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Reflecting on Sierra Club’s ‘Building a Carbon Free Grid’ Conference

This month, I had the opportunity to represent Clean Energy Action at the Sierra Club’s ‘Building a Carbon Free Grid’ conference in New Orleans, where hundreds of lawyers, energy economists, policy experts and organizers convened to strategize over the technical and movement-building requirements to achieving a just transition away from fossil-fuel powered electricity system towards one that is powered by renewable energy.  Over the course of three inspiring, information-rich days, dozens of panelists provided a broad survey of the work that is being done across America to facilitate the transition to a renewably-powered future; the grassroots campaigns, the economic analyses and the legal battles. Since the conference, a few realizations have been solidified in my mind and they’re mostly good news:

  1. The movement for energy democracy is alive and well.

Perhaps the most inspiring takeaway is the realization that the fight for energy democracy is alive and well and the fight is taking place across the United States from California and Colorado to Mississippi and Philadelphia.  Take for example the work of Soulardarity, a non-profit in Highlands Park, Michigan that is combatting energy poverty by installing community-owned solar powered street lights after their utility, DTE Energy removed over 1000 streetlights from the community to cut costs.  Or consider the work of One Voice, a non-profit from Jackson, Mississippi that is educating and empowering historically disadvantaged community members to run for leadership positions within Mississippi’s rural electric cooperative utilities that provide electricity to 50% of the state’s population.  These are just two examples among many of organizations that are harnessing the opportunity to regenerate economic and political power amidst the transition towards a clean, affordable, flexible energy system.

  1. Clean energy portfolios are a cost-effective and technically-feasible alternative to natural gas generation.

A second huge take away from the Building a Carbon Free Grid conference is the understanding that as coal-fired power plants are retired across the country, utilities need not rush to build new natural gas plants.  Rather we can replace coal-fired generation capacity with clean energy portfolios and expect similar or cheaper electricity rates, lower emissions and similar or better grid-reliability services compared to natural gas-fired electricity generation.  Consider findings from a report by Rocky Mountain Institute titled ‘The Economics of Clean Energy Portfolios,’ which demonstrates that our vision for a 100% clean energy system is the least cost option AND it is technically feasible, today.  The report features 4 real-life case studies of utilities across the country that are considering their options for building new electricity generation, showing that in each case, building out clean energy portfolios would be cost-competitive, equally reliable and allow utilities to circumvent ill-advised investments in natural gas plants that may become stranded assets sooner than we expect.

  1.  There are multiple paths towards a clean energy future.

The last key takeaway, and perhaps a launching point for further discussion, is the realization that multiple paths exist towards the destination of 100% clean energy — paths that differ in notable ways.  Some paths prioritize policies that regenerate political and economic power within communities most-impacted by climate change. Others define success more narrowly as the integration of large amounts of renewables + storage as quickly as possible by whatever means available.  As society moves towards a carbon-free grid we would do well to explore all possible paths that exist and weigh the respective benefits and drawbacks of each. Key questions that will help communities assess their options are: ‘Who will foot the bill for bad investments in coal and natural gas?’;  ‘who will own the solar panels,wind turbines, storage devices or even the local grid when they are built?’; ‘who will determine how our energy dollars are being invested?’; ‘how will the eventual savings realized from making the switch to RE + storage and microgrids be passed onto average citizens?’.  

These questions are especially crucial to Coloradans, Xcel Energy having recently announced its plan to replace 2 of its coal-fired power plants with record low-cost wind, solar and storage.  Though Xcel’s announcement comes as good news to the folks at Clean Energy Action that have led a grassroots movement of citizen-advocates for over a decade to move Xcel away from imprudent fossil fuel investment towards renewables, the challenge for CEA and other just transition advocates will be to ensure that consumers are not forced to foot the bill for Xcel Energy’s stranded fossil fuel assets.  This challenge will continue to rear its head for years to come as the plummeting cost of clean energy threatens the financial viability of Xcel’s remaining fleet of coal and natural gas plants. (Sign up for Clean Energy Action’s newsletter to stay abreast of efforts to ensure that Xcel Energy replaces its remaining coal plants with renewables in a manner that is just for ratepayers.)

