In recent years, it has been widely reported that large oil and gas companies like Exxon knew about potential risks of climate change, only to eventually bury the information. A recent report from the Energy and Policy Institute shows that utilities also knew about the threat of climate change as far back as 1968.
With the growing electrification of transportation, heating, and other end uses that have historically relied on fossil fuels, some major oil and gas companies are making plans to transition away from fossil fuels and into renewables and other clean energy technologies like hydrogen geothermal, and carbon capture.
While utilities are also transitioning to a cleaner energy mix, some aren’t doing so as quickly as possible, especially those in regulated states that can rate-base the costs of fuel and operations for their plants onto customers’ monthly bills.
Utilities have begun to retire older coal-powered plants and transition to cleaner sources. But the emergence of wind and solar as the dominant sources of new generation has only happened in the past decade. Carbon emissions from power generation peaked in 2007, primarily because of substantial investments in coal generation over other technologies from 1970 through 2000. Those plants typically have a decades-long lifespan, and utilities are unwilling to retire them early.
Will utilities make a good faith effort to transition to cleaner sources of generation and invest in the advanced technology needed to take advantage of the growth in distributed energy resources, like rooftop solar and battery storage? A full transition will take decades. What the quickest, most efficient way to accomplish it is the source of much debate.
While large investor-owned utilities continue to drag their feet, investment in distributed energy resources (DERs) is growing quickly thanks to consumer demand and competitive markets that encourage innovation and consumer-friendly prices. Policymakers in Congress tend to like big, centralized projects, but limits on transmission and distribution – to say nothing of monopoly mismanagement – often mean the investments of utilities underdeliver while burdening captive ratepayers with the costs.
Wood Mackenzie's second annual U.S. DER Outlook report found that 253 gigawatts of DER capacity will have been installed from 2017 through 2021, with most – 176 gigawatts installed between now and 2026. Policymakers should get behind these market-driven investments in clean energy with policies that increase competition and transparency. Government incentives are helpful, but getting the market design right so that private investment can make smart decisions and can compete will make the most impact over the long term.