In the USA, most of the decline in emissions that's taken place has been because of the replacement of coal power stations by natural gas. But something interesting is starting to happen. Gas is now being replaced by renewables plus storage. I wrote about this taking place in LA. This article by World Resources Institute looks at developments across the USA.
In April 2019, in the heart of coal country, Indiana regulators rejected a proposal by its electric and gas utility, Vectren, to replace baseload coal plants with a new $900 million, 850 megawatt (MW) natural gas-fired power plant. Regulators were concerned that with the dramatic decline in the cost of renewable energy, maturation of energy storage and rapidly changing customer demand, such a major gas plant investment could become a stranded, uneconomic asset in the future. Regulators are now pushing Vectren to consider more decentralized, lower-carbon resources such as wind, solar and storage that would offer greater resource diversity, flexibility and cost effectiveness.
This decision is notable in a state where coal is still the primary energy fuel. At the same time, the Indiana decision hints at a broader transformation happening across the United States.
Coal, the long-reigning king of the U.S. power sector, was officially dethroned by cheap, abundant natural gas in 2016. In 2018, natural gas fueled more than 60 percent of newly installed electric-generating capacity and accounted for 35 percent of total U.S. electricity generation.
Utility regulators from a range of states have begun to question continued investments in new natural gas generation, instead turning to low cost wind and solar. Here are five examples from U.S. states:
Arizona
Earlier this year, the Arizona Corporation Commission placed a moratorium on new gas plants 150 megawatts (MW) or larger through August 1 of this year. In the meantime, the state is considering an energy modernization plan for utilities to source 80% of their electricity from renewables and nuclear by 2050. The plan also involves deployment of 3,000 MW of energy storage by 2030, to help provide peak power as an alternative to gas plants that can provide extra power during peak demand periods.
Last year Arizona regulators also declined to recognize the 15-year IRP filed by the state's investor-owned utilities for their disproportionate reliance on massive gas plants, to the exclusion of more renewable energy.
California
Natural gas-fired power plants accounted for approximately half of California's in-state power in 2016, but new gas construction is becoming a rarity as market and policy headwinds intensify. The state is pushing its utilities to replace natural gas power plants with renewables and other resources. Recently, Southern California Edison (SCE) selected a portfolio of battery plants totaling 195 MW, instead of a 262 MW gas "peaker" plant (plants that kick in with additional power when demand for energy is especially high) it had chosen previously. In addition, Los Angeles decided to shutter three gas-fired coastal power plants over the next decade; the city will instead invest in renewable energy. California is expecting to retire more gas plants in the coming years—1,380 MW of gas power plant capacity to be retired in 2019 and another 4,600 MW in 2020—and they are more likely to be replaced by renewables and storage.
Colorado
Colorado's biggest utility, Xcel Energy, announced last year that it would replace 660 MW of coal-fired generation with the biggest package of renewable energy projects ever proposed in the country for an individual coal plant retirement—more than 1,800 MW of wind, solar and battery storage. Xcel estimates the transition will save ratepayers between $213 million and $374 million. While Xcel's plan includes the purchase of existing gas plants, it proposes no new gas construction. Xcel has also announced plans to go entirely carbon-free by 2050.
Nevada
Nevada regulators granted NV Energy permission to construct six major solar projects which, combined with 100 MW in battery storage, would double the state's solar capacity and renewable energy production by 2023. In their approval, Nevada's Public Utilities Commission noted that this plan "best advances Nevada's clean energy goals" by diversifying fuel sources and decreasing reliance on natural gas.
Virginia
In a sign that the transition to a clean energy future is taking place outside of its traditional borders, Virginia regulators rebuked Dominion Energy for overestimating projections of future electricity demand and failing to take into account a number of electricity resources that would lower costs for consumers or are mandated by law.For the first time ever, Dominion's integrated resource plan (IRP)—an outline of a utility's resource needs, filed with public utility commissions—was rejected for failing to consider the impacts of energy legislation passed last year. That legislation will significantly increase Virginia's renewable capacity and mandates Dominion spend $870 million on energy efficiency. Regulators noted there was "considerable doubt regarding the accuracy and reasonableness of the Company's load forecast," which could lead to overinvestment in natural gas infrastructure.
[Read more here]
The reason why utilities and regulators are taking these steps is because renewables have got so cheap. In 2009, utility-scale solar cost 3 times as much as coal. In 2019, it costs one third. Although gas (in the USA) is cheaper than coal, wind and solar are now cheaper than gas too. And every year, they get cheaper still.
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| Source: Lazard; BNEF; my estimates Chart updated for new data 31/8/2021 |
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