Dive Brief:

• The United States' generation fleet is aging, and new research from the Rocky Mountain Institute estimates about half of existing thermal generation plants (gas, coal and nuclear) will retire by 2030. How those plants are replaced, about 500 GW in all, is a significant choice for regulators and investors alike.
• New gas turbines are becoming more efficient and natural gas is expected to remain cheap. Already, $112 billion in gas-fired power plants have been proposed or are under construction, along with $32 billion in proposed pipelines to serve them.
• RMI's research concludes regulators, utilities and investors should take a hard look at using a clean energy portfolio, rather than continuing what the report calls a "rush to gas" that could cost more than $500 billion. 

Dive Insight:

Particularly in California, the power industry has witnessed renewables and distributed resources forcing second thoughts on gas infrastructure. RMI's new report attempts to put a price tag on what's at stake. The think tank writes that underestimating the potential of clean energy resources could cost billions.

Generators "may be committing their customers and investors to as much as $1 trillion in future investment and fuel costs through 2030 as they rush to build new gas-fired power plants," the report warns. "Yet advances in renewable energy and distributed energy resources (DERs) offer lower rates and emissions-free energy while delivering all the grid reliability services that new power plants can."

RMI says its analysis shows "regionally specific clean energy portfolios already outcompete proposed gas-fired generators, and/or threaten to erode their revenue within the next 10 years."

Of the $112 billion in proposed plants, $93 billion is in the merchant gas power sector and $19 billion is from vertically integrated utilities.

RMI's trillion-dollar figure assumes $520 billion for gas-fired power plants to replace retiring capacity and another $480 billion for fuel through 2030. Replacing all of the capacity with gas-fired generation would also generate 5 billion tons of carbon dioxide emissions through 2030, and up to 16 billion tons through 2050. 

The report looks at a pair of announced combined-cycle gas turbine power plants, planned for high capacity-factor operation, and two announced combustion-turbine power plants, planned for peak-hour operation. In three of the plant reviews, the analysis showed an optimized clean energy portfolio would cost somewhere between 8% to 60% less than the gas-powered alternatives.

In the fourth plant assessment, RMI found the net cost of the optimized clean energy portfolio was about 6% higher than the proposed power plant.

RMI said that if you consider "expected further cost reductions" in distributed solar and/or a $7.50/ton price on CO2 emissions, "all four cases show that an optimized clean energy portfolio is more cost-effective and lower in risk than the proposed gas plant."

"Renewables and DERs are outcompeting and beginning to capture market share from natural gas-fired generation in many parts of the country, including both peaking capacity as well as higher-efficiency, combined-cycle plants," RMI principal and report  author Mark Dyson said in a statement. Continuing a business-as-usual approach "promises to negatively impact customers, investors, and the environment."

Non-wires alternatives and a host of clean energy strategies and resources are increasingly being used, such as utility scale and distributed renewables, energy storage, efficiency and demand response.

In one of the most recent examples, California regulators are now considering a proposal to reject a 47 mile, $639 million pipeline that San Diego Gas and Electric and Southern California Gas Co. want to construct. In addition, earlier this year, Calpine withdrew an application for a new gas plant in the state, and a municipal utility in Glendale, Calif., has scrapped plans for a gas generation project.