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Decarbonizing Utilities, Inspirational or Aspirational?

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Nevelyn Black's picture
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Nevelyn Black is an independent writer with a background in broadcast and a keen interest in renewable energy.  In the last few years, she transitioned from celebrity interviews and film shoots...

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  • Jul 22, 2021 4:39 am GMT
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Oregon just passed a clean energy bill that directs its two largest utilities to deliver 100 percent clean electricity by 2040.  Oregon is joining Hawaii, California, Washington, New Mexico, New York, Maine, and Virginia in their commitment to 100 percent clean electricity.  When it comes to decarbonization, utilities are willing but are they able?  To meet renewable energy mandates, PacifiCorp submitted plans to replace retiring coal plants with wind and solar farms. No detail is too small but in this case, there are so many that still need to be fleshed out that a growing number of companies are concerned about the timetable.  The targets stair-step from 80 percent clean electricity by 2030, to 90 percent by 2035 and 100 percent by 2040.   “If you go out to 2030, we think we can hit that,” said PacifiCorp Senior Vice President Scott Bolton. “We were pretty clear though, beyond that we don’t have a plan that shows we can get there.”   Brett Sims, a vice president at Portland General Electric, said the company completed thorough analysis that shows they can also meet the 2030 target by eliminating coal, operating natural gas-fired plants at peak times only and adding substantial wind, solar, and storage to its energy mix.  However, Simms believes the 2040 target is ‘aspirational.’  Brimming with optimism about developing strategies and new technologies, Nicole Hughes, executive director of the advocacy group Renewable Northwest, responded, “I prefer ‘inspirational.  We’ve solved harder problems than this before.” 

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Problem solving will be required to meet the requirements of new legislation.  How will new clean energy standards help or hinder utilities utilizing natural gas to maintain reliability during peak demand?  The clean electricity bill passed in Oregon also prohibits new or expanded natural gas-fired power plants in the state.  In fact, over the past three years, BerkeleySan FranciscoSan JoseSeattle and New York City have passed similar laws banning gas in new construction, and more cities are considering similar measures.  “Electric companies and their customers cannot be penalized for keeping the system reliable as we work to achieve our clean energy goals,” said Emily Fisher, general counsel with the Edison Electric Institute that represents investor-owned utilities.  However, Senate Democrats are proposing to penalize utilities that don’t meet clean-energy targets.  The Clean Energy Standard plan would mandate 80 percent carbon-free electricity by 2030 and require colossal changes for the energy sector.  Sam Ricketts, co-founder of the environmental group Evergreen Action feels strongly about the mandate saying,  “This is critical policy to decarbonizing the power sector and is the linchpin for our economy-wide clean energy transformation.”  Utilities are facing a very precarious situation but perhaps there is a silver-lining.  

  • Advancements in hydrogen-based fuels could soon provide a less carbon-intensive approach. 
  • Grants could help utilities retrofit coal plants and help lower customer bills.  
  • A new law, in Minnesota, aims to help natural gas utilities innovate and diversify their businesses while eliminating carbon emissions.  Utilities there are encouraged to file “innovation plans” with regulators that decarbonize their operations.  Ultimately, natural gas will be hard to replace, heating two of every three homes in Minnesota.  Margaret Cherne-Hendrick, director of energy transition for Fresh Energy said,  “I think it’s notable that we will potentially see a gas utility moving forward with electrification plans. I think it really signals an appetite, and an acknowledgment, that the business model as it stands today is going to need to change and adapt to be able to serve customers in a decarbonizing economy.” 

One analyst believes a clean energy standard is a win-win for utilities.  “Overall it is very positive for utilities,”said Andy DeVries, a utility analyst for CreditSights Inc. “If the federal government mandates it, that essentially forces state regulators to approve these record capital expenditure budgets and that leads to strong earnings growth.”  A detailed path to decarbonization would provide a more agreeable timeline and the technology needed could be just around the corner. Until then, are the current carbon-free electricity goals aspirational or inspirational?  Considering the scale of technological gains, grid improvements and investments that would be needed to make the transformation, Duke Energy Corp. CFO, Steve Young, called the 2035 target “challenging.”  What’s your word for it? 

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