Overall, the Building a Carbon Free Grid Conference was inspiring and refreshing —  I am now certain that we will win this fight. We are already winning across the country at the state and local level thanks to the many individuals and organizations that have dedicated their lives to the vital work of transforming our energy system.

Bourbon Street, New Orleans

New System Should Connect Wind and Solar Supply with Demand

While the clock ticks on climate change, Coloradans are blessed with an abundance of low-cost wind, solar and storage projects. Sadly, our current regulatory system doesn’t allow this clean energy to be delivered at high levels to the communities that want it.

It is now clear that it is past time to rethink whether Colorado should move beyond the monopoly (and near monopoly) structures that are keeping Colorado communities from decarbonizing their electricity as quickly and as cheaply as they could be. Recently, the city of Boulder conducted a “request for indicative pricing” and found that if the city could “go to market” (you know, like we do for everything from potato chips to cell phones) there is a significant number of providers willing to bring the city high levels of renewable energy in the early 2020s (e.g. 89%) at a cost well below that of Xcel Energy’s expected price.

In 2018, Xcel’s electricity generation in Colorado was still 73% fossil fuel — 40% coal and 33% natural gas. Xcel’s 27% renewable energy in Colorado in 2018 is better than it used to be, but it is still too little, too slow — and too expensive. Most recently, Xcel has brought on the Rush Creek Wind Project (without going to bid) at about $29/megawatt-hour when the price of competitively-bid wind farms would likely have been less than half of that.

By David Monniaux – Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=308998

Since the beginning of this century, Xcel has been allowed to spend about $1.5 billion on new and old coal plants in Colorado — expenditures that are now widely recognized as mistakes. Clearly our current “regulated monopoly” system has not served the state well when we have made $1.5 billion of mistakes.Advertisement

Recently the Colorado Public Utilities Commission (which is supposed to protect ratepayers from Xcel’s monopoly power) has begun assigning accountability for Xcel’s mistaken investments in excess coal capacity. The PUC’s decision: 100% of the accountability goes to Xcel’s customers, who not only are expected to pay for the mistaken expenditures on coal, but also they are expected to pay Xcel its full level of profit on the mistakes. Clearly the Xcel-PUC system is broken.

Similarly, the city of Boulder has been trying for almost two decades to exercise its constitutional right to municipalize in order to reduce the carbon intensity of its electricity and make rapid progress in addressing the ravages of climate change. During this time, Xcel has done everything it can (which is a lot) to block Boulder’s progress. Most recently, Xcel has been allowed to back out of a property transfer agreement that Xcel and Boulder spent over a year negotiating, further delaying Boulder’s efforts to decarbonize its electricity supply. Again, it is clear the Xcel-PUC system is broken.

Outside of Xcel territory, much of rural Colorado is served by Tri-State, which also uses its power to keep communities from accessing the low-cost, low-carbon wind and solar that abounds in our state. In comparison, Holy Cross Electric, which serves the area around Aspen, set carbon reduction goals in 2018, and a few short months later they were able to enter into an agreement with Guzman Energy, which will take Holy Cross to almost 70% renewable electricity by 2021, without increasing costs. The difference is that Holy Cross was not served by Tri-State and was not hamstrung by the regulatory system that governs communities in Xcel’s territory.

While there are reforms that can be undertaken to improve the PUC’s regulatory process, it seems likely that the cumbersome regulatory system will not bring us optimal solutions — i.e., the most renewable energy at the lowest cost, the way a more competitive system would.

A group of citizen energy analysts from Boulder County, under the name of Energy Freedom Colorado (energyfreedomco.org) has prepared a white paper of options to help bring Colorado communities more energy options. The Community Energy Options analysis can be found on EFCO’s website, and citizens are working hard to bring these energy freedom options to Colorado.

