Efficiency makes clean energy cost-competitive with new gas power plants

(ACEEE blog, 23 Sep 2019) Clean energy, including wind, solar, storage, energy efficiency, and demand flexibility, has reached an economic tipping point and is now cost-competitive with natural gas power generation, according to a new study by the Rocky Mountain Institute (RMI). Dig into the report’s findings, and you’ll see that energy efficiency and demand flexibility play an outsized role.

The study finds that including these least-cost, demand-side resources more than triples the near-term market for clean energy to replace new gas power plants.   

Across the United States, utilities and energy developers have announced plans to spend about $70 billion building new natural gas power plants. RMI finds that clean energy portfolios (CEPs) are lower cost than 90% of the proposed gas capacity. It concludes that these planned investments in new gas power plants are at significant risk of becoming stranded assets or obsolete. CEPs present an alternative to new gas power plants and can deliver both large cost savings and emissions reductions.

The outsized role of efficiency and demand flexibility

The RMI analysis, The Growing Market for Clean Energy Portfolios, finds that energy efficiency and demand flexibility each deliver about one-fifth, or 40% combined, of the energy capacity needed to avoid new combined cycle gas turbines in the US. The opportunity for demand-side resources is even higher in some regions — more than 50% in the Midwest and West and more than 40% in the Northeast/MidAtlantic.

Energy efficiency is also important for avoiding new gas combustion turbines, providing a tenth of the capacity needed to avoid all new such turbines. Here, demand flexibility and storage play the largest roles because these turbines primarily provide power during peak hours.

The capacity contributions from demand-side solutions are large, but their cost savings are most striking. While wind, solar, and storage resources would deliver $3.5 billion in customer savings, efficiency and demand flexibility would add another $25.5 billion.

The potential savings from efficiency are large, but will not happen on their own. That’s why we need policy solutions to drive investments in efficiency when and where they’re most needed.

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ACEEE blog, 23 Sep 2019: Efficiency makes clean energy cost-competitive with new gas power plants