US hits record zero-carbon power generation as renewable energy surge continues

The U.S. generated a record 40% of its electricity from zero-carbon energy sources in 2020 as annual wind and solar installations hit an all-time high, research firm BloombergNEF and The Business Council for Sustainable Energy said in a Feb. 18 report.

Carbon-free power generation, including from nuclear plants, increased last year with the addition of 17.1 GW of new wind capacity and 16.5 GW of solar power as investors and project developers rushed to complete projects ahead of expected cuts to federal tax incentives, said Ethan Zindler, head of Americas at BloombergNEF.

"The continued growth of clean energy in the United States, in spite of the economic downturn and the challenges of the pandemic, demonstrates that the market for these technologies is maturing and the portfolio is highly resilient,” Lisa Jacobson, president of The Business Council for Sustainable Energy, said in a statement. "Global supply chain disruptions, workforce protection measures, and policy uncertainty required adaptation across the industry."

At the end of last year, renewables, including hydro, accounted for 20% of the U.S. power mix, up from 17% in 2019; natural gas' share rose to 41% from 39% a year earlier; nuclear held steady at 20%; and coal's share fell to 19% from 23% in 2019 and 45% a decade earlier.

Gas' role in question

The renewable energy industry is looking to build on 2020's momentum following the extension of existing tax credits late last year and the creation of a new tax incentive for offshore wind projects. Investors are also betting the industry will get a lift with Democrats in control of Congress and the White House.

Utilities, which have been shifting more investment to renewables in recent years as they pledge to cut emissions, could move faster toward clean energy depending on the policies they see from Washington, said Jose Ramon Mas, CEO of MasTec Inc., a Florida construction company that works in the energy and utility sectors.

"So it will be interesting to see what the administration does to support renewables, right? Is it tax credits? Is it direct investments? What are the things that they're going to do to move the needle?" Mas said Feb. 17 at an investor conference. "Do I think that will impact the business? I do in a big way, but we don't really know what that is yet."

Many companies are already showing they plan to double down on their clean-energy strategies.

Executives at ALLETE Inc. said Feb. 17 that the Minnesota utility will rely on its renewable energy business to drive growth in the coming years. "Businesses and communities with ambitious climate action commitments are raising demand for renewable energy solutions," Al Rudeck, president of ALLETE Clean Energy Inc., said on an earnings conference call.

With President Joe Biden pushing to decarbonize the U.S. power sector by 2035, the country's energy industry could be in for a dramatic overhaul in the years ahead. The biggest uncertainty seems to be around natural gas, which to date has been instrumental in lowering emissions by pushing coal plants into retirement and helping to back up variable renewable energy resources such as wind and solar power.

"As you look over the next 10 to 15 years, I think there [are] real questions about the role that gas can continue to play, at least in the power generation segment, if the administration wants to hit the goal that they've set," Zindler said.