Having witnessed the failures of Colorado’s regulated monopoly system, it now seems apparent that if Colorado allows market forces, competition and innovation to work, communities will be given more freedom to connect with our abundant low-carbon, Colorado-grown wind and solar electricity at the best possible prices.

Natural Gas—How Much Longer for Low-Cost Natural Gas?

Clean Energy Action has long specialized in questions related to long-term coal supply, issuing detailed reports in 2009 (“Coal Cheap and Abundant: Or Is It”)  and 2013 (Warning: Faulty Reporting of US Coal Reserves.”).

The trends noted in the CEA reports of increasing production cost and declining profit margins in the coal sector combined with high levels of debt have indeed led to dramatic reductions in coal production and coal company bankruptcies, as predicted.

Now, as claims of “cheap and abundant” natural gas arise, the question becomes, how much longer for natural gas reserves. While Clean Energy Action has not taken as hard a look at fossil methane (aka “natural” gas) reserve questions, we would like to point our readers to a few resources.

For background information and  academic reviews of the pros and cons of shale gas production see “Cornucopia or curse? Reviewing the costs and benefits of shale gas hydraulic fracturing (fracking))” by Benjamin Sovacol at the Vermont Law School or the article Natural gas from shale formation – The evolution, evidences and challenges of shale gas revolution in United States (Full articles require purchase.) A free BBC discussion of fracking can be found here.

For a detailed assessment of projections of fossil methane “reserves” available as a result of fracking, see “Shale Reality Check” by David Hughes. Hughes notes that production often declines quickly from shale gas reservoirs—often 70-90% in the first three years–
and that to maintain production new wells must be continually drilled. If drilling investment lags, then production will fall off and investment can lag when the most economically viable “sweet spots” are exhausted.

After a detailed analysis of drilling records for all major shale plays, Hughes concludes that estimates of future production (such as those by the US Energy Information Administration) are “highly to extremely optimistic.”

For a detailed assessment of US Energy Information Administration projections that have underestimated renewable energy additions and overestimated fossil fuel production, see this 2016 Clean Energy Action report by Molly May.

Another key source for assessing claims of “cheap and abundant” natural gas is the petroleum geologist, Art Berman who has asserted that the days of cheap natural gas are over.  Berman notes that only the Marcellus and core Utica plays broke even in 2016. There is a decline in production, and it will be challenging to turn around. Berman believes that the days of abundant and cheap natural gas are gone, and the United States can expect to see prices rise as supply drops. The figure below shows the prices of shale gas from January 2016-January 2017 as presented by Art Berman.

While no one can predict the future of natural gas production and prices with certainty, we do know that reliance on fossil methane is problematic because it is a known contributor to climate change that is 86 times more powerful than carbon dioxide over a 20 year horizon as detailed in this Scientific American article.

Moreover, there is good reason to believe that natural gas will become increasingly  less essential for the production of electricity as it is already being outcompeted by renewable energy sources as pointed out in 2018 reports by the Rocky Mountain Institute and the Union of Concerned Scientists.  RMI has observed the price decease of renewable energy sources and energy storage systems by significant amounts and expects them to fall by 40% in the next 20 years. Within the next 10–20 years, it will likely be less expensive to build entirely new renewable energy portfolios that can perform the same grid services as a gas plant than it will be to run existing gas plants. Union of Concerned Scientists (UCS) also sees the risks of investing in shale gas since fossil fuel prices are subject to price volatility, while renewable energy sources are not. As pointed out by RMI and UCS, excessive reliance on fossil methane in the coming years could lead to more stranded assets in the decades to come.

As Clean Energy Action has long noted, non-renewable resources do not renew and for reasons of both climate and price, it is time to rapidly reduce our reliance on all fossil fuels, including fossil methane (aka “natural gas.”)