US utility renewable energy targets and emission reduction goals remain on a rapid growth trajectory with 35 utility holding companies out of 51 now having very "aggressive" goals, including those for net-zero emissions and 100% carbon-free power among others.
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The 35 companies have 108 US utility subsidiaries, according to data compiled by S&P Global Platts.
It has become more apparent that a challenging and expensive energy transition is ahead in US power if these companies want to meet these steep, long-term decarbonization goals.
"Incorporating the rapid expansion of renewable energy within electricity markets presents unique challenges in the context of decarbonization," said Kieran Kemmerer, Power Sector Analyst, North American Electricity Analytics.
"Incremental electricity demand from sources like electric vehicle charging and natural gas heating electrification must be met with intermittent resources that have diminishing capacity value at higher levels of market share," Kemmerer said.
While energy storage is "staged to resolve some of the issues, electricity markets will continue to evolve to provide appropriate price signals to incentivize desired attributes," he added.
Emera Energy and Puget Holdings were among the additions to the list of utilities with aggressive goals in first-quarter 2021.
Emera announced a target of net-zero by 2050 in February. In January, Puget Holdings announced it was effectively going beyond its net-zero carbon emissions target to become 100% carbon-free in its electricity supply by 2045. It joined 10 other holding companies with similarly aggressive carbon-free targets: CMS, Consolidated Edison, PNM Resources, IDACORP, Sempra, Excel, Avista, Pinnacle West, Hawaiian Electric and PG&E.
On Feb. 25, the CEO of American Electric Power, Nicholas Akins told analysts that his company will "continue to transform" its generation and plans to add more than 10,000 MW of wind and solar generation in regulated states by 2030. Akins said AEP's goals are to achieve an 80% reduction in emissions by 2030 from its 2000 baseline and reach net-zero emissions by 2050.
In fourth quarter 2020, Entergy announced it was joining the group with a net-zero target, bringing along its five subsidiaries. In total, companies with net-zero targets now number 18 out of the 51 utility holding companies tracked.
In order to meet these aggressive targets, more coal-fired generation retirements will likely have to be accelerated. Some utilities are still stretching coal-fired retirements out almost 20 years.
In Q1 2021, Duke Energy sold a 19.9% stake in its Duke Energy Indiana utility, which relies almost entirely on coal and natural gas-fired generation, to Singapore's sovereign wealth fund, GIC Private Limited, for $2.05 billion.
The proceeds, Duke said, would help it fund its almost $60 billion, five-year capital investment plan that "will accelerate its clean energy transition -- and redeploy capital to support increased growth investments within its portfolio of regulated utilities."
According to data from the Energy Information Administration, the US power grid relied on carbon-emitting fossil fuels for 60% of its utility-scale generation in 2020, down from 63% in 2019 and 64% in 2018. Last year, coal still represented 19% of the total; natural gas was at 40%; non-hydropower renewables represented only 10% of utility-scale power generation with solar at just 2% of the US total. Nuclear held a 20% generation market share, while conventional hydro represented 7% of the total.
"The current and scheduled pace of coal-fired power plant retirements needs to speed up in the next few years and emissions from their gas-fired counterparts must be eradicated for US companies to reach their decarbonization goals," consulting firm Deloitte noted in a report released in late 2020.
It also noted that EIA projected the power sector's emission reductions could "plateau, rather than accelerate as would be needed to achieve full decarbonization by 2050."
According to Platts data, 21 US states plus Washington DC have carbon emission reduction or renewable energy goals that are extremely aggressive, meaning they are either net-zero emissions targets, 80% to 100% carbon-free targets or goals to have renewable power represent 80%-100% of their power generation mix at some point between now and 2050. A total of 38 states plus DC have some form of GHG reduction or renewable generation goal.
In late January, the governor of Minnesota, Tim Walz, Democrat, proposed that the state bring forward its target date for reaching 100% carbon-free electricity from 2050 to 2040.
His proposal followed a report by the Minnesota Pollution Control Agency that found that the state was not on track to meet its earlier goals of reducing economy-wide greenhouse gas emissions 30% below 2005 levels by 2025, and 80% by 2050. The report found that the state had reduced its greenhouse gas emissions by just 8% between 2005 and 2018, while the power sector had seen emissions from generation fall 29% since 2005.
The Minnesota governor also called for the "strengthening" of the state's renewable portfolio standard which currently calls for just 26.5% renewables by 2025.