The US President has lit the spark on a net zero energy system ” utilities must now carry the flame says Wärtsilä Energy president Sushil Purohit.
The new US administration’s policies could prove to be a pivotal moment in the global fight to tackle climate breakdown.
President Joe Biden signed a host of executive orders on ‘Climate Day’ at the end of January: to rejoin the Paris agreement, appoint a climate ‘tzar’, pull the plug on the Keystone XL oil pipeline and order the Pentagon to make climate change an issue of national security.
The US has an ambition for a zero-carbon energy sector: the question is how can the country deliver it in practice? What is the cost-optimal energy mix for the US to achieve a renewables-led energy system? Plus, can it possibly be delivered within the aggressive timeframes set out by the new President?
At the core of the US’s energy policy is a pledge to invest $2 trillion to create a zeroemission electricity system by 2035. The stated aim is to drive economic recovery and job creation, while protecting communities that lie in the crosshairs of climate change.
The naysayers are already claiming that the energy transition won’t be possible within that budget or timescale, with one source even estimating that the costs of realising a 90% decarbonised energy system would reach $7 trillion.
At Wärtsilä, we have used our energy experience and power system modelling to analyse the potential to meet the vast energy demands of the US using the lowest cost power source ” renewables.
Our recent report ” Aligning stimulus with energy transformation ” found that the US could achieve a zero-emission electricity system by 2035 through investing $1.7 trillion into wind and solar, plus energy storage and flexible generation to balance system intermittence and volatility.
The most productive areas for wind and solar in the US are in relatively lowly populated areas, so massively scaling up renewables is possible, but will require significant investment in network infrastructure to transport clean energy to homes and businesses where it is used.
However, even considering the construction of new transmission lines to export the increased amount of wind and solar power, our modelling shows the overall cost of a zero-emission electricity system would stay well within the US administration’s $2 trillion estimate.
Onshore wind and solar are by far the cheapest forms of new electricity generation and are the only economically viable way to achieve decarbonisation at the pace and scale required.
According to our modelling, the US vision for a zero-emission electricity system could be achieved by deploying 1,700GW of new renewable energy capacity over the next 15 years.
This is undoubtedly a huge undertaking, but would be transformative for the US, creating cleaner air, transforming the green economy and generating almost nine million sustainable jobs, according to our calculations.
States like California and Texas have already made tremendous progress in decarbonising, thanks to record levels of private sector investment in clean energy, which has pushed the US energy system to the brink of transformation.
Texas is the national leader in wind energy with 30GW of installed capacity, supporting 25,000 jobs.
The Lonestar State has extremely favourable conditions for renewables, with some areas driving world leading capacity factors of 50% from wind and 25% from solar.
Instead of trying to balance new installed renewables with centralized ‘legacy’ gas power plants, several Texan utilities are balancing their renewable generation with new technologies, such as energy storage, and state-of-the-art flexible power plants which will in the future use renewable fuels.
This combination of new renewables and flexible engine technology can be a fulcrum for the transformation that the US energy sector needs to undergo to regain profitability and grow its profits by expanding into new sectors.
With such a significant amount of new renewables deployed, flexibility in the form of energy storage and carbon neutral flexible gas power plants ” enabled by future zerocarbon fuels ” is key to balancing the grid.
Our modelling found that the US would need 410GW of new battery energy storage capacity by 2035, combined with 116GW of new flexible gas-fired power capacity operating on renewable bio- or synthetic carbon neutral fuels. That would be created via 151GW of new electrolyser capacity for Power-to-Gas fuel production.
In this approach firm, fast-starting natural gas power plants bridge the load to renewables in the short-term, while also future-proofing utility portfolios to burn carbon neutral fuels, such as synthetic methane and hydrogen, which are just around the corner.
Future fuels produced via a Power-to-X process present a huge opportunity to capitalise, not curtail, excess renewable energy to provide clean, flexible thermal balancing, alongside clean, transportable fuel to power buildings, mobility and industry.
At Wärtsilä we are already generating power with engines which can use blends of natural gas and hydrogen, and are being further developed to burn 100% green hydrogen within the next few years.
These fuels form a large seasonal storage to compensate for weather changes and seasonal variations like winter. They can be stored, transported and used to decarbonise all energy consuming sectors, from mobility to heavy industry, making the utility sector more relevant than it has ever been within the US economy.
This cost optimal zero-carbon energy system will come to fruition when energy systems reach 80-90% renewables, as Power-to-X will enable the final step to 100% renewable power by powering responsive gas engines with carbon neutral fuel.
While a wealth of cheap natural gas remains available, the direction of travel is clearly towards greater regulation on carbon. Future fuels represent the missing piece of the puzzle of how to bridge energy portfolios to zero emissions.
The change is from an opex model (i.e. doubling down on ongoing fuel costs, high maintenance costs and climate risk), to a capex model which offers predictable up-front investment in unlimited renewable power, with relatively low maintenance.
Ending fossil fuel subsidies
A zero-carbon energy system is viable for $2 trillion, but in a post-COVID-19 world, can the US be expected to generate that level of investment?
The signals coming from the White House suggest as much and reflect the changing investment structure and valuing of carbon.
The US spends an eye-watering $40 billion on fossil fuel subsidies, which have long been seen as public enemy number one for achieving decarbonisation.
However, that looks set to change as the new administration has called for the US to “be bold” and put an end to fossil fuel subsidies once and for all.
The impact of shifting that level of global capital away from fossil fuels would be vast and the ripples would be felt around the world, especially if it were to be redirected towards renewables and future fuels.
That level of subsidy with a focus on flexible power systems would enable us to rapidly commercialise future fuels and take a significant step in enabling and speeding up the energy transition.
Countless governments have set ambitious carbon neutral targets, but these are yet to be matched by clear strategies and firm action plans.
That is like trying to conquer Everest without a map and it must change if we are to realise the energy transition.
Having modelled power systems for over 145 countries worldwide, our experience tells us that every country can achieve a cost optimal, futureproof path to 100% renewable energy using technology that is available today.
But the path to net zero will not materialise through incremental steps and organic change.
An unplanned, step-by-step journey risks energy systems being burdened with technologies that do not support the transition to 100% renewable energy.
Governments and utilities must adopt clear strategies to drive action, developed in collaboration with all sectors of the economy and setting clear milestones for transformation.
Leading the world again
The US has the opportunity to accelerate the energy transition globally.
Current US policies demonstrate that the next four years will be dedicated to rapidly progressing the march towards a net zero energy system.
Energy companies can either use this opportunity to evolve and shape the new model, or they can be pushed along by regulation, attempting to cling onto an inflexible model where their value has been eroded by lower cost, clean technologies.
President Biden will outline the US climate plan on the global stage at the COP26 meeting in the UK in November.
Recently-appointed Special Presidential Envoy for Climate John Kerry says that the Glasgow climate summit is “the last best chance the world has to come together to avoid the worst consequences of the climate crisis”.
The chance of grasping that opportunity today seems more possible, especially if the utility sector steers the way.