Most utilities that have set 100% clean or net-zero targets will be the first to admit they don’t entirely know how they’ll get across the finish line by 2050.
For the next two decades, power companies have a clear vision. They’re planning to retire much, if not all, of their coal-fired power. They’re doubling or tripling their wind and solar portfolios. They’re seeking to extend the licenses of their existing nuclear plants to keep that carbon-free power online.
Beyond that, the vision gets a little fuzzy. Utilities are banking that nascent technologies such as carbon capture and long-term battery storage will drop dramatically in cost. In some cases, they’re betting on emissions-cutting technologies that might not even exist yet.
“We do have 20 more years to go, and we put our faith in the fact that there are a lot of innovators in this field [and] in this industry,” said Brian Wheeler, a senior public information director with Consumers Energy. The Michigan-based utility announced Feb. 25 a goal to reach net-zero emissions by 2040, a decade earlier than other power companies.
“By setting that ambitious goal, we actually will be able to contribute some momentum toward that innovation, put some leverage behind what those people and those companies are trying to do,” Wheeler said in an interview.
Nonetheless, the uncertainty over how utilities such as Consumers Energy will reach their goals raises questions about investment and policy in the next decade. One of the biggest questions power companies will face is what to do about natural gas plants, which have been the driver of much of their carbon-cutting success so far. The problem, however, is they cause emissions of greenhouse gases, including methane, at least two-dozen times more potent than carbon dioxide.
Most utilities’ net-zero or clean energy targets don’t include plans to shutter natural gas facilities. Some power companies, such as Michigan-based DTE Energy, are building even more natural gas capacity to help balance the vast amounts of wind and solar power they plan to bring online in the next decade or two. DTE, which set a net-zero goal last fall, plans to triple its renewable energy generation in the next decade.
“Natural gas plays an essential role in helping us achieve net-zero,” said Aaron Ruby, who manages gas communications for Virginia-based Dominion Energy, which set its 2050 goal Feb. 11. “As we rapidly expand renewable energy, we need reliable and easily dispatchable natural gas backing it up, so we never sacrifice the reliability of our system.”
Utilities see natural gas as a pillar for their plans to add more and more renewable power, wind and solar generation that, while relatively cheap to build, is variable. Without long-term battery storage technology with the capability to store power for days or even weeks, utilities are looking for steady power such as nuclear or, more often, natural gas to be their backbone.
“We have significant periods of time that we don’t get enough generation from our renewable energy to supply our customers,” said Skyles Boyd, DTE’s vice president of environmental management and resources, in an interview. “We call them silent periods.”
Natural gas is a critical piece of making sure the lights stay on during those periods, he added.
North Carolina-based Duke Energy also sees natural gas as both a significant piece of its success so far — the utility cut its emissions by 8% in 2019 alone — and a complement to its ability to expand its renewable portfolio significantly, said Phil Sgro, a spokesperson for Duke.
Duke, which set a net-zero by 2050 goal last year, plans to at least double its renewable generation by 2025. That includes adding another 3,000 megawatts of commercial renewables by 2023 and another 500 MW of wind and solar in its regulated territories by 2025.
“I think it’s really important that the overall picture is taken into account when people look at the role of natural gas,” Sgro added.
Nonetheless, many of these utilities will face a reckoning point in the mid-2030s.
“I think the next 10 to 15 years is probably a relatively straightforward exercise,” said John Larsen, who directs U.S. power sector research at the Rhodium Group, an independent research firm. Most utilities will follow a similar path as energy models tell them to, retiring coal plants, maintaining gas and nuclear power, and scaling up renewables significantly, he said.
The last 15% to 20% of a net-zero or 100% clean goal, however, “might get super expensive to meet with just renewables,” Larsen said. “That’s when you start to have some tougher conversations about” natural gas with carbon capture or other technologies such as advanced nuclear and hydrogen that right now are too expensive to deploy widespread.
Minnesota-based Xcel Energy, for example, is confident it can slash its emissions 80% below 2005 levels by 2030. In 2019 alone, the utility cut its carbon output by more than 10%, its most significant single-year drop, putting it at a 44% cut overall, the company announced Wednesday.
After 2030 though, “the cost of adding new renewable energy starts to climb dramatically,” said Frank Prager, Xcel’s vice president of policy and strategy, in an interview. “The next increment of renewable energy gets very, very expensive.”
That’s even as Xcel, the very first U.S. utility to set a 100% clean energy goal, is well-positioned to take advantage of abundant Midwest wind power and Colorado solar power. Much of its carbon reduction so far has come from renewable buildout, coupled with the retirement of coal, rather than a transition to natural gas, Prager said.
“We need technologies we don’t have today,” he added. “That’s where a big piece of our strategy really comes to the fore, trying to identify and build the technology development that’s going to be necessary” to bring about steady zero-carbon power that can balance intermittent renewables such as wind and solar.
No utility sees a silver bullet, though. Instead, they’re keeping an eye on many different emerging technologies: natural gas with carbon capture, small modular nuclear reactors, long-term battery storage, hydrogen, and geothermal. Dominion Energy is investing in so-called renewable natural gas, using captured methane and biomass from agricultural production.
Power companies are asking for the federal government’s help to shoulder more of the cost of these early innovations. Part of many of their clean energy strategies is to advocate more directly for policies on Capitol Hill that boost research, development, and deployment of these technologies, mainly through pouring more dollars into research programs at the Energy Department.
It’s not clear whether utilities would embrace a carbon price or clean electricity mandate, as proposed by Democrats in Congress, enough to lobby for it. Only one of the utilities interviewed by the Washington Examiner, DTE Energy, mentioned it could support a price on carbon, in the form of a cap-and-trade system.
Clean energy advocates are hoping utilities will test-drive some of these nascent technologies.
“How do we use the next 10 years to just innovate the heck out of everything?” said Armond Cohen, co-founder and executive director of the Clean Air Task Force. He suggested utilities could partner up to serve as early customers for some of these emerging technologies that are more mature, such as hydrogen, to help initially drive the market for them.
“You’ve got to be politically active to get the support for what you need, but as market players, you have to start getting out there and talking to vendors and saying, ‘This is what we’re looking to provide,’” Cohen said he tells utilities. “It’s a commercial strategy and a policy strategy combined.”
Some utilities, though, say they face hurdles on the state level as they pursue investments in new clean energy technology because there’s not a way yet for them to recover all those costs.
“We need to see a 21st-century regulatory climate that recognizes that massive investments in clean energy are in the public interest and a reasonable and prudent expense of our company’s investment dollars,” Ruby of Dominion Energy said. “That isn’t historically the framework in which most utility commissions operate.”
One other hurdle, though, is the politics, especially as climate activists and progressive Democrats set their sights on phasing out natural gas entirely.
That political strategy could undercut investments that utilities and others argue need to be made in technologies such as natural gas carbon capture and hydrogen, technologies that would ultimately reduce natural gas’s footprint.
“If solving the climate problem is your agenda, it’s extremely risky not to be planning for what to do with fossil fuel use in the middle of the century,” said Bob Perciasepe, president of the Center for Climate and Energy Solutions. “We need to keep working on all of those things,” he said of technologies such as carbon capture and hydrogen, both of which he said will be critical to drawing down emissions to meet overall climate goals.
“The No. 1 thing for electricity decarbonization and the total volume of greenhouse gases is to close the coal plants as soon as possible,” Perciasepe added. That could mean utilities need natural gas in the near-term.
“People are fighting them over that,” but it’s a “rational” climate policy to shutter coal and look to cleaner options, he said.
