Is your community prepared for the energy transition?
Whether you live in a city, village or rural town, climate change will affect everyone in coming decades. Climate change-exacerbated severe weather is already affecting many communities-- floods, drought, wildfire, heat, and storms. Coastal communities are experiencing creeping sea level rise. Extreme weather in recent years is compelling climate change-related activity: carbon mitigation programs, land use changes, and updated business plans. The root cause of climate change is the dominating amount of greenhouse gas (GHG) emissions associated with urban energy usage. To lower GHG levels there is an accelerating focus on changing urban energy systems.
Understanding how energy generation and usage will change is important for the eighty percent of the domestic population living in urban areas. 2020 census. Energy changes will affect homeowners, renters, businesses, community officials, and planners. Energy impacts are going up with concerns over electric reliability, power quality, costs, energy-related services (e.g., electric vehicle charging locations), economic development, and business competitiveness. The below trends offer insight on potential infrastructure changes, timing, and the likelihood of this energy transition.
Extreme weather longevity
Extreme weather patterns will continue for decades as GHGs continue rising faster than predicted. The international community agreed (2015 Paris Agreement) on GHG targets to limit global warming to 1.5°C compared to pre-industrial levels. There was evidence of significantly less damage if warming was limited to this level. The global surface temperature rise was already around 0.446°C. The 2023 global average temperature rise is forecast to be around 1.20°C. This increasing global temperature trend is quickly approaching the 1.5°C threshold. Katharine Sanderson, Earth's average 2023 temperatures now likely to reach 1.5°C of warming, Nature, September 22, 2023. Since GHGs remain in the atmosphere for decades and are still rising, addressing climate change requires long-term energy action and investment.
Energy infrastructure resilience
Property and economic damage from extreme weather is going up. Damage. To protect infrastructure, public safety, and economic viability, many communities are reassessing infrastructure vulnerabilities and the adequacy of their building, safety, and land management programs (such as zoning and building codes). Energy infrastructure is a part of this reassessment. Society increasingly depends on electricity for more purposes such as computer-based technologies and transportation, especially with remote working. This increased electricity usage (demand) also requires enhanced electric reliability. Communities can strengthen energy infrastructure reliability by working with private owners and utility companies on energy facilities in urban areas. Potential projects include elevating energy infrastructure, installing flood barriers, waterproofing buildings, moving electric equipment, allowing self-generation, having redundant systems, upgrading smart grid technology, and updating emergency response plans.
Reliability concerns increase public interest in strengthening utility electric distribution delivery grids and installing resilient self-generation equipment, such as solar rooftop, microgrids, and community solar/wind projects. In response to this public reliability interest, community governmental entities often work with state authorities to shape utility energy investment to accommodate interconnection with privately-owned local energy generation. Community governmental entities are also integrating energy-related projects into capital project plans, updating building codes to accommodate new energy technologies, and zoning for locating electric generating facilities, batteries, charging stations and other facilities associated with local energy .
Energy-usage dominates climate changing impacts.
Mitigating global warming depends on reducing GHG emissions. About 75 percent of GHGs emanate from carbon-emitting fossil fuel electric generation and fossil fuel usage (e.g., transportation and heating). Thus, a zero or low electrification strategy (decarbonization) is essential to significantly reduce GHGs. This was confirmed by the International Panel on Climate Change (IPCC). The IPCC considered over a thousand strategies to achieve the 1.5°C goal. IPCC. Electrification (with near elimination of fossil fuels) was one of the few strategies that met the 2100 Paris Agreement goal without a large interim exceedance of the 1.5°C threshold. This electrification strategy requires about three times more electric generation than today's capacity. With limited open land for large renewable energy projects and large project permitting obstacles, much of this low carbon generation/storage capacity will be decentralized within urban areas. Saul Griffith, Electrify: An Optimist’s Playbook for Our Clean Energy Future (2021).
Climate change policies
For over a decade the international community has sought policies and activities to reduce GHGs to limit global warming. On December 13, 2023, nearly 200 countries at the 28th Conference of the Parties (COP28) agreed for the first time to transition energy systems away from fossil fuels toward low and zero carbon sources. In addition, COP28 set a near-term target to triple renewable energy capacity, double energy efficiency, and substantially reduce methane (natural gas) emissions. All countries, including the United States, need to submit a conforming climate action plan by 2025.
The Biden administration is already taking significant steps to decarbonize the domestic energy system, including using federal energy procurement. New legislation provides unprecedented funding to achieve climate change goals. The Biden administration seeks an economy-wide fifty percent reduction in GHGs (from 2005 levels) in 2030. The cornerstone of this ambitious GHG reduction plan is a heavy reliance on transitioning energy systems away from fossil fuels and towards renewable energy. The recent Bipartisan Infrastructure Act and Inflation Reduction Act (IRA) funding is expected to reduce GHG emissions by roughly forty percent in 2030. The funding incentivizes renewable electric generation, renewable-related improvements to the electric grid, and products that use, store, and save electricity (e.g., electric vehicles, batteries, heat pumps for heating and cooling).
States were early participants in establishing climate change policies and programs. Today, three-quarters of states and the District of Columbia have announced or are developing climate action plans. Most of these plans significantly affect energy generation and usage. These programs include renewable portfolio standards, carbon pricing, clean transportation, renewable energy permitting, GHG reduction targets, energy efficiency, and renewable energy generation/distribution systems. Plan implementation will affect energy costs, available energy technologies, access to energy-related services, and renewable generation/distribution facilities. Many communities are competing for newly available federal and state funding and are integrating supporting features in their building codes and land use plans.
