There was a time, not that long ago when clean energy meant expensive energy for electric utility companies. This was a period when coal ruled because the economics of it looked unbeatable and renewables, like wind and solar, seemed condemned to eternal subsidies, especially in the United States. It was a time when innovation and investment in other clean energy alternatives, like hydrogen, was seen as a marginal activity benefiting only niche applications.
Times have changed. In less than a decade, coal has lost its economic advantage over renewables despite recent efforts, in a dramatic reversal of roles, to subsidize this dinosaur industry to make it competitive again. Renewables are not only here to stay; they are here to displace coal and other dirty fossil fuels when it comes to generating electricity because it is now cheaper to adopt them. No subsidies required.
Electric utilities everywhere are boldly crossing the bridge to embrace a clean energy business model.
Quicker, Cleaner, Cheaper
“There is a realization that renewables are quicker, cleaner, cheaper and also strategically in India’s interest because of energy security; it just makes financial sense to invest in renewables.”
This is what Sameer Kwatra, an energy policy analyst with the Natural Resources Defense Council, told Inside Climate News just a couple of week ago when India announced, for the first time, that it is investing more money in solar power than in coal. This is big news coming from an economy that is expected to double its demand for energy by 2040 (BP estimates) and the third largest emitter of CO2 in the world (after the U.S. and China).
The Independent points out, “We may be seeing the beginning of the end of coal’s rein [in India] as renewable energy investments have begun to outpace those in fossil fuels.” In short, while India continues to increase its use of coal, the trend for new investments is now set for renewables to slowly overtake it―because they are quicker, cleaner and cheaper―as it is already happening in other parts of the world.
More U.S. Utilities Plan to Go Carbon-Free
Doing good for the planet, and for our health, is no longer a mere ‘greenwashing’ gesture offered by utilities facing rising consumer demand for clean electricity; it now makes economic sense. An article by the National Resources Defense Council (NRDC) provides insights into the growing trend by electric utilities pledging to operate fossil-free in the United States (read our article on one of them here). One such utility, MidAmerican Energy, owned by Warren Buffet’s group Berkshire Hathaway, plans to go carbon-free within a year:
“Xcel Energy recently became the first major utility to commit to eliminating 100 percent of its carbon emissions by 2050. Platte River Power Authority, a publicly owned utility in Colorado, announced its pledge to provide 100 percent carbon-free energy by 2030. And MidAmerican Energy, a Berkshire Hathaway subsidiary, will be the first U.S. utility to provide customers with electricity generated from 100 percent renewable energy by 2020, less than a year away.”
Recently, YaleEnvironment360 reported that Xcel Energy “will close its remaining coal-fired power plants in the upper Midwest a decade ahead of schedule and add 3,000 megawatts of new solar capacity by 2030.” Their goal, according to Chris Clark, president of Xcel’s operations in Minnesota and the Dakotas, is to “transform the way we deliver energy to our customers.” This move is a clear indication of a utility changing their business model to stay relevant in the new era of zero-carbon electricity demand.
NRDC explains that “the best investment is climate action” based on their analysis of how the economics of renewables have become more attractive than coal, which serves to make coal an “innovation orphan.” Check out the post we wrote on this topic a few months ago (Coal Power Plants Lose Their Advantage Over Renewables).
Five Days of Zero Coal in the UK
Coal displacement by renewables due to superior economics is a worldwide movement. Electric utilities everywhere are utilizing different strategies to move their industry forward to a carbon-free grid. One promising experiment was conducted in the United Kingdom the first week of May as Bloomberg writes, “The U.K. has gone more than five days without burning coal, the longest streak the country has managed without burning the fuel since the Industrial Revolution.”
The country’s National Grid operator told Bloomberg:
“As more and more renewables come onto our energy system, coal-free runs like this are going to increasingly seem like the new normal. We believe that by 2025 we will be able to fully operate Great Britain’s electricity system with zero carbon.”
This initiative proves beyond any doubt, that as uncertain as it may seem for utilities once reliant on coal, going carbon-free is easier than it once seemed when the right mix of renewables is in place. The U.K.’s recent five-day streak was their third test. The country began experimenting earlier this year with only one coal-free day, then they went to 90 hours, then to five days. Having a solid mix of renewables already in place makes it possible. As Bloomberg points out, “Coal’s portion of the [U.K.} power generation mix has dropped from 40 percent just six years ago to 5 percent last year.”
A Cleaner Future Faster
We have entered an era where renewables will increasingly overtake fossil fuels for the same reason that fossil fuels ruled the past century: better economics. This happens at a time when the rapid increase in global warming makes it imperative to utilize clean energy to move society forward. We need to accelerate this transition by ensuring all renewables―not just wind and solar, but also hydrogen and even nuclear―play in concert to bring affordable, 24/7 clean energy to every corner of the planet.
As the Hydrogen 2.0 ecosystem gains momentum, we’ll be sharing our views and insights on the new Hydrogen 2.0 Economy. We also update our blog every week with insightful and current knowledge in this growing energy field.