PLUMMETING SOLAR, WIND, AND BATTERY COSTS CAN ACCELERATE OUR CLEAN ELECTRICITY FUTURE JUNE 2020 EXECUTIVE SUMMARY Global carbon emissions must be halved by 2030 to limit warming to 1.5°C and avoid catastrophic climate impacts. Most existing studies, however, examine 2050 as the year that deep decarbonization of electric power systems can be achieved—a timeline that would also hinder decarbonization of the buildings, industrial, and transportation sectors. In light of recent trends, these studies present overly conservative estimates of decarbonization potential. Plummeting costs for wind and solar energy have dramatically changed the prospects for rapid, cost-effective expansion of renewable energy. At the same time, battery energy storage has become a viable option for costeffectively integrating high levels of wind and solar generation into electricity grids. This report uses the latest renewable energy and battery cost data to demonstrate the technical and economic feasibility of achieving 90% clean (carbon-free) electricity in the United States by 2035. Two central cases are simulated using state-of-the-art capacityexpansion and production-cost models: The No New Policy case assumes continuation of current state and federal policies; and the 90% Clean case requires that a 90% clean electricity share is reached by 2035. 2 03 5 THE REPORT | 2 KEY FINDINGS Table ES-1 shows the report’s findings at a glance, and the following discussion expands on these findings. CURRENT GRID (2019) NO NEW POLICY (2035) 90% CLEAN (2035) U.S. Power System Characteristics by Case Modeled in the Report Highly Decarbonized Grid Dependable Grid Electricity Cost Reductions - Feasible Scale-Up - Highest Number of Jobs Supported - Largest Environmental Savings - STRONG POLICIES ARE REQUIRED TO CREATE A 90% CLEAN GRID BY 2035 The 90% Clean case assumes strong policies drive 90% clean electricity by 2035. The No New Policy case achieves only 55% clean electricity in 2035 (Figure ES-1). A companion report from Energy Innovation identifies institutional, market, and regulatory changes needed to facilitate the rapid transformation to a 90% clean power sector in the United States. 2 03 5 THE REPORT | 3 TABLE ES-1. ANNUAL GENERATION | 90% CLEAN ANNUAL GENERATION | NO NEW POLICY 5000 SOLAR AN N UAL G E N E R ATIO N ( T Wh/yr) AN N UAL G E N E R ATIO N ( T Wh/yr) 5000 4000 WIND HYDRO GEOTHERMAL 3000 NUCLEAR BIOPOWER 2000 OTHER 1000 GAS SOLAR 4000 3000 GEOTHERMAL BIOPOWER NUCLEAR 2000 1000 COAL GAS COAL 0 2025 2030 2035 202O THE 90% CLEAN GRID IS DEPENDABLE WITHOUT COAL PLANTS OR NEW NATURAL GAS PLANTS Retaining existing hydropower and nuclear capacity (after accounting for planned retirements), and much of the existing natural gas capacity combined with new battery storage, is sufficient to meet U.S. electricity demand dependably (i.e., every hour of the year) with a 90% clean grid in 2035. Under the 90% Clean case, all existing coal plants are retired by 2035, and no new fossil fuel plants are built. During normal periods of generation and demand, wind, solar, and batteries provide 70% of annual generation, while hydropower and nuclear provide 20%. During periods of very high demand and/or very low renewable generation, existing natural gas, hydropower, and nuclear plants combined with battery storage cost-effectively compensate for mismatches between demand and wind/solar generation. Generation from natural gas plants constitutes about 10% of total annual electricity generation, which is about 70% lower than their generation in 2019. ELECTRICITY COSTS FROM THE 90% CLEAN GRID ARE LOWER THAN TODAY’S COSTS Wholesale electricity costs, which include the cost of generation plus incremental transmission investments, are about 10% lower in 2035 under the 90% Clean case than they are today, mainly owing to low renewable energy and battery costs (Figure ES2). Pervasiveness of low-cost renewable energy and battery storage across the United States requires investment mainly in transmission spurs connecting renewable generation to existing 2 03 5 THE REPORT | 4 HYDRO OTHER 0 202O WIND 2025 2030 FIGURE ES-1. Generation Mixes for the 90% Clean Case (left) and No New Policy Case (right), 2020–2035 2035 high-capacity transmission lines or load centers. Hence, additional transmission-related costs and siting conflicts are modest. Relying on natural gas for only 10% of generation avoids large investm