If the United States completely decarbonizes by 2030, it could cost north of $4.5 trillion, according to a Wood Mackenzie report.
However, if the country chooses one of several alternative routes—including stretching the timeline to allow for the development of less costly technologies and greater renewable energy storage capacity or expanding clean energy sources to include nuclear energy—both the monetary and societal costs could be more manageable, the consultancy group asserts.
If the United States were to adopt 100% renewable energy policies (RE100) in 12 years (or else face severe impacts from global warming per the Intergovernmental Panel on Climate Change), the country’s power grid would need about 1,600 gigawatts (GW) of new wind and solar capacity to produce enough energy to replace all fossil fuel generation, Wood Mackenzie writes. To reach that goal, roughly $1.5 trillion would have to be spent.
In the report, head of global wind energy research, Dan Shreve, and, director of Americas power research, Wade Schauer, write, “Adoption of RE100 would involve massive investments that could lead to significant transition costs and customer rate impacts, despite the falling cost of renewables.”
“This buildout is unprecedented,” they write. “Aggressive climate policies with 2030 targets will require more capacity to be built every single year over the next 11 years than what has been installed collectively over the past two decades.”
But that’s just the start. The authors assert RE100 costs would rise to $4 trillion due to the investment in 900 GW of longer duration energy storage capabilities that are currently in use today.
“The inadequacy of the energy storage supply chain is apparent and is compounded by technology gaps,” the authors write. “The recent proliferation of smaller, short run lithium ion storage plants fails to deliver the longer duration storage capability critical to balancing seasonal swings in wind energy production or extended resource droughts stemming from major weather events.”
Additional costs include $700 billion to build 200,000 miles of new high-voltage transmission to communities far away from wind and solar facilities, and the real potential for increased supply chain costs to build out such facilities in such short of a time, including escalating costs for raw materials, like steel and copper, and associated logistics, such as transport and cranes.
Then there are the huge societal costs to meet aggressive timelines and goals, including how current utilities deal with suddenly stranded assets and difficult political choices on where to place massive new wind and solar farms in more suburban and urban areas.
“For any country to embrace a nationwide transition to 100% renewable energy (RE100) or zero carbon (ZC100) emissions constitutes a massive disruption with far-flung economic and social repercussions,” the authors write. “Nimbyism is inevitable and forecasted increases in consumer energy costs may result in public backlash against aggressive climate change policies.”
Policymakers could craft compromises that could lessen both monetary and societal costs, they assert.
One option would be to extend the RE100 timeline (as California and Germany did) to allow time for new technologies to be commercialized that could lower costs.
Policymakers could also choose to include zero-carbon technologies, especially nuclear power, which currently provides 60% of the total clean energy in the United States, compared to wind and solar’s 20% contribution. This could save nearly $500 billion in renewable energy investments, as well as mitigate transmission and storage investment needs while also easing supply chain constraints.
Yet another option would be to reduce mandates from ZC100 to ZC80, allowing 20% of the power mix to come from existing natural-gas-fired generation. This would reduce renewable energy costs by roughly 20% and energy storage costs by at least 60%.
“Decisions made, or not made, over the next 10 years will have generational impacts,” the authors write. “Political leaders are taking action, but must balance the rallying cries of campaign rhetoric against sound policy decisions, or run the risk of exacerbating cost and operational challenges. Or worse yet, incite public backlash to climate initiatives and derail these efforts in their entirety.”
Overall, RE100 goals remain largely aspirational, but attainable, given a reasonable timeframe to allow for technology development, regulatory realignment and socio-economic reforms, according to Wood Mackenzie.
“Decarbonization dynamics are accelerating and it is imperative that power market stakeholders take the necessary steps to participate in the energy transition,” they conclude.