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Climate Action Makes (Business) Sense for U.S. Utilities

NRDC Expert Blog by Sheryl Carter & Elisheva Mittelman

Michigan’s DTE Energy recently pledged to reduce carbon pollution by more than 80 percent by 2050. Another Michigan utility, Consumers Energy, committed to phase out coal generation over the next two decades and generate at least 40 percent of its energy with renewable resources. Duke Energy, with customers in six states in the Southeast and Midwest, has committed to reducing its carbon emissions 40 percent by 2030. But why are these and many other utilities doing this now, when the Trump administration is working to roll back climate and clean energy action?

Because it just makes good business sense.

When President Trump announced his intention to pull the U.S. out of the Paris Climate Accord, there were concerns that America’s utilities would change course and abandon action on climate. Instead, the Edison Electric Institute (EEI), which represents the nation’s investor-owned electric utilities serving 220 million Americans (two-thirds of the population), said that it expected the industry’s emissions to continue their decline. And in fact, EEI recently renewed its commitment to a cleaner energy future, including reductions in greenhouse gas emissions.

The solutions for climate action are the best investments

Programs to help customers save energy, and solar and wind energy are cheaper in most places than almost any other resource to meet customer energy needs, including coal and gas, and getting cheaper all the time. They also happen to be the most effective solutions to reduce carbon pollution, allowing us to meet our carbon reduction targets at lowest cost, while dramatically reducing our reliance on polluting and more expensive fossil fuels to power America’s homes and businesses.

Utilities know this. That is why a recent survey by Utility Dive of more than 600 U.S. and Canadian electric utility executives confirms that they do not expect to change course in their commitment to a cleaner energy future. More than 80 percent of respondents from each region expect moderate or significant increases in utility-scale solar generation, distributed (or onsite) generation like rooftop and community solar panels, and energy storage.

Oregon Department of Agriculture

Recent climate commitments

The fact that utility commitments to clean energy and carbon reduction are not just sticking, but are still being announced after more than a year of assaults by the Trump administration, illustrates that utilities are not veering from the clean energy path. Here is a sample of the commitments made by utilities representing nearly 49 million customers:

  • Consumers Energy in Michigan pledged to cut carbon pollution 80 percent by 2050, phase out its coal generation within two decades, and replace it with at least 40 percent renewable energy by 2040.
  • National Grid, with customers in New York, Massachusetts, and Rhode Island, maintains its commitment to reduce its carbon pollution 80 percent by 2050 from 1990 levels.
  • Xcel Energy, with utilities in Colorado, Minnesota and six other states, has set near-term goals of a 45 percent reduction in carbon emissions and 40 percent renewable generation by 2021, with a 60 percent reduction in carbon and 60 percent renewables by 2030.
  • Ameren Missouri established a goal of reducing carbon emissions 80 percent by 2050, and committed to increasing its energy generated from wind (700 megawatts by 2020) and solar generation (50 MW by 2025).
  • Duke Energy -- with customers in North and South Carolina, Ohio, Kentucky, Indiana, and Florida, announced a goal to reduce carbon pollution 40 percent by 2030 and invest in cleaner electricity generation.
  • Already working to meet California’s target for an 80 percent reduction in carbon emissions by 2050, Southern California Edison proposed increasing the use of large-scale, carbon-free generation such as wind, solar and large hydroelectric power plants to at least 80 percent of electricity delivered to customers by 2030.
  • American Electric Power (AEP), which serves customers in 11 Southeast and Midwest states, set a goal to slash carbon emissions 80 percent from 2000 levels by 2050 through investments in energy efficiency, renewable resources, and other cleaner energy investments.
  • MidAmerican Energy in Iowa has established a goal of 100 percent renewable energy (with 95 percent expected in 2021 for its portfolio).
  • PPL Corporation announced its goal to reduce carbon emissions 70 percent by 2050, which will require near elimination of its Kentucky coal fleet and improved efficiency in its U.K. and United States operations.
  • WEC Energy Group, based in Wisconsin, set the goal of a 40 percent reduction in carbon emissions from 2005 levels by 2030.
  • DTE Energy in Michigan committed to a 30 percent reduction in carbon pollution by the early 2020s, 45 percent by 2030, 75 percent by 2040 and more than 80 percent by 2050. The company will achieve these reductions by incorporating substantially more energy efficiency, renewable energy, and other cleaner sources. DTE also announced the shutdown of 11 coal plants by the early 2020s.
  • First Energy, serving customers in Maryland, New Jersey, New York, Ohio, Pennsylvania, and West Virginia, committed to reducing carbon pollution at least 90 percent from 2005 levels by 2045.

