Utilities are planning to shift to clean energy — just not too quickly

Nearly every major utility company in the U.S. has committed to shifting to clean energy, but a lot of Americans don’t know that — including, it would seem, a majority of Supreme Court justices.

The court ruled last month to block the Environmental Protection Agency from enforcing already out-of-date carbon emission regulations for the power sector. The conservative majority determined that a decision about whether to move the nation away from coal power should be made by Congress, not EPA regulators. The justices appear to have missed the fact that utilities have already pledged to leave coal behind and have begun minimizing it in favor of cleaner options.

“In the last three years, you have seen major energy companies in the U.S. publicly declare net-zero” targets, said Arshad Mansoor, CEO of the Electric Power Research Institute. ​“I think that has been a sea change.”

Mansoor knows a few things about C-suite attitudes in the utility sector. The organization he runs is funded by utilities to research the big questions facing their industry; it was created by Congress in response to the Great Northeast Blackout of 1965. He answers to a board comprising dozens of top U.S. utility executives.

At EPRI’s Electrification 2022 conference in Charlotte, North Carolina last month, the leaders of heavy-hitter utilities unanimously embraced cutting carbon emissions and electrifying transportation. That is, on its face, a huge win for climate activists and clean-energy advocates.

So the if is settled. But that leaves a crucial question: when?

That’s where things get interesting. The same utility executives proposing a bold turn toward clean energy and electric vehicles at the EPRI conference chased that sentiment with caution, warning that moving too fast could hurt their customers — especially now, when Russia’s invasion of Ukraine has rattled global oil and gas markets.

Net-zero carbon goals don’t mean much if they aren’t followed by action, and utility exhortations to patience don’t convey the kind of urgency that climate modelers say are needed. I caught up with Mansoor on the sidelines of the conference to ask if all the talk about ​“net zero, but at an appropriate pace” was industry code for not moving fast.

“No, I think it’s a code for: We’ll move as fast as the speed of reliability and affordability,” he said. ​“You will also hear every one of [these utilities] saying that if we don’t take care of affordability and reliability, that will be the biggest obstacle to go to clean energy, because if customers get upset, it will have a negative impact on the clean energy transition.”

Given the need to keep the power flowing, Mansoor worries that a rush to hit the nice, round number of 100 percent clean electricity by 2030 would be ​“too fast, too deep, too soon.” That’s not actually the deadline the Biden White House chose — that would be 2035. But 2035 is not far off for utilities that have to plan their infrastructure at the timescale of decades.

Right or wrong, utilities play a central role in the nationwide shift to cleaner energy. Based on my conversation with Mansoor, here are three key ideas animating utility attitudes toward decarbonization right now.

This is the decade for major investment in wind, solar and batteries

The utility industry by and large has moved past its earlier skepticism of wind and solar. It’s now clear that grids can handle levels of renewable generation that were previously unthinkable — in fact, this is already happening in many states.

During the 2020s, the power sector needs to ramp up the most readily available clean technologies, according to Mansoor. ​“The widespread deployment has to happen in wind and solar and batteries,” he said.

The newest addition to that roster is batteries. Battery storage has already become the default choice for new on-demand power capacity in California, which has a legal mandate to end carbon emissions from the grid by 2045. In much of the country, though, the exact same storage technology is treated as a new and untested thing, yet to be attempted at scale.

But Mansoor said that, even if battery construction has yet to spread from coast to coast, it’s gotten utility leaders’ attention.

“Right now, most utilities — East Coast, West Coast — would say that battery [storage] is a legitimate option,” Mansoor said. It still needs to fit into a utility’s planning process and meet regulators’ expectations for a cost-effective investment, however. ​“If the regulator approves, then I think you will see the battery wave happening everywhere.”

The supply-chain crunch couldn’t have come at a worse time

To halve economywide carbon emissions from 2005 levels by 2030, as President Biden has pledged to do, the U.S. needs to build far more wind and solar each year than it ever has before.

But right when the early 2020s ramp-up should have started, Covid kicked in. Then solar supply chains got wobbly and battery demand outstripped supply and the U.S. solar industry was rocked by the threat of new tariffs.

Now clean energy deployments need to bounce back from a slowdown to reach historically unprecedented heights.

“Almost every [renewable energy] project is a year delayed [or] nine months delayed, and almost every project has a 15%, 20%, 25% cost-up,” Mansoor said. ​“And when is 2030? It’s just around the corner.”

That’s not to say EPRI is pessimistic about making serious progress toward decarbonization by 2030, Mansoor added. Some regions will lower power-sector emissions by 80 percent from 2005 levels, and a handful of utilities could reach 100 percent clean energy by the end of the decade.

“But somebody will have to bring a dose of reality [about] what has happened in the last two years,” he said.

Utilities don’t want to get rid of all their coal and gas too soon

The simple near-term roadmap for cleaning up the grid is to shut down coal and gas plants and build wind, solar and batteries. Shutting down (often uneconomic) coal plants, specifically, has proven a tangible objective for climate activists to campaign on. And they’ve been successful, aided by a heavy dose of economic reality: According to the Sierra Club, 357 coal plants have been closed down in the U.S. in recent years, while 173 remain online.

One of Mansoor’s more contentious arguments, then, is that we shouldn’t be too worried about keeping some coal and gas plants around as a rarely used backup option for the grid.

“Should a coal plant be operating for 5% of the time for the next 20 years?” he asked. ​“Absolutely, if you cannot get other things ready in terms of cost-effectiveness. […] It’s already there; you’re paid for.”

Granted, there are well-documented cases of already-built coal plants that cost more to run than other sources of power. But Mansoor is specifically talking about using coal plants not as continuously running assets, but as flexible backup for extreme moments when other resources can’t meet demand.

“When people say, ​‘Arshad, are you supporting gas and coal to stay?’ I say, I’m supporting lights to be on, because if the lights are not on, then this transition will have the most severe setback,” Mansoor said.

The issue is that wind and solar aren’t capable of delivering dependable power 24/7 the way old-school fossil plants do. Batteries can currently help cover gaps of a few hours, but not longer. Clean firm resources such as small modular nuclear reactors or clean hydrogen-burning turbines could eventually take that role, as could cheap long-duration energy storage, but they’re all still years away from prime time.

The electricity sector has already reduced its carbon emissions by a far greater percentage than other key sectors such as buildings, transportation or heavy industry, Mansoor said. Indeed, the decarbonization of those other sectors will depend to a large degree on the electricity sector being able to provide clean, reliable power.

Instead of fighting about whether one particular gas plant is good or bad, Mansoor argued in favor of a broader societal focus on how to get the most decarbonization bang for the buck. In many cases, he said, that means investing in cleaning up the other sectors before shutting down every last fossil power plant.

“We want to go net zero by 2050 economywide, and to do that, what should we be doing?” Mansoor asked. ​“In that whole scale of things that we need to do, how much is this going to impact the bigger-picture goal?”

Of course, it’s easy enough to imagine utilities using this argument to justify extending the life of uneconomic, polluting plants when cost-effective, clean alternatives exist. Specific choices about whether to keep a gas or coal plant running or build a new gas plant will need to be backed up by rigorous empirical analysis. And building any new fossil infrastructure would run counter to the International Energy Agency’s roadmap for how humans could just barely manage to prevent warming from surpassing 1.5 degrees Celsius.

If utilities aren’t yet comfortable jettisoning the tools they are deeply familiar with as they start making the transition to net zero, the onus is on clean-energy providers to perform so well that those lingering fossil plants run as little as possible.