Financial Transition

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The rapid cost decline of renewable energy means running existing coal generation now exceeds the all-in cost of replacing it with wind and solar in most of the United States. This “coal cost crossover” begs regulators and utilities to reconsider the prudency of continuing to operate existing coal plants. Though cleaner resources save customers money almost immediately, untangling potentially stranded assets and transitioning this unproductive capital into new clean energy resources requires balancing consumer, environmental, investor, and local interests through complex regulatory proceedings.

Regulators, utilities, stakeholders, and investors must work together to ensure customers benefit from closures while helping affected communities transition away from a coal-based economy. But regulation needs to adapt – without opportunities to reinvest in clean resources, regulated utilities that own uneconomic plants will seek to keep them running as long as possible because they can still earn substantial returns even on uneconomic assets.

Energy Innovation analysis highlights different tools to balance stakeholder interests and facilitate the transition away from uneconomic fossil fuel plants. We provide utility stakeholders with information about tools to manage financial transition to balance stakeholder interests, and can help states facing new economic realities embrace clean energy.

 

Resources

Making The Most Of The Power Plant Market: Best Practices For All-Source Procurement Of Electric Generation

When utilities procure generation through non-ideal processes biased against clean energy, they result in portfolios with higher consumer costs and carbon emissions. This report outlines how “all-source” procurement allows technologies to fairly compete to meet utility needs, reducing costs and emissions, with detailed case studies from recent utility procurement processes.

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Natural Gas: A Bridge To Climate Breakdown

The rush to build more than 60 gigawatts of natural gas plants and pipelines risks tens of billions in investment and a trillion dollars in consumer costs by 2030. This report outlines these evolving risks for shareholders, lays out investor strategies to accelerate the clean energy transition, and shows how clean energy cuts utility investment risks from over-reliance on natural gas while providing new growth opportunities supporting decarbonization.

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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.

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.

 

Articles

How Effective Utility Monopsony Regulation Drove Colorado’s Shockingly Cheap Wind And Solar Bids

EI’s Mike O’Boyle shares Colorado’s lessons learned in preventing utility monopsony power and how to replicate its competitive wind and solar bid results.

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Utilities Running Uneconomic Coal Plants Cost Consumers $3.5 Billion From 2015-2017

EI’s Mike O’Boyle interviews authors of a Sierra Club report on how utilities running uneconomic coal plants have overcharged customers by $3.5 billion.

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Overcoming Barriers to 100% Clean Energy, Part Two: How We Need to Evolve America’s Power Grid to Enable a Clean Energy Future.

EI’s Eric Gimon outlines how smart policy can overcome barriers on the grid to 100% clean energy targets to achieve a paradigm shift in the US power system.

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The U.S. Southeast: A Hotspot For Uneconomic Fossil Power, Already Costs Consumers Millions

EI’s Mike O’Boyle says by continuing to run and build uneconomic fossil fuel plants, Southeast U.S. utilities cost consumers millions and risk billions in stranded assets.

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Overcoming Barriers To 100% Clean Energy, Part One: The Electricity Distribution Network

EI’s Eric Gimon outlines how smart policy can overcome barriers on the grid to 100% clean energy targets to achieve a paradigm shift in the US power system.

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Cheap Clean Energy Makes New Natural Gas A Risky Bet Utility Regulators Should Avoid

EI’s Mike O’Boyle says cheap clean energy prices make natural gas a risky economic bet for utilities, risking climate change and stranded assets.

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The Billion-Dollar Coal Bailout Nobody Is Talking About: Self-Committing In Power Markets

EI’s Mike O’Boyle discusses a hidden billion-dollar coal bailout: Self-committing, or utilities scheduling uneconomic coal-fired plants to run at a loss even when cheaper electricity is available.

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Renewable Energy Job Boom Creates Economic Opportunity As Coal Industry Slumps

EI’s Silvio Marcacci says renewable energy jobs are booming just as the coal industry is contracting, even in America’s most coal-dependent regions.

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The Coal Cost Crossover: 74% Of US Coal Plants Now More Expensive Than New Renewables, 86% By 2025

EI’s Silvio Marcacci details new “coal cost crossover” research showing 74% of existing U.S. coal plants cost more to operate than replacing them with new local wind and solar.

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How Utilities Can Swap Coal Debt For Clean Energy Equity

APP’s Ron Lehr outlines financial tools which swap coal debt for clean energy equity to help utilities retire uneconomic coal generation early.

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Closing Colorado Coal Would Save $2.5 Billion. A New Proposal Could Unlock The Coal-To-Clean Shift.

EI’s Silvio Marcacci says retiring Colorado coal plants could save $2.5 billion and a proposal in the state legislature could generate private investment to help utilities close plants while funding economic transition.

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Steel For Fuel: How Utilities Can Replace Fossil Fuel Expenses With Renewables Earning Potential

EI’s Mike O’Boyle outlines the “steel for fuel” strategy of swapping out coal for renewables while hitting the sweet spot on risk, return, and scale for utility customers and investors.

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From Coal To Clean: How Utilities Can Manage The Inevitable Financial Transition

Former Colorado PUC Chair Ron Lehr outlines how utilities can profitably manage the financial transition from coal to clean being driven by fast-falling clean energy prices.

