This post originally appeared on the site of CGC’s campaign for a federal Green Bank.
When it comes to the addition of new power generation, renewables have been rapidly gaining ground on fossil fuels. EIA has reported that wind and solar account for 64% of new planned capacity additions in 2019. This is a positive trend, but a pair of new reports from the Rocky Mountain Institute (RMI) shine a critical light on the other 34% of this pie: the continuing addition of new natural gas generation.
RMI’s reports find that economics now favor clean energy over nearly all new natural gas generation. This means that not only will consumers be paying higher-than-necessary power prices from day one of these projects’ operation, but investors in these projects face significant risks. By the 2030s, RMI estimates that even existing gas plants will have difficulty competing with new renewables. For plants being built today, that means that they’ll be in economic trouble well before they’re fully paid for. Investors in these facilities could stand to lose tens of billions.
To reach this conclusion, RMI didn’t just compare the costs of building a natural gas plant vs. a wind or solar farm. They did something more interesting: they created location-specific “portfolios” of clean energy technologies that represented the most cost-effective mix for that area. These portfolios included wind and solar, but also energy storage, energy efficiency, and demand flexibility resources.
In studying this mix of technologies, RMI makes a realistic projection based on trends that are already happening. The report cites recent examples, including this one where construction plans were changed:
In North Carolina, Duke Energy has effectively canceled a previously planned gas-fired power plant, in part because the utility was able to procure significant battery storage, EE, and demand flexibility resources to obviate the need for the gas plant through the end of its planning horizon.
Green Banks are already helping expand investment in these technologies at the state level. For example, energy storage has been a focus for new investment from the New York Green Bank; the state has announced that it “seeks to invest at least $200 million in storage related-investments, which will help drive down costs for the strategic deployment of energy storage at scale. Continued flows of capital, including from a National Climate Bank, will be important in spurring the growth of these clean energy portfolios and strengthening their ability to compete with fossil fuels.