Fade to Black: Bad News for Fossil Fuels
February 5, 2016
Bad week, in what’s going to be a tough decade for Big Fossil.
I’ll be posting a series of updates on this over the coming days. Change is coming faster than most people think.
In a stunning trend with broad implications, the U.S. economy has grown significantly since 2007, while electricity consumption has been flat, and total energy demand actually dropped.
“The U.S. economy has now grown by 10% since 2007, while primary energy consumption has fallen by 2.4%,” reports Bloomberg New Energy Finance (BNEF) in its newly-released 2016 Sustainable Energy in America Factbook. BNEF’s Factbook, which is chock full of excellent charts and data, cites studies attributing most of this change to improvements in energy efficiency.
Equally remarkable, this “decoupling” between energy consumption and GDP growth extends to the power sector: “Since 2007, electricity demand has been flat, compared to a compounded annual growth rate of 2.4% from 1990 to 2000.” As I discussed in my recent renewables series, this decoupling is an unprecedented achievement in modern U.S. history. It may seem especially remarkable for an economy underpinned by soaring usage of the internet and electronic equipment — but as I wrote in a 1999 report, a true Internet-based economy was always likely to be a more efficient economy.
When solar farms in sub-Saharan Africa start to become more common than coal-fired power plants, it is time for the rest of the world to take notice. The clean energy revolution is happening right now under our feet.
The rapidly unfolding energy transition is bypassing coal and going straight to low-cost renewables. As countries in Africa, Asia, and Latin America seize this chance to “leapfrog” over fossil fuels and expand their clean energy capacity, they not only benefit from economic growth and cheap electricity, they also increase their security and avoid the severe damage to health and the environment that burning fossil fuels causes.
In fact, the Paris Climate Conference prompted the creation of the African Renewable Energy Initiative, a continent-wide program to massively increase Africa’s clean energy over the next 15 years while bypassing the pitfalls of fossil fuels.
As the new African Renewable Energy Initiative indicates, countries have the ability not only to leapfrog fossil fuels, but also to replace them while still keeping the lights on. Our research, conducted at Stanford University and the University of California, shows that by 2050 nearly every country in the world can transition its all-purpose energy to 100% clean, renewable wind, water and sunlight.
Africa has significant clean energy resources available that make it technically and economically feasible for 80% of the continent’s energy to be switched to renewables from fossil fuels no later than 2030.
As Africa’s current population grows from 1.1 billion to 1.6 billion by 2030, wind and solar could overtake fossil fuels as the dominant forms of energy. For example, our analysis shows that South Africa could get 56% of its electricity from utility-scale solar, Kenya 28%, and Mozambique 34%, all for lower cost than electrifying with coal. While conservative scenarios predict about half of the continent will have access to the electricity grid by 2030, this means 640 million Africans will plug into the grid for the first time thanks to renewables.
As many U.S. power companies fight the federal Clean Power Plan, Xcel Energy took a different path Friday, declaring the utility’s Minnesota operations are “nearly certain” to comply with the plan’s greenhouse gas reductions through cost-effective investments over the next decade.
The strategy, which Xcel first laid out last year and firmed up in a regulatory filing late Friday, calls for $6 billion in wind and solar energy investment, retirement of two Minnesota coal-burning units, construction of a nearly $1 billion natural gas-fired generator and further investment to retain the carbon-free energy from its two nuclear power plants.
“We think it is a good business plan, period,” said Laura McCarten, a regional vice president for the Minneapolis-based utility, as it submitted details to the state Public Utilities Commission.
McCarten said Xcel’s analysis of the strategy, which speeds up wind and solar investment in this decade, shows it to be a cost-effective way to reduce greenhouse gas emissions by 60 percent by 2030 — likely beyond Minnesota’s requirements under the Clean Power Plan.
Xcel also responded to concerns by state regulators about the ballooning cost of preserving its two nuclear power plants in Minnesota. The utility defended the projected investment of $1.2 billion or more over 15 years as cost-effective but said it is open to discussing early retirement of the Prairie Island nuclear plant in Red Wing, Minn.
Xcel projects investing $3 billion in wind energy and $3 billion in solar in its Minnesota region by 2030. The wind power additions would be the equivalent of nine of Xcel’s largest existing wind farms, with four projects built by 2020. Much of that investment would benefit from a recent five-year extension by Congress of renewable energy tax credits.
The federal subsidy brings down the cost of wind and solar by 30 percent. Xcel has said new wind power, with the subsidy, costs less over time than buying fuel to burn in existing power plants. That’s one reason Xcel estimates the entire plan’s effect on Minnesota electric rates would be moderate — about 2.4 percent annually through 2030. Recent rate hikes have been higher.