Why Wind and Solar won’t be Stopped
November 24, 2016
On the plains of West Texas, new wind farms can be built for just $22 a megawatt-hour. In the Arizona and Nevada deserts, solar projects are less than $40 a megawatt-hour. Compare those figures with the U.S. average lifetime cost of $52 for natural gas plants and about $65 for coal.
Environmental rules and government subsidies are no longer the key drivers for clean power. Economics are.
That’s why Donald Trump will have limited influence on the U.S. utility industry’s push toward renewable energy, according to executives and investors. Companies including NextEra Energy Inc., Duke Energy Corp. and others that invest billions in power plants are already moving forward with long-term plans to generate electricity with cleaner and more economic alternatives.
“We said before the election that whoever is elected president, we would be continuing our efforts to go to a low-carbon fleet and also pursue renewables,” said Tom Williams, a spokesman for Duke, the second-largest U.S. utility owner.
Wind and solar have been the two biggest sources of electricity added to U.S. grids since 2014 as utilities closed a record number of aging coal-fired generators.
And it’s not just cost that makes clean energy attractive to utilities — it’s time. A solar farm can go up in months to meet incremental increases in utility demand; it takes years to permit, finance and build the giant boilers and exhaust systems that make up a coal plant, and they can last for a generation. A four-year presidential term is hardly a tick in that energy clock, and companies are already planning projects that will commence after Trump leaves office, even if he serves two terms.
Here are a few examples of power companies that are shifting their generation towards low-cost clean energy:
- Of American Electric Power’s (AEP) generating capacity, more than half (60 percent) comes from coal — but even AEP is reducing emissions by replacing coal with renewables and natural gas. AEP has already cutcarbon dioxide emissions 39 percent from 2000 levels. The company plans to add 5,500 megawatts of wind, 3,000 megawatts of solar, and 3,000 megawatts of natural gas in the coming years. CEO Nick Akins last year noted that the Clean Power Plan could be a “catalyst for the transformation that’s already occurring in our industry.”
- Iowa-based MidAmerican Energy has announced a goal to provide 100 percent renewable energy. MidAmerican’s just approved $3.6 billion project to add 2,000 megawatts of wind — called the “largest wind energy project in US history” — will expand wind energy to become 85 percent of the company’s sales. Said CEO Bill Fehrman, “Our customers want more renewable energy, and we couldn’t agree more.” Meanwhile, an executive of MidAmerican’s parent company, Berkshire Hathaway Energy, had this to say about the Supreme Court stay of the Clean Power Plan: “We wish that hadn’t happened… Rather than litigating, we are leading.”
- Southern Company, a major generator of coal-fired power, is expanding renewable energy development that would count towards Clean Power Plan compliance. Southern Company and its subsidiaries have added or announced more than four gigawatts of renewable generation since 2012 to its 44 gigawatt fleet. Southern Company subsidiaries are challenging the Clean Power Plan in court.
- Xcel Energyreported in a recent SEC filing that its Integrated Resource Plan for subsidiary NSP-Minnesota will “allow for a 60 percent reduction in carbon emissions from 2005 levels by 2030,” and that it “anticipated compliance with the [Clean Power Plan] while maintaining reasonable costs for customers.” In comparison, the Clean Power Plan will reduce carbon emissions from the power sector on average 32 percent below 2005 levels by 2030.
- Westar Energy, which serves Kansas, is rapidly reducing emissions — even while it is challenging the Clean Power Plan in court. The company’s 2015 Annual Report states that its fleet’s carbon emissions will fall 36 percent below 2005 levels by 2017 (see page 86 of the report). That already exceeds the national goal under the Clean Power Plan.
Power companies aren’t alone in their race to clean energy. States are continuing to make significant progress towards reducing their power sector emissions and meeting Clean Power Plan targets.
Here are some examples of continued state progress:
- Arkansasalready reached its 2030 Clean Power Plan compliance target last year, thanks to declining coal use in favor of more renewables and natural gas. An in-depth Arkansas Democrat-Gazette article found that “low natural-gas prices” was the most common reason cited by utility leaders for the decline in coal use.
- Arizona is “well positioned” to comply and already on track to meet interim goals under business as usual, according to analysis by Pace Global. Modeling from Arizona State University similarly found that compliance was eminently feasible. The state is continuing to convene meetings to assess compliance options even though the Arizona Corporation Commission is challenging the rule in court.
- California released a draft of its Clean Power Plan compliance plan in early August, the first state to do so. A California Air Resources Board spokesman stated that the proposal is “a proof of concept for other states, to demonstrate that this is a program that can be adapted to each state and that can be set up in a way that we can form a regional association.”
- Georgia is on track to comply with the Clean Power Plan, especially under Georgia Power Company’s proposed integrated resource plan, which proposes to add much more renewable power.
- Louisiana is continuing to plan for compliance. According to Louisiana Department of Environmental Quality Secretary Chuck Carr Brown, “Some of the coal states are saying, ‘Put your pencils down’… I took this as an opportunity to sharpen the pencil — to create something that is going to work for the state of Louisiana.”
- Michigan’s Attorney General is fighting the Clean Power Plan in court even though the state “would be largely in compliance” with the rule under expected “business as usual” conditions, according to a recent report by the Electric Power Research Institute.
- South Carolina regulators are developing a new state energy plan that will likely include measures to reduce power plant emissions. Although the state has halted official work on the Clean Power Plan and is challenging it in court, these emissions reductions could help the state comply with the rule — and spur economic development, as highlighted in a recent op ed by Frank Knapp, President of the South Carolina Small Business Chamber of Commerce.
- This summer the National Association of Clean Air Agencies released a comprehensive report designed to help states develop implementation plans to comply with EPA’s Clean Power Plan. The report includes a complete model state plan submittal that states can adapt or build on as they wish.
Environmental Protection Agency Administrator Gina McCarthy on Monday joined a chorus of voices saying the country is inevitably shifting from fossil fuels to renewables, regardless of what President-elect Donald Trump does with the Clean Power Plan.
Without naming Trump specifically, McCarthy said the CPP simply followed the market forces that are leading the U.S. to cut greenhouse gas emissions and shift toward renewable energy, but that President Obama used the plan as “a sign of U.S. commitment” to acting on climate change.
Now, developing countries are “wondering if the U.S. will turn its back on science and be left behind” as the rest of the world transitions to cleaner energy sources, McCarthy said at the National Press Club, in what appears to be her last major speech as administrator.
The EPA developed the CPP to require states to cut emissions from the power sector, most likely from closing coal-fired power plants. But on Monday, McCarthy downplayed the rule’s impact, saying critics “give us too much credit. The CPP was designed to follow the clean-energy transition that was already underway, the one that the energy market depends on and the one that the energy market will continue to demand.”
McCarthy noted that 24 states already had lower emissions in 2015 than required by 2022 under the plan.