plants and exceed the economy-wide climate targets
set in the Paris Agreement: an 80% reduction of carbon emissions from
2005 levels by 2050.
It’s a surprising move by two (primarily) coal-powered utilities in the
American West, but get ready for more. Economics, and politics, are fast
converging on a consensus. Committing to a 100% carbon-free goal, even
before we quite know how to reach it, is good for business.
The first to make the announcement was Xcel Energy, a utility serving
3.6 million people in eight states from Minnesota to New Mexico. On Dec.
4, the company said it would hit an 80% reduction target by 2030, and
eliminate all carbon emissions from its power plants by 2050. Two days
later, Colorado’s Platte River Power Authority (an Xcel competitor)
approved its own goal of 100% carbon-free energy by 2030.
Jason Frisbie, general manager of Platte River Power Authority, said it
was just an admission of economic realities, not a political statement.
“This whole thing started because the board wanted to recognize the
shift that has already been taking place in the business for several
years,” he told a local newspaper. Cities buying its electricity were
demanding clean energy, and the price of renewables had tumbled below
even the cheapest fossil fuels.
Costly coal
Although the announcements came in quick succession, they’ve been a long
time coming, says Mark Dyson of the energy nonprofit Rocky Mountain
Institute. At least 90 cities have declared their intention to adopt
100% renewable energy goals. Utilities can accept this, or risk losing
their biggest customers.
Two major defections recently drove home the point. In Boulder,
Colorado, the city council voted on Dec. 4 (the same day Xcel made its
announcement) to leave the utility to pursue its own 100% renewable
electricity generation two decades earlier than Xcel. In Silicon Valley,
San Jose left the utility PG&E this year to offer a 100% renewable
option from San Jose Clean Energy. (PG&E is only delivering 80%.)
After years of hedging their bets, utilities can’t ignore the numbers
anymore. Last week, PacifiCorp, which relies on coal for 59% of its
fuel, said it’s more expensive to run 13 of its 22 coal units than to
retire them and switch to renewables. The company estimated it could
save money by shutting down 60% of its units by 2022, an assessment
largely in line with the Sierra Club’s calculations. Globally, at least
42% of the world’s coal power stations are operating at a loss,
estimates the research nonprofit Carbon Tracker.
Dyson says it’s just a matter of time before more utilities across the
US reach the same decision to replace old coal with “crazy cheap” new
renewables. In Colorado, bidders are selling wind for as little as $12
per megawatt hour (MWh) and solar for $23 per MWh. Even after adding
batteries to solar farms to keep supplying power into the evening, the
cost rises to just $30 per MWh. That’s before income tax credits of 30%
for new renewables built by 2023. Those prices are well below the
average US price of nuclear ($105/MWh), coal ($67/MWh), and even
low-cost natural gas ($39/MWh), according to Ravi Manghani of energy
research firm Wood Mackenzie.
Steel for fuel
With prices so low, investing in new renewable-energy infrastructure
instead of fuel is a no-brainer. In fact, that’s the basis of Xcel’s new
business model: “steel for fuel,” with steel meaning new wind turbines
and solar arrays. Xcel, like most vertically integrated utilities, is a
regulated monopoly. A state commission sets customers’ prices so the
utility can earn a reasonable rate of return on what it builds without
overcharging. More stuff on the ground equals more money. In the case of
renewables, argues Xcel CEO Ben Fowke, “everybody benefits.” Xcel earns
money on the new “steel” and customers get lower prices far into the future.
More utilities are following its lead. The Southern Company’s CEO said
in April that the utility will be “low to no carbon” by 2050. Earlier
this year, New Mexico utility PNM said (with no publicity) it will exit
all coal generation by 2031. In October, northern Indiana’s Public
Service Company said it will save $4 billion by replacing all coal
generation with renewables by 2028.
Yet some are still fighting to make coal great again. In the same week
of Xcel’s announcement, Wyoming’s Black Hills utility proposed buying an
existing coal power plant as the cheapest option with “long-term
price-stability,” a characterization that left some analysts scratching
their heads (jobs may have something to do with it). Meanwhile the Trump
administration is rolling back environmental rules such as the Clean
Power Plan and promoting a Coal FIRST initiative to keep coal plants
open. But Moody’s Analytics, a financial analysis firm, said these
actions “will not materially derail decarbonization trends.”
Built-in climate catastrophe
Accelerating those trends is critical to avert catastrophic climate
change. Greenhouse gas emissions have already baked at least 2°F into
the climate, and just 15 years remain to avoid another one-degree rise.
Stopping the construction of new, long-lived power plants that emit
carbon for decades is the only way to avoid this. ”Most warming
anticipated this century is from infrastructure yet to be constructed,”
writes Ken Caldeira, a climate scientist at Stanford University.
For now, the grid is not quite ready for 100% renewables. Far more
storage will need to come online. High-voltage transmission lines must
ferry energy from (often remote) wind and solar arrays to their final,
urban destinations. With utilities set to approach 80% renewables in the
next decade, the last 20% of carbon-free electricity will be the hardest
to achieve.
“Technical options exist but it does get costly,” says Tom Wilson, a
renewable-energy expert at the Electric Power Research Institute. Right
now, the only cost-effective commercial options running at scale are
nuclear reactors (very pricey) and large hydroelectric facilities (hard
to site new ones). While geothermal, carbon sequestration, revolutionary
batteries, and experimental small reactors are among future
cost-effective possibilities, utilities are betting the right solutions
will come on time. “If you have the vision, and the need to get there,
sometimes the technology shows up,” says Wilson.