Competitively priced renewable energy
While climate policies and legislation garner much attention, changing energy costs are rapidly shifting toward a more local and renewable energy system. Dramatic cost reductions in renewable technologies are driving both private and utility investment. Since 2010 the pre-incentive rooftop solar project cost has fallen about fifty percent. The price of residential solar has dropped from about $7.53 to $2.50 per watt. Similarly, the cost for utility-scale solar has dropped from $5.66 to 89 cents per watt. NREL. Utility-scale solar is now less expensive than generating electricity from coal-fired power plants and is close to dropping below electric prices associated with natural gas combined-cycle plants. The levelized cost of energy (LCOE) for utility-scale solar ranges between $24 - $96 per MWh, significantly more competitive than $68 - $166 per MWh for coal-fired generation. The cost differential for utility-scale wind generated electricity versus coal is even more significant.
The value proposition for renewable energy will go up as newer technologies are more affordable and integrated with the utility electric system. One emerging technology is energy storage, such as batteries. Energy storage overcomes the intermittent character of solar and wind generation. The combination of renewable energy generation/storage is dramatically increasing the value for both privately-owned and utility-scale renewable investments. See, e.g., battery values. This cost shifting will accelerate as businesses, the Department of Energy, and national energy laboratories continue to research and fund activity to integrate privately-owned renewable technologies with utility distribution grids. This includes the unrealized electric generation/storage capacity from connecting electric vehicles (EVs) to the electric grid. DOE. Inclusion of EV generation/storage will reduce vehicle ownership costs and avoid additional utility capacity investment. The continued cost reductions associated with renewable technologies will further grow public interest in a more decentralized renewable energy transition.
Energy markets
The current domestic electricity capacity is inadequate for a successful electrification strategy that requires more power for additional electric-using technologies such as motors, appliances, and modes of transportation. This need for more electric capacity is made more challenging with legacy centralized power plants shutting due to age and the cost of using fossil fuels. The average age of these plants is about forty years. Centralized plants are mostly nuclear (20 percent) and fossil fueled (60 percent) from coal, natural gas, and petroleum. Utility-scale electricity is delivered via weather-vulnerable long distance electric lines. New electric generation capacity is overwhelmingly renewable solar and wind. Much of this new renewable generation is more resilient with shorter electric delivery distances within urban areas for industry, businesses, and residential users. Since state authorities oversee utility investments, states are directing utilities to upgrade the utility distribution grid to interconnect this growing local electric capacity with the utility grid.
Many states have ordered utilities to add significant renewable energy capacity to meet carbon reduction targets and reduce public energy costs. Over the next five years the U.S. solar and wind capacity is expected to nearly triple in size and account for most new electric generation. SEIA. While utility-scale renewable energy projects are outpacing residential and commercial solar installations, large utility projects face unique challenges in acquiring land, obtaining energy and environmental permits, and securing grid interconnection. Consider that in the last few years California residential and commercial solar installers added more renewable energy capacity than all the state’s utility-scale solar projects. Given this need for more clean energy capacity, urban areas will play a significant role in transitioning energy systems, including user controls for electricity management, local permits for installing self-generation, and zoning/ building codes.
Urban areas are at the climate change epicenter.
Urban areas dominate GHG contributions, largely from fossil fuel generated electricity and transportation/heating usage. With urban areas contributing three-quarters of domestic GHG carbon dioxide emissions, cities play an outsized energy transition role. Nature. Community governmental entities are the epicenter of policy/cost shifts favoring decarbonized energy usage and public demand for lower cost renewable technologies. To deal with climate change, state and local communities will choose how and where energy related systems/programs will integrate with urban infrastructure and land use plans.
Private and utility energy investment is already following climate change-related policy and cost trends. In 2022 annual rooftop solar grew nearly fifty percent (rooftop solar), almost 700 microgrids were installed in the United States (microgrids), and domestic EV sales went up by over fifty percent. This private investment growth in local low carbon energy complements utility decarbonization investments. There is little new investment in fossil fuel power projects despite the retirement of expensive-to-operate existing coal power plants. Since 2010 over 600 coal-fired plants have announced retirement plans. About twenty-eight percent of operating coal-fired electric-generation capacity will retire by 2035. coal retirement. Rather, utility investment is flowing to new utility-scale wind and solar energy sources. This renewable generation capacity is surpassing coal-fired generation and is now eroding investment in new natural gas power plants. renewables.
There is no overall national plan for transitioning the domestic energy system to a more local and renewable future. Still, the legacy centralized energy system is rapidly changing due to the trends mentioned earlier. Aging power plants are retiring, and the long, one-way electric lines are being modernized to handle multiple generation sources and two-way electric and communication flows. These energy changes will affect everyone: those buying a car/appliance, programs to manage home electricity use, and businesses/individuals investing in energy generation/storage technologies. States are largely responsible for making the energy transition cost effective and smooth, primarily by allowing utility investments that address public interest in energy options. Local governments are responsible for adjusting building codes for energy efficiency/systems, updating zoning for energy equipment siting, planning for community energy-related services, and updating safety/fire response plans. States are moving forward (or not proceeding) at various speeds to prepare for the ongoing energy transition.
Decades ago, individuals and businesses had few energy options. Merely plugging in and paying the utility bill was the norm. Today, understanding how states and communities are preparing for the energy transition is a rising priority, especially if climate change trends continue. This transition is essential in addressing climate change, as well as maintaining a quality of life. State and community actions increasingly affect purchasing decisions for energy-related products, managing electricity usage, sustaining business competitiveness, maintaining electricity reliability, and enhancing community economic development. With a more climate-aware citizenry and highly mobile population, both individuals and businesses will increasingly be more engaged in their communities’ energy transition preparedness.
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