Electric utilities all over the place are promising to eliminate or net out their carbon emissions — here’s GTM’s look at the top five.
Such promises were unthinkable for utilities just a few years ago. But the trend took off when Xcel Energy figured out it could retire coal plants, build clean power plants, and make more profits while keeping electricity costs down. The combination of positive public perception, a bigger rate-base and greater appeal to sustainability-minded investors turned the carbon-free commitments into the rule, not the exception, for the utility sector.
“They’re really trying to appease a nascent but quite powerful movement of [environmental, social and governance focused] shareholders and institutional investors,” said David Pomerantz, executive director of utility watchdog group Energy and Policy Institute, which tracks carbon targets. “Once it started taking off…it became awkward if a company didn’t have a goal.”
A few exceptions do remain, though — holdouts that have not promised to eliminate their greenhouse gas emissions. Some have promised to lower emissions intensity, which allows them to keep burning fossil fuels as long as they also build zero-emission plants. Others haven’t even promised that. All of them prominently list sustainability information on their websites.
Here’s the list of investor-owned electric utilities in the U.S. that have not committed to eliminating carbon emissions. It’s not a long list — it’s become increasingly difficult to find utilities that haven’t made the pledge. But the roster includes some of the biggest names in renewables development, showing that it’s possible to invest big in renewables while hoping to burn fossil fuels for decades to come.
NextEra Energy
Few companies have played as big a role in advancing the clean energy transition as NextEra Energy.
Its deregulated arm, NextEra Energy Resources, leads the U.S. in renewables development and pioneered large-scale battery storage at a time when few companies were building it. Sister company Florida Power & Light, that state’s largest regulated utility, minimized its coal production years ago. It generated 73.6 percent of electricity in 2019 from gas and 22 percent from nuclear, with the remainder from coal and solar.
But instead of a long-term carbon commitment, NextEra pledged to reduce its carbon emissions rate 67 percent below 2005 levels by 2025.
All the wind and solar that its renewables development arm produces lowers the corporate emissions rate. Since NextEra hasn’t made any commitments around absolute emissions reductions, it could simply keep burning the same amount of fossil fuels and rely on the new renewables to keep lowering emissions intensity, even while emissions themselves remain at the same level.
NextEra also acquired utility Gulf Power, which burned coal for nearly half of its own generation in 2019.
“Decreasing the carbon-intensity may have made sense at a time when we had a lot more time,” Pomerantz said, referring to scientific assessments of what’s needed to hold global warming below 2 degrees Celsius. “Now, you just have to stop burning carbon.”
The lack of specific commitments around absolute emissions hasn’t stopped NextEra from building a standout reputation on Wall Street as a forward-thinking, environmentally responsible power company. It remains to be seen if that reputation will suffer from being out of step with the sector on tackling carbon pollution. The company did not respond to requests for comment.
If it wants to tackle absolute carbon emissions, NextEra will have to deal with its gas fleet. Holding onto it or building new gas plants creates risk for shareholders in the event that policy shifts to carbon-free requirements during the payback period of those assets. Presidential candidate Joe Biden proposed a national clean energy standard pegged to 2035, which is not far away in terms of the lifespan of a gas plant.
Entergy
The New Orleans-based utility, which serves several states across the South and runs a nuclear fleet, does not plan to stop emitting carbon. It does, however, expect to reduce emissions intensity 50 percent below 2000 levels by 2030.
Entergy’s climate strategy has focused on swapping old gas and coal plants for new gas plants. Any new gas plants built in the next decade could stick around for another 30 years, well beyond the point when other leading utilities say they will eliminate carbon emissions.
Though the company declined to pick a “specific future supply plan,” its climate goal analysis illustrates a “solar replaces most coal” scenario that would meet the 2030 target. The result is that renewables rise to nearly 7 percent of generation, while natural gas provides 60 percent.
Berkshire Hathaway Energy
Warren Buffett’s subsidiary Berkshire Hathaway Energy owns several utilities across the Great Plains and the West, as well as several gas companies. The company has not announced a carbon-reduction target, because it says “the advanced technologies needed to achieve net-zero targets do not exist,” according to spokesperson Jessi Strawn.
That said, BHE is investing $30 billion in renewable generation across its portfolio, which already has a pretty clean profile.
The company says 43 percent of its owned and contracted capacity comes from non-carbon sources. Subsidiaries MidAmerican Energy Company and PacifiCorp lead regulated utilities in wind capacity. BHE Renewables operates 4.6 gigawatts across nine states.
Overall, though, coal dominated BHE’s generation in 2018 at 41 percent, joined by 24 percent from gas, according to its latest sustainability report. Renewables delivered 32 percent.
With new investments, MidAmerican should deliver 100 percent renewable power to Iowa customers next year, Strawn said. NV Energy has signed massive solar-plus-battery contracts and must decarbonize completely according to a new Nevada state law. PacifiCorp has a plan to build 4.3 GW of solar and batteries.
Structural factors may shield BHE from the investor pressure that other utilities face to make big carbon-reduction commitments. It is just one sliver of the vast Berkshire Hathaway conglomerate, nestled among insurance companies and diamond purveyors and ketchup makers and Nebraska Furniture Mart. Buffett personally controls 30.7 percent of the conglomerate’s voting power and enjoys considerable trust from investors due to his long record of outperforming the market.
Then again, midcentury goals don’t matter as much if the utility is decarbonizing right now.
Emera
The Nova Scotian utility that could, Emera now owns utilities in Canada, the U.S. and the Caribbean; its U.S. electric foothold is Tampa Electric, which serves nearly 800,000 customer accounts. President and CEO Scott Balfour has identified reducing greenhouse-gas emissions as a key environmental priority. But that’s about it for specifics.
Emera has reduced greenhouse-gas emissions by 24 percent since 2005 and cut coal’s share of its generation mix by 70 percent, as of 2018. Tampa Electric has begun working toward a cleaner grid, by building a 600 MW, $850 million solar plant and piloting battery storage.
Oklahoma Gas & Electric
This regulated utility serves more than 858,000 customer accounts in Oklahoma and western Arkansas. It has built or contracted for 814 MW of renewables, mostly wind, and converted some of its coal fleet to gas. These actions lowered its carbon-dioxide emissions by more than 40 percent since 2005.
But the utility has not set a measurable, long-term goal to keep those emissions reductions coming; it instead describes expectations, stating that it expects emissions to be 50 percent below 2005 levels by 2030.
“Between 2030 and 2050, OGE expects to retire 95 percent of its current fossil-fueled generation, cost-effectively meeting our capacity requirements by replacing retiring generation with newer technology including high-efficiency natural gas or zero-emitting technology such as renewables or batteries,” according to the utility’s climate fact sheet.
If those expectations become reality, OGE could achieve an exceptionally clean fleet. The question is whether the company is adequately incentivized to do so without an official commitment.
Source: Greentech Media
