Market News

 September 12, 2019
Renewables are now cheaper than building new natural gas plants

 Clean energy has reached a tipping point: It's now cheaper to build and use a combination of wind, solar, batteries, and other clean tech in the U.S. than to build most proposed natural gas plants. Utilities want to spend $90 billion to build new gas plants and $30 billion to build new gas pipelines---but if they used renewables instead, consumers could save $29 billion in electricity bills, according to a new report from the nonprofit Rocky Mountain Institute.

"In 2019, given what is needed on the grid today, we show that these technologies have crossed the line and become the cheapest way to add electricity to the grid," says Chaz Teplin, a manager in RMI's electricity practice. "Going forward, that case is going to only accelerate because while the price of natural gas, for example, may fluctuate up and down, the cost to install new renewables is only going to continue to decrease."

The researchers looked at how natural gas plants are used on power grids today and then calculated what would be necessary for clean energy to replace those plants, including batteries to store power when wind and solar aren't available. It's already cheaper, in almost all cases, to build and run new clean energy projects than natural gas projects. By the middle of the 2030s, clean energy could drop in cost so much that it will be cheaper to build and run new renewables than to keep existing gas plants running, and gas plants could quickly become stranded assets (the same thing is currently happening with coal plants around the country). More than 90% of recently built plants could be forced into early retirement.

Many utilities already recognize the economic need to switch. Idaho Power plans to transition to 100% clean energy by 2045. Minnesota-based Xcel Energy, which works in several states, aims to be carbon-free by 2050. Regulators in Indiana rejected a plan to build a new $781 million natural gas plant earlier this year out of concern that it would become a stranded asset. Florida Power and Light plans to build the world's largest solar-powered battery storage system to retire new natural gas plants. And the list goes on across the country.

But some utilities continue to plan to build natural gas projects, either out of inertia, or because they haven't recognized the full economic advantages of renewables, or because the system allows them to make a bigger profit with gas. Another new report, from the Energy and Policy Institute, explains that companies like Duke Energy have demonstrated a market "need" for new gas pipelines---which they partially own---by signing contracts with their own utilities, manipulating the system to make it seem like a more expensive investment is necessary. In states where utilities plan to move forward with natural gas, consumers should question that choice. "It is worth it, if folks prefer that their state prioritize new, clean technologies, that they advocate for that either directly to the utility or to the state regulatory agencies to make their voice heard on that," says Teplin.