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Plunging Prices Mean Building New Renewable Energy Is Cheaper Than Running Existing Coal

EI’s Megan Mahajan details how the price to build new renewable energy has fallen below the cost of running existing coal-fired power plants across the U.S.

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Record-Breaking $405 Million Auction Proves Offshore Wind Is The Rare Bipartisan Success Story

EI’s Silvio Marcacci writes that a record-breaking offshore wind auction proves it is America’s biggest bipartisan success story.

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Investment-Grade Policy: De-Risking Renewable Energy Projects

An excerpt from EI’s new book Designing Climate Solutions outlines how de-risking renewable energy projects can accelerate investment and deployment of clean energy.

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Redirecting Trump’s Coal and Nuclear Bailout to Fund Economic Redevelopment

EI’s Sonia Aggarwal outlines how federal coal and nuclear bailout funding could be better spent investing in community redevelopment and worker transition.

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Billions At Stake: Should We Invest In Struggling Power Plants Or Communities Facing Closures?

EI’s Sonia Aggarwal outlines how billions in proposed coal and nuclear subsidies would be better spent on economic redevelopment for communities and workers in areas affected by plant closures.

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Top Renewable Energy Financiers Reveal Pathway To $1 Trillion In U.S. Investment

EI’s Silvio Marcacci says a new survey shows renewable energy will be an increasingly attractive investment in the U.S. and could attract $1 trillion in cumulative private investment by 2030.

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Is Offshore Wind About To Hit Cost-Competitiveness In New York And New England?

EI’s Mike O’Boyle says offshore wind may seem like a pricey option, but it’s actually an extremely valuable investment that’s about to reach cost-competitiveness in New York and New England, creating thousands of jobs along the way.

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Wind and Solar Costs Continue to Drop Below Fossil Fuels. What Barriers Remain for a Low-Carbon Grid?

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America’s Offshore Wind Boom Is Finally Here: Which State Will Win The Race To The Top?

EI’s Mike O’Boyle says America’s offshore wind boom has finally arrived, as major project announcements in Maryland and Massachusetts combined with record-setting auctions expected in New York and New Jersey have set off a “race to the top” to capture clean energy’s economic opportunity.

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Cheap Renewables Keep Pushing Fossil Fuels Further Away From Profitability – Despite Trump’s Efforts

EI’s Silvio Marcacci says renewables became the cheapest new U.S. power generation source in 2017, building new wind is often cheaper than running existing coal, and as renewable energy costs continue their relentless decline fossil fuels will fall further from profitability despite Trump Administration action.

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Rick Perry’s Coal And Nuclear Subsidy Could Cost The U.S. Economy $10.6 Billion Per Year

Research shows Rick Perry’s coal and nuclear subsidy proposal could cost $10.6 billion per year, and would overwhelmingly flow to roughly 10 companies and 90 power plants.

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Offshore Wind’s Investment Opportunity: Economic Growth With Emissions Reductions

Offshore wind energy’s costs are falling fast, just at technological innovations combine with smart state policy to generate huge investment opportunities for utilities and developers along with economic growth for states and communities along the U.S. coasts.

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Global Coal Use, Power Sector Emissions Will Peak Within A Decade As Low-Cost Renewable Energy Grows

Bloomberg New Energy Finance’s (BNEF) New Energy Outlook 2017 is the newest report to predict a diminishing role for fossil fuels as renewable energy and battery storage become cleaner, cheaper, and more reliable grid resources to 2040.

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Embracing The Coal Closure Trend: Economic Solutions For Utilities Facing A Crossroads

Utilities across the United States continue to announce coal plant closures and reaffirm previous plans to remove coal from their generation fleets. What’s behind this trend? And how can U.S. utilities profitably transition themselves and affected coal communities to a 21st century generation mix?

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New Financial Tools Proposed In Colorado Could Solve Coal Retirement Conundrum

Cheap natural gas and renewables are outcompeting coal-fired power plants on economics, pushing many of them into early retirement and leaving behind coal workers and communities. A newly proposed bill in Colorado aims to turn this economic challenge into an economic engine for utilities, electric consumers, and coal workers and communities.

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Wind and Solar Are Our Cheapest Electricity Generation Sources. Now What Do We Do?

Debates about the future of America’s electricity system have long centered on a binary choice between lowering costs or decreasing pollution. But that has changed. In many parts of the country, new renewables are simply the cheapest resource.

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Analysis Finds Wind Could Replace 6,000 Gigawatt-Hours of Coal in Colorado

In 2004, Colorado voters bet on the outcome of costs dropping for wind and solar energy as they were used more — and it looks like the initiative’s promise is coming to fruition. Today, around 6,000 gigawatt hours (GWh) of generation from Colorado coal plants could be replaced with 2 gigawatts of wind while reducing costs passed onto ratepayers — without threatening reliability.

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Driving Blind: The Worst Examples of Outdated Data Skewing Renewable Energy Projections

Policymakers rely heavily on quantitative analysis to understand how to manage rapid changes in the power sector, and quantitative analysis (particularly forward-looking projections) relies heavily on underlying assumptions. The quality and breadth of these assumptions are crucial to good decisions.

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