UTILITIES ARE QUITTING FOSSIL FUELS
2020 is going down as one crazy year, and the plot twists just keep coming. But if you look underneath the madness of the headlines, there are some truly remarkable, positive things that are happening.
One big shift that is playing out by increments is that our society is moving towards a consensus that we will quit fossil fuels and decarbonize our electricity system by mid-century. The most obvious place that this can be seen is in the wave of utility commitments to go carbon-neutral by 2050.
September saw Entergy make such a net-zero carbon emissions pledge, adding to commitments by Xcel, Duke, Dominion and Southern Company. When you add these to the six states that have mandates to fully decarbonize their power sectors, there’s a significant and growing portion of the United States that has a plan to entirely get out of fossil fuels for electricity.
Of course, this means a lot of solar. Particularly for Entergy. The natural solar potential of the power company’s service area in the Deep South and the Gulf Coast of Texas is pretty good and the utility doesn’t have a lot of other good options for zero-carbon generation. Entergy has a sizable nuclear fleet, but given the dismal economics of new nuclear compared to solar, we don’t expect new nuclear plants to get built any time soon. Nor is land-based wind a particularly strong option for Entergy, as wind speeds are generally low where it operates.
Entergy is planning to build more gas plants, including some which will run a mix of gas and hydrogen, eventually moving to pure hydrogen. But it’s going to need power for the electrolyzers to make that hydrogen, which brings us back to solar. Entergy hasn’t said as much about batteries, but given the increasingly strong economics of solar plus energy storage, it’s going to be hard to see how the company will avoid deploying them.
And while the Deep South has long lagged on solar deployment, lately we’re starting to see some big projects. In September, a sizeable 2.4 MW rooftop installation on a series of warehouses was completed near the Industrial Canal in New Orleans, and a deal was announced for GM to buy the output of a big solar project in Arkansas.
The long-term promise of solar to help utilities decarbonize is bolstered by an increasingly positive short-term outlook. The economics of solar continue to improve even faster than expected, and what this means is that new fossil fuel power plants are less and less able to compete.
This doesn’t just apply to coal; projects to build gas plants are also being cancelled in the interconnection queues of grid operators, to be replaced by solar and wind. And with the rush to get projects online to qualify for a higher level of ITC, the market is booming. This is a great time to be in the solar business, and to be making the future happen.