Wholesale Electricity Market Design for Rapid Decarbonization

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Competitive wholesale electricity markets are at a turning point. These papers outline questions emerging about wholesale market reform and introduce two pathways for markets to evolve.

The Coal Cost Crossover: Economic Viability Of Existing Coal Compared To New Local Wind And Solar Resources

Permalink to The Coal Cost Crossover: Economic Viability Of Existing Coal Compared To New Local Wind And Solar Resources

America has entered the “coal cost crossover” where existing coal is more expensive than cleaner alternatives.  Today, local wind and solar could replace 74 percent of the U.S. coal fleet at an immediate savings to customers. By 2025, this number grows to 86 percent of the coal fleet.

Power Markets in Transition: Consequences of Oversupply and Options for Market Operators

Permalink to Power Markets in Transition: Consequences of Oversupply and Options for Market Operators

This research paper explores energy transition impacts on competitive power markets, finding every U.S. organized power market except ERCOT is oversupplied due to seven oversupply drivers. Oversupply slows decarbonization, but market operators and load serving entities have options to responsibly manage the power system through this transition. The full version of this paper was published in the March 2019 issue of Current Sustainable/Renewable Energy Reports, and is available upon request. https://link.springer.com/article/10.1007/s40518-019-00123-6

Managing The Utility Financial Transition From Coal To Clean

Permalink to Managing The Utility Financial Transition From Coal To Clean

At least 36 GW of uneconomic coal-fired capacity is forecast to be retired by 2024. These policy briefs highlight how to help utilities balance stakeholder interests, facilitate the financial transition away from uneconomic coal, and help states embrace clean energy.

Debt For Equity Utility Refinance

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When electric utilities transition from fossil fuels to clean energy, they must address unrecovered investment balances. Depreciation schedules are often accelerated to line up with earlier-than-planned retirement dates, which can increase short term consumer rates. This brief reviews how utilities can refinance undepreciated balances on plants in service to lessen the consumer rate burden, primarily through replacing some portion of equity with corporate debt.

Depreciation And Early Plant Retirements

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Depreciation accounting recognizes asset value reduction over time. For coal plants, depreciation determines the value remaining when plants retire early. Depreciation is an important tool for transitioning away from older assets, such as coal plants, to cheaper resources, such as wind and solar. This brief reviews how depreciation schedules affect utility earnings and ratepayer costs, as well as other stakeholder interests.

Steel For Fuel: Opportunities For Investors And Customers

Permalink to Steel For Fuel: Opportunities For Investors And Customers

Early retirement of uneconomic coal assets can improve shareholder earnings if a utility is allowed to reinvest capital in new renewable energy generation. When building new renewables is cheaper than operating existing coal, swapping steel for fuel adds value for investors, customers, and the environment. This brief addresses equity shareholder perspectives and suggests how potential funding sources can mitigate impacts on communities and workers affected by early plant retirements while improving environmental performance.

Utility Financial Transition Impact: From Fossil to Clean

Permalink to Utility Financial Transition Impact: From Fossil to Clean

By analyzing publicly available financial information, policymakers and utility stakeholders can identify where running existing fossil fuel generation costs more than replacing it with new wind or solar. A suite of financial instruments can facilitate and reduce costs of this financial transition away from fossil fuels toward clean energy. This brief uses Colorado’s experience transitioning from coal to clean energy as a case study analyzing existing generation costs, and introduces financial tools to help electric utilities that own fossil generation manage the clean energy transition.

Designing Climate Solutions: A Policy Guide for Low-Carbon Energy

Permalink to Designing Climate Solutions: A Policy Guide for Low-Carbon Energy

Energy Innovation’s new book Designing Climate Solutions is the first policy manual for low-carbon energy and is the first book to identify the 10 policies, applied to the 20 highest-emitting countries, that can reduce emissions fast enough to stay below 2°C of global warming and avoid the worst impacts of climate change.

Redirecting Federal Funds Toward Coal And Nuclear Plant Communities

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The Trump Administration has proposed directing funds to keep uneconomic coal and nuclear plants online. This research note assesses the $2 billion in subsidies that would be needed to keep the six plants owned by FirstEnergy in the Ohio Valley in operation, and finds the funds would be better spent supporting economic transition for the power plant communities and displaced workers.