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Rocky Mountain Institute Claims New Gas Generating Stations & Pipelines Are Tomorrow’s Stranded Assets

In a series of reports, Rocky Mountain Institute warns that investing in new gas-fired generating stations could be wasting ratepayer money as the cost of renewables continues to decline rapidly.

The natural gas industry claims its product is a bridge fuel to the future because it burns clearer than coal. That part is true, but in reality, the methane emissions from extracting it and transporting it more than offset any reduction in carbon emissions. The latest research indicates natural gas may actually be responsible for more emissions than the coal it is replacing.

In a report entitled A Bridge Backward?, the Rocky Mountain Institute says,

“Clean energy technology costs have reached a tipping point. The past decade has seen a dramatic reduction in the costs of wind, solar, and storage technologies. At the same time, sophisticated utilities and market operators are increasingly able to procure grid reliability services from these non-traditional resources. As a result, leading US utilities are now prioritizing investment in “clean energy portfolios” (CEPs) — combinations of renewables, storage, and demand-side management strategies — that can cost-effectively provide the same reliability services as traditional gas-fired power plants. CEPs have declined in cost by 80% since 2010, and are now lower-cost on a levelized basis than new gas plants.

“Within the next 10–20 years, continued cost declines will allow new CEPs to undercut the operating costs of existing gas plants. However, US utilities and independent power producers are replacing retiring coal, nuclear, and old gas capacity on a nearly 1:1 basis with new gas-fired power plants — nearly 70 GW of capacity is announced for construction within the next five years, and at least another 20 GW of new gas proposed as part of longer-term utility resource plans.”

RMI maintains that investments in new natural gas plants and distribution facilities will become an albatross around the neck of investors sooner rather than later.

“Even as clean energy costs continue to fall, utilities and other investors have announced plans for over $70 billion in new gas-fired power plant construction through 2025. RMI research finds that 90% of this proposed capacity is more costly than equivalent CEPs and, if those plants are built anyway, they would be uneconomic to continue operating in 2035, well ahead of the ends of their planned economic lifetime. Continued investments in these power plants will present stranded cost risk for customers, shareholders, and society, while locking in 100 million tons of CO2 emissions each year.”

A Massive Increase In Battery Storage

The Institute attributes much of the progress in making renewable energy cheaper than conventional thermal energy to a dramatic drop in energy storage costs. Its Breakthrough Batteries report projects investments of $150 billion or more in battery storage worldwide through the end of 2023. “These investments will push both Li-ion and new battery technologies across competitive thresholds for new applications more quickly than anticipated. This, in turn, will reduce the costs of decarbonization in key sectors and speed the global energy transition beyond the expectations of mainstream global energy models.”

The report goes on to say “self-reinforcing feedback loops” between public policy, manufacturing, research and development, and economies of scale will take place in the near future. Those loops will drive battery performance higher while pushing costs as low as $87 per kWh by 2025, according to Forbes. They are at about $185 per kWh today. “These changes are already contributing to cancellations of planned natural-gas power generation,” the report says. “The need for these new natural gas plants can be offset through clean energy portfolios (CEPs) of energy storage, efficiency, renewable energy, and demand response.”

RMI says it expects lithium-ion to remain the dominant battery technology through 2023, steadily improving in performance, but then new battery technologies will emerge to serve the heavy vehicle and energy storage industries. Trucks and ships will depend on zinc alkaline, Li-metal, and Li-sulfur batteries. Meanwhile, grid scale energy storage will adopt low cost, long duration batteries such as zinc-based, flow, and high temperature batteries expected to come to market by 2030.

Keeping Up With Changing Technology

In a conversation with Utility Dive, Johannes Pfeifenberger, a principal at the Brattle Group, said, “We already see that combined cycle units built 10 to 20 years ago have a hard time competing with the combined cycle technologies that are getting built now. Wind plants that were built 10 years ago have a hard time competing with new technology and many times it’s cost effective to replace them with newer technologies. So I do think that everybody investing in any kind of technology today has to consider how technology will change over time, how customer preferences will change over time, and make investments with our eyes wide open.”

It’s a variation of the old adage, “A mind is like a parachute. It only works when it’s open.” Too many utility executives are locked in the past, still following a model created by Thomas Edison. It’s easy, it’s convenient, and it risks wasting billions of dollars of rate payer money, not to mention contributing to the collapse of the ecosphere the utility industry is supposed to serve. You can almost hear the snorts of derision in the boardroom of companies like Duke Energy, which is firmly committed to doing what it has always done, no matter the cost. American ratepayers — and the Earth — deserve better.

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Written By

Steve writes about the interface between technology and sustainability from his home in Florida or anywhere else The Force may lead him. 3000 years ago, Socrates said, "The secret to change is to focus all of your energy not on fighting the old but on building the new." Perhaps it's time we listened?


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