President Trump and the clean energy future
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Donald TrumpDonald TrumpBipartisan group of mayors asks for immigration reform Obama offers laments and optimism at last presser Overnight Energy: Trump's EPA pick faces Congress | 2016 is the hottest year on record MORE’s election and presidential transition has revived debate over the roles various energy sources should play in a secure, reliable, affordable and clean U.S. electricity system.

Putting partisan differences aside, the key question is this: If cost and reliability are of great concern, what is the cleanest energy mix we can use to power our economy? More specifically, what is the role of natural gas now and in the long term?

Moving beyond rhetoric, actual data show the market forces driving clean energy are likely to continue, regardless of federal policy under a President Trump. Let’s look at the numbers.

Estimates from investment firm Lazard compare today’s unsubsidized costs for building new power plants by technology. The costs of new natural gas plants are highlighted below in gold, wind and solar costs are highlighted in green, and the vertical black lines show the cost range for a combined cycle gas turbine. On a level playing field coal, nuclear and several forms of natural gas are all more expensive today than new wind and solar.

For additional context, consider how the capital costs of solar and wind have been on steep downward trajectories for years. Solar costs have dropped more than 80 percent and wind more than 60 percent since 2009. Both benefit from zero fuel costs, while the capital costs of building natural gas have remained relatively stable even as fuel costs have moved up and down.

Economics dictate these trends will continue: While fossil fuel prices fluctuate, technology costs are generally irreversible. Even if Trump expands fracking as president, natural gas prices are unlikely to go down much further, especially considering Mexico has accounted for more than half of all U.S. natural gas exports over the last couple of years and is likely to remain a major market. Simply fracking more gas is unlikely to push prices further down.

The effects of these relative costs are easily observed in real-world market dynamics. Consider Texas’s power market: The left side of the below chart shows energy market revenues for combined-cycle gas from 2011-2015 in several regions of Texas, suggesting for the past few years the state’s power market has not generated enough revenue to cover the cost of new entry for a typical new gas plant; in fact, it’s far short. The right side of the chart compares net revenues and costs for new gas, wind and solar in 2015 — based on 2015 hourly electricity market prices, plus 2015 hourly output data from wind and solar plants, plus 2015 published prices for power purchase agreements in Texas — showing the gap between real 2015 revenues and the cost of new gas, wind and solar.

This shows a much rosier financial picture for utility-scale wind and solar in Texas, and suggests short-term growth in market share for gas in Texas is unlikely to continue in the long term, especially given cost trajectories for renewables. No wonder the state’s installed solar is expected to double in 2016 and grow nearly 400 percent over the next five years.

The national numbers for 2015 reflect the effects of these relative costs as well — last year, more than 40 percent of new power generation capacity built in the U.S. was wind-powered, about 30 percent was natural gas-powered and more than a quarter was solar-powered.

As the share of renewable power grows, many wonder what we are going to do at night when the wind “is not blowing” in a particular region. It’s a fair question, but basic portfolio theory shows the limitations of this line of thinking. The left chart below depicts the volatility of a stock compared with an index. Analogously, the right chart shows the volatile production profiles of diverse energy resources that add to a similarly smooth overall electricity demand curve. Why does this work? Wind correlation drops dramatically with distance, so by connecting regions with transmission lines and smart grid technology, we can smooth out variable generation.

In other words, if Trump’s pledge to “spur $1 trillion in infrastructure investment” over a decade includes investing in our creaking grid, we can create new jobs and local revenue while facilitating cleaner energy. Smart hot water heaters, batteries and electric vehicles can draw power when renewables are available and discharge it when they’re offline. Don’t forget the cost of energy storage has fallen more than 70 percent since 2008.

Natural gas may have a role in a clean energy future, but its optimal use will be as a premium fuel for fast-ramping power, only generating energy a few hundred hours per year. Advanced IT already enables us to dynamically deploy this kind of diverse resource portfolio, handily meeting overall electricity demand — imagine what hundreds of millions in new federal and private investment could do.

Add it all up, and existing market forces combined with the president-elect’s desire to keep U.S. businesses competitive and invest in infrastructure mean taking a portfolio approach that allows renewables to supply a very high share of overall electricity needs reliably. Hour-by-hour modeling from the National Renewable Energy Laboratory shows they could reliably supply more than 80 percent of our nation’s needs while keeping costs within the same margin of error as a fossil-dominated system.

This transformation also poses a dilemma for free-market advocates who want to continue to burn coal. They will have to choose between propping up an obsolete, dirty fuel with a kind of state socialism or taking advantage of technology innovation. The dilemma is already showing up, as some conservative states are establishing special tariffs just so coal plants may run longer.

Clean energy can work well for the U.S., even in a Trump administration. We just need to recognize technology and market economics are reality, not rhetoric.


Sonia Aggarwal is director of strategy at energy policy think tank Energy Innovation.

The views of Contributors are their own and are not the views of The Hill.