Utilities are backing up their long-term pledges by taking actions now to slash their emissions. Carbon pollution from the power sector has fallen by 28 percent since 2005, with reductions expected to continue over the next several years as utilities double down on their investments in clean energy resources. The cost declines of renewables continue to outpace expectations, and utilities are often making big clean energy investments while delivering economic benefits for their customers at the same time. In Colorado, for example, Xcel’s new 600 megawatt wind farm is expected to save customers over $1 billion over the project’s 25-year lifetime. In Iowa, MidAmerican is building a new wind project – as part of its path to 95 percent renewables by 2021 – without raising customer rates. And in New Mexico, the CEO of a co-op that is building a community solar project declared that the installation “delivers renewable power to our members while also saving them money.”

With the business case so clear, in spite of the uncertainty created by the current administration’s actions, wouldn’t it make more sense for the nation’s electric customers, utilities, and the health of our economy to establish a clear economy-wide carbon policy that encourages all utilities to join in?

Republished with permission from the Natural Resources Defense Council's expert blogs.

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Mark Rigoglioso's picture
Mark Rigoglioso on Mar 15, 2018

All these numbers for solar and wind look great at first glance and are in lock step with the notion of renewables as solutions to 'save' our planet (which is not in jeopardy regardless of what the pope says). 

We need to look deeper into the actualities of future situations and not just rely on idealized beliefs about wind and solar vis a vis predicted costs of these sources relative to coal and methane (possibly) happening in the future. 

 

1 - Industry commitments to reduceing carbon by up to 60% sounds great but can be done simply by converting to natural gas, which has become abundant and cheap thanks to fracking. 

2 - Coal and natural gas plant capacity factor outstrips wind and solar by 2x to 3x. This metric is not likely to be improved by reduction in cost factors for wind and solar. Capacity factor is critical for maintaining base load in a nation which is only going to increase its power demands dramatically as we rely more and more on networked digital information for constant use. Solar and wind will not be able to meet nor keep up with this requirement.

3 - Clean coal and gas plants have a much smaller physical footprint per megawatt capacity than either wind or solar, which is definite a big factor in some parts of the country.

4 - As mentioned in this article several times, solar and wind have geographic limitation factors due to their dependence on the wide variances of sunlight and wind availability.

5 - A big problem with curent coal plants is their age and efficiency. No one doubts these older facilities will have to be phased out. But we should be sensitive to the lives of workers and not do like the Obama Administration that practically enjoyed bankrupting our largest coal companies, serving only to impoverish many people in the coal states and contributed unnecessarily to their already challenged economic situations. Attrition is an acceptable and even an ethical strategy where real human beings are involved.

6 - Coal has been a blessing to our nation for over 150 years. We have come up with some very good ways of filtering its truly toxic emissions from the air. The amount of coal under America equals over 80x the biomass of the entire surface of the planet, so we should appreciate this vast resource and take seriously ways of making it ever more efficient and clean. Meanwhile, China, Vietnam and other Asian nations will be increasing their demand for coal in the next 30 years so we should be able to profit from some of that. 

7 - The effects of human activity on climate change has yet to be proven, as the cases of Northern Africa and Central Asia attest; we also have yet toprove that inceased CO2 in the atmosphere has more down sides than good.

8 - All in all, it is wise to take a diversified approach to energy technology. I for one am a big fan of the propspects for solar hydrogen from synthetic photosynthesis.

Mark Rigoglioso's picture
Mark Rigoglioso on Mar 15, 2018

Sorry for any typos in the preious post.

An added concern for the promise of renewables is the power demand that is going to be created if we convert from ICE vehicles to electric transportation. 75% of our total power demands come from vehicle movement and heating of buildings. So we have to be realistic about the ability of wind and solar to match these massive numbers over and above the baseline power we are talkng about for everyday electricity consumption in addition to the increasing demands for electricity we already are dealing with.

Mark Rigoglioso's picture
Mark Rigoglioso on Mar 15, 2018

One more reality - Wind and solar will always require considerable government subsidies to remain competitive with coal, oil and natural gas, and even solar hydrogen when we figure that one out. The strain on state governments and the fed has been quite noticeable and is the main reason solar subsidies are being phased out around the country. It's not evil vs. good - it is pure economics, energy density, availability, cost factors and capacity factors in the face of increased power demands that are defining the reality even where ideologues push agendas that can harm people's lives. If we stop looking at CO2 as an evil gas (plants need it desperately) then the entire economic/cultural landscape can shift back onto what I would call a more sound footing. 

Bryan Leyland's picture
Bryan Leyland on Mar 15, 2018

The whole thing is raving nonsense. If, for some reason, you want to reduce man-made carbon dioxide then the obvious option is nuclear power.  It is the safest, cleanest, cheapest and most environmentally friendly way of reducing carbon dioxide.

But the reality is that there is no convincing evidence that man-made greenhouse gases cause dangerous global warming. None.  Virtually all of the so-called "evidence" comes from climate prediction programs that are programmed to predict warming if carbon dioxide increases. So they assume what they are supposed to prove. They are worthless.

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