Unsubsidized renewable energy and battery storage are so much less expensive than conventional electricity generation that they will likely replace all coal generation in the United States within a decade, the head of the country’s biggest power utility told a conference last week.
“We see renewables plus battery storage without incentives being cheaper than natural gas, and cheaper than existing coal and existing nuclear,” NextEra Energy CEO, President and Chair Jim Robo told analysts attending the Wolfe Research Utilities and Energy Conference in New York. “And that is game-changing.”
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The US$17-billion company holds 46 gigawatts of energy assets, employs 14,000 people, and has an estimated market value of $114 billion, making it “nearly as big as the entire Australian grid,” RenewEconomy notes.
While the U.S. Energy Information Administration sees the U.S. hitting 35% renewable electricity by 2030, Robb said the total could reach 50% by that year and 70 to 75% by 2050. “I think that’s very doable, and that would take an enormous amount of carbon out of the United States. And at the same time, bring [electricity] rates down across the country,” he said. “And that’s the thing that I think people still haven’t grasped—that you can be green and low-cost at the same time, and that it’s terrific for customers, it’s terrific for the environment, and it’s great for shareholders, as well.”
The transition “really is good all around,” he added. “we’re leading the charge on disruption there, and I’m very excited about the growth prospects.”
In response to an audience question, Robo elaborated on how the shift could play out in his own company.
“You still have coal being roughly 35% of the energy generated last year and, effectively, we think renewables can replace almost all of that by 2030,” he told the participant. “When you look at wind and solar paired with a battery, new construction is cheaper than the operating cost of existing coal. So there’s very little reason from an economic standpoint to continue to run those units. There’s very little reason from a reliability standpoint to run those units. And there’s certainly no reason from an environmental standpoint to run them.”
Robo stressed that battery costs are falling fast, and utilities need far less storage to shave peak demand than is often understood. “For the first 1,000 megawatts of battery storage, you probably only need two hours to really shape the peak,” he said. “So I don’t think you need, like, giant step changes to get to 70% or 75% (renewables), honestly, with the existing grid.”
With grid areas like Texas and the Little Rock, Arkanasas-based Southwest Power Pool at 50% renewables, “we know we can run the grid on days with very high wind and very good resources,” he added. “So you can run the system on that, and that’s with very little storage on those systems, right? So four hours of storage, we think, is the sweet spot for most systems that we’ve modeled. And you don’t really need a step change to be able to do that.”
