As Coal Plants Fade, Clean Energy Opportunities Flourish

This post was authored by Rachel Fakhry, Schneider Fellow, NRDC.

The shift away from coal presents the U.S. with an exciting opportunity to lead a global transition to a clean energy economy. In that context, NRDC argues in an issue brief published today we should capitalize on clean energy opportunities as more and more coal-fired power plants close.

The U.S. electric power sector is in the midst of a significant transition. Record-low natural gas prices, plummeting renewable technology costs, modest electricity demand growth, and environmental standards have driven power companies all over the country to retire a large number of old, dirty and uneconomic coal plants. And despite the Administration’s claims, there is broad agreement that a coal resurgence is unlikely, as some of the largest utilities in the country have reaffirmed their commitment to move away from coal in coming years for long-term economic and environmental reasons.

In this paper, NRDC highlights three major opportunities—energy efficiency, renewable energy, and electric grid modernization that can replace the retiring coal fleet while delivering much-needed economic and environmental benefits.

Energy efficiency is the cheapest resource available  

Energy efficiency has been repeatedly shown to be the cheapest resource to meet our energy needs. The U.S. has massive untapped potential to save energy and money through more efficient appliances, buildings, lighting, and more. Leading states like Rhode Island and Massachusetts have cost-effectively achieved annual electricity savings close to or over 3 percent of electricity sales but at least 20 of the states in the country have yet to exceed annual efficiency savings of 0.6 percent of electricity sales.

Energy efficiency investments deliver a long string of benefits: they reduce utility bills for customers, avoid the need for states to spend on costly natural gas power plants and transmission infrastructure, create a sizeable number of jobs and help maintain grid reliability. Underperforming states should adopt strong energy efficiency goals and put in place a regulatory framework that incentivizes energy savings. States should also incorporate efficiency into long-term resource planning, following the example of the new Northwest Power Plan for Idaho, Montana, Oregon, and Washington, which uses energy efficiency and demand response to fulfill nearly all projected growth in energy and capacity needs through 2035!

Renewable energy is expanding rapidly because it is increasingly cost competitive

Wind and solar generation have experienced remarkable growth over the past eight years. Between 2008 and 2015, total U.S. wind generation more than tripled, while 2015 total solar generation was 30 times what it was in 2008. Technology cost reductions, coupled with federal and state policy support, make it cheaper to build a new wind or solar project than to run an existing fossil fuel-fired power plant in some areas of the country. And the story will keep getting better. Industry experts expect the multiyear extension of the tax credits for wind and solar to drive unprecedented expansion in renewables over the next five years.

We have increasing opportunities to capture the benefits of cost-effective renewable energy investments as more coal plants retire around the country. Existing state Renewable Portfolio Standards (RPS) have reduced carbon emissions and air pollution, cut water use, and created hundreds of thousands of clean jobs at little or no cost to households and businesses. The U.S. Department of Energy recently estimated that, out of the electrical generation workforce, the U.S. solar industry alone employed more people in 2016 than the coal, gas and oil industries combined. Similarly, DOE’s most recent tally counts twice the number of employees in the sector than the American Wind Energy Association tracked in 2013.

Some states have seized these opportunities and are making laudable clean energy commitments. California, New York, Hawaii, Oregon and Vermont—and the District of Columbia, home to one-fifth of the country’s population, now intend to get at least 50 percent of their electricity from renewable sources. Additionally, Illinois and Michigan have passed important legislation to boost renewable energy standards.

The outlook for renewables has never looked better, and states should capitalize on the opportunity to enjoy the large economic and environmental benefits of clean energy investments.

A more integrated and responsive grid is within our reach

Integrating large amounts of intermittent wind and solar resources while maintaining a strong and reliable electric grid will require system planners to scale up existing resources to reinforce grid operations. Those include smart investments in transmission upgrades, demand response, advanced metering infrastructure, and other distributed energy resources like battery storage. For example, expanding transmission infrastructure to wind- and solar-rich areas can reliably unlock more than 10 times the current amount of wind and solar on the Eastern Interconnect power system.

At the same time, mechanisms such as dynamic electricity pricing  and demand response enable system planners to shift electricity consumption to times of high renewables generation or curtail consumption in times of constrained supply. These programs can minimize electricity bills because shifting electricity demand to off-peak hours reduces the need to run the most expensive and inefficient generators and could avoid new plant additions.

Energy storage also promises to play a key role in the modernization of our nation’s electricity grid and the integration of more renewable energy, and batteries are expected to be commonly installed alongside rooftop solar by 2020.

A fossil-reliant future is fraught with risks

In addition to all the upside benefits of more clean energy investments, there are a number of key environmental and economic risks associated with a fossil-reliant future. Running natural gas plants will undermine our ability to achieve the carbon reductions necessary to mitigate the worst impacts of climate change. At the same time, natural gas production has been increasingly associated with environmental hazards including earthquakes and methane leaks. There are also significant economic risks. Gas prices are notoriously volatile, and states that rely more heavily on natural gas plants expose their customers to price swings and sudden spikes in electricity and heating bills.

For more details on region-specific opportunities for clean energy expansion in the most coal-heavy parts of the nation, including the Mid-Atlantic (PJM), the Midwest (MISO), and the Southeast, please refer to the issue brief.

The ongoing trend of increasing coal plant closures across the country offers the U.S. a critical opportunity to move to a clean, more flexible and resilient energy system, and lead a global transition towards a carbon-free future while reaping economic, environmental and public health benefits. With the transition to a clean energy future already under way, smart planning to maximize investments in resources like energy efficiency, renewable energy, and a more integrated, responsive grid will move the nation toward an affordable and reliable clean energy future.