Rocky Mountain Institute

What utilities can teach us about fighting climate change

In 2018, we've seen the harsh impacts of climate change arise much faster than expected, and carbon emissions continue to increase at a record pace. But against this stark backdrop and with uncertain political will at the federal level to address it, shining examples of business- and state-led action illustrate the possible and profitable transition to a lower-carbon and lower-cost energy mix.

Nowhere has this trend been more visible in 2018 than among American electric utilities, and not just those in blue-state strongholds. Motivated not by politics but by lower costs, value creation and customer preferences, a growing number of electric utilities across the nation unilaterally have announced ambitious targets for carbon reductions in line with science-based goals and the international commitments made under the Paris Agreement.

Colorado is an indicative and encouraging example of this emerging trend. Colorado is an unabashedly purple state with split priorities on climate, but its 41 electric utilities serve communities across the political spectrum using the same set of objectives focused on safe, reliable and affordable service. No matter where in the state or political spectrum you look, these same timeless objectives are increasingly aligned with accelerated adoption of low-cost renewable energy.

The largest public recognition of this emerging reality has come from eight-state Xcel Energy, whose Colorado operation provides electricity to over half of the customers in that state. Xcel, after discovering earlier this year that continuing to run two coal plants would cost its customers an extra $200 million compared to retiring and replacing them with renewables and batteries, this month became the first major, multi-state U.S. utility to commit to 100 percent carbon-free electricity by 2050.

Other utilities serving a diverse cross-section of Colorado customers have taken similar steps in 2018. Colorado Springs Utilities, serving a military town, announced a plan to provide over 20 percent of its energy from solar projects by 2024. The board of Platte River Power Authority, serving four municipalities in northern Colorado, voted unanimously to adopt a goal of 100 percent carbon-free electricity by 2030. And Holy Cross Energy, a small cooperative utility in the mountains of central Colorado, adopted a goal of 70 percent renewable energy by 2030.

These new goals from diverse Colorado utilities ensure that over half of all electricity sold in the state will come from zero-carbon resources by 2030, leapfrogging the 30 percent standard set by the legislature and providing a business-led head start for the policy goals of Gov.-elect Jared Polis, who campaigned with a 100 percent renewable energy target. Incoming governors in other states, including New MexicoWisconsin and Maine, are committing to clean energy even as the federal government doubles down on high-cost, legacy coal technologies.

Electric utilities across the country have come to the same conclusions about the emerging cost-effectiveness of low-carbon resources compared to legacy coal technologies. Even among utilities who own and operate significant fleets of coal-fired generation, there is increasing recognition that replacing coal with lower-cost renewables will benefit customers — and even help make systems more resilient against disruption.

For example, PacifiCorp, a large utility serving customers in six Western states, released a study (PDF) in early December showing that 13 out of its 22 existing coal-fired generating units were more costly to keep running than to replace with new, cleaner resources. Consumers Energy in Michigan filed a plan in June with its regulator to retire all of its coal-fired generators by 2040, replacing them entirely with renewable resources and energy efficiency investments. And the Northern Indiana Public Service Company, in the heart of coal country, announced in November it could save its customers $4 billion by retiring all of its coal plants ahead of schedule and replacing them with wind, solar and batteries.

Even where utilities are lagging in their ambitions to move quickly towards low-cost clean electricity, corporate America is more than picking up the slack. So far in 2018, corporations have signed deals to buy nearly 5,000 megawatts of new renewable energy projects, smashing records set in previous years and proving again the case for profit-motivated, not politically motivated, climate action.

As world leaders gather in Poland for COP24 to negotiate international goals for climate action, a quiet revolution is meanwhile underway in the American power sector, driven in large part by economics and the power of innovation.

Although much progress is yet to be made by U.S. utilities in setting and achieving climate-aligned goals, 2018 has shown how quickly even our $400 billion utility industry can move when the money is right and the need for climate action is clear. As we struggle with ways to further decarbonize our economy and limit the worst effects of climate change, policymakers and business leaders in other sectors can take a lesson. 

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