Ameren Missouri, the Show-me state’s largest utility, is finally coming around to clean energy. In a significant shift, the nation’s second most coal-reliant utility announced last week its plan to dramatically increase its wind and solar investments and significantly cut carbon pollution.
Up until now, Ameren’s generation portfolio was made up almost exclusively of coal and nuclear sources. But the company is now recognizing the cost-effective technologies of today and the future, namely solar and wind. Ameren’s President, recognizing that customers and investors now expect a more diversified clean energy mix, asserted- “This is important for our customers. They're asking us to do it."
While the company can certainly go further, the announcement is a major step forward and ushers in a long-awaited clean energy transition promising large economic, environmental and public health benefits to Missouri households and businesses.
A big leap forward, with room for improvement
The announcement came on the heels of the company’s filing of its Integrated Resource Plan (IRP)- a 20-year plan for investments in new generation and infrastructure to meet customer power demand.
In its IRP, Ameren laid out its plans to invest in at least 700 megawatts (MW) of wind generation by 2020 and 100 MW of solar projects in the next decade. These investments are by far the biggest ever investments in renewable energy by Missouri’s largest utility. The new plan also marks a big step forward considering Ameren’s current generation fleet: coal makes up nearly 70 percent of its generation, while solar and wind make up less than 1 percent of the supply. In fact, while located in one of the windiest regions in the U.S., the company owns no wind projects and only purchases enough wind to power roughly 25,000 homes. The new commitment would raise the share of wind to 10 percent of the company’s generation - more than a nine-fold increase in 3 years! This puts Missouri on track to reap the climate, health and economic benefits that its neighbors, including Iowa and Kansas, are reaping from impressive wind investments.
However, Ameren can go much further. Its neighboring peer utilities have made large wind investments and continue to beef up their renewable portfolio; looking over at the western part of Missouri, Kansas City Power & Light (KCP&L, the state’s second largest utility) has a wind portfolio exceeding 1,400 MW and continues to make large wind investments. Ameren can thus further increase its investments in wind energy. That said, the current plan is still a good start, and the company has asserted that 700 MW is the minimum threshold.
Additionally, Ameren is now among the first utilities in the country to announce an ambitious carbon dioxide (CO2) emissions reduction goal, committing to cutting its CO2 emissions by 80 percent by 2050 compared to 2005. By doing so, it joins the ranks of Xcel Energy, DTE Energy, Duke Energy and others. Its pathway towards meeting that goal includes retiring half of its coal capacity by 2037, and all of it by 2050. Notwithstanding this laudable step forward, the average age of Ameren’s coal fleet is nearly 50 years, with the youngest plant being 40 years old. This represents a significant opportunity to retire more coal earlier than it sets out to do in its current plan.
Customers will pay lower bills
In the words of Ameren’s president, the large growth in wind generation is expected to provide “great value to [Ameren’s] customers, who will save money on energy costs. Because of significant advancement in technology, harnessing wind is less expensive than other forms of new generation." And he is spot-on. The plummeting costs and continued advancements of wind and solar technologies, coupled with the tax credits enjoyed by these projects, have made them the cheapest form of new generation in many parts of the country, especially in the Midwest. In Ameren’s case, investing in cost-effective new wind and solar projects would be cheaper than running its existing coal plants. And those energy cost savings would translate into lower bills for Ameren’s customers.
That’s a particularly important point considering how electricity rates in Missouri have recently fared compared to the rest of U.S. Families and businesses face electricity bills that have increased at the fourth highest rate in the country in the past ten years, while Ameren’s customers have seen higher rate increases than customers of its peers since 2010. Therefore, tapping into wind energy- a reliable, cheap electricity resource sheltered from price fluctuations- would be particularly beneficial for Ameren’s customers and Missourians in general.
Customers want clean energy
Ameren’s announcement was driven in no small part by the growing demand for clean energy by its large customers. To quote Ameren’s President again "This is important for our customers. They're asking us to do it".
In fact, many of Ameren’s largest customers- including Walmart, General Motors and Anheuser Busch- have made commitments to power their operations with 100 percent renewable energy in the near future, and have been very explicit about their clean energy needs. And considering the growing nationwide trend of large businesses like Amazon, Apple and Facebook locating their data centers based on easy access to renewable energy, it became all the more necessary for Ameren to boost its clean energy investments to both attract new customers and retain current ones. In fact, only a few days before Ameren’s announcement, one of the company’s oldest and most iconic customers- Anheuser Busch- bypassed the utility and contracted to purchase wind energy from an Oklahoma wind farm to meet its clean energy goals.
The announced clean energy investments, coupled with Ameren’s recent efforts to get permission to make renewable energy purchases on behalf of its large customers to exclusively meet their clean energy requirements, create a good environment for large businesses to move to Missouri. This would be an economic boon, creating jobs and spurring economic activity.
Conflicting visions have unfolded
Ameren’s renewable energy commitment kicks off Missouri’s long-awaited clean energy transition. In fact, looking over at the western side of the state, KCP&L has also laid out an aggressive coal plant closure schedule by 2019 and is on track to have wind supply more than 20 percent of its generation by the end of the year.
Ameren’s announcement also reveals a dissonance in Missouri with respect to the state’s energy future. While utilities are increasingly recognizing the benefits of clean energy and moving to transition away from fossil fuels towards cleaner, more diversified portfolios, the state blocked for the second time the approval of the Grain Belt express- a proposed transmission line that would deliver cheap wind from Kansas to Missouri and other states, and would thereby aid the state’s utilities in achieving their goals and delivering benefits to their customers and shareholders (more detail here).
Similarly, many opportunities such as energy efficiency, demand response, distributed solar, storage, and electric vehicles remain to a large extent untapped in Missouri, and must be integrated into future investment decisions to maximize benefits for consumers and the environment.
Indeed, there remains a big and exciting opportunity for Missouri to tap into clean energy to make the state more competitive now and in the future. The recent Ameren announcement is an important step in that direction.