U.S. Electricity System in a Sustainable Future

Phase-out of emissions in electricity and transportation by 2060 can be enabled by renewable sources at costs economic relative to today's levels

Reduction of emissions to near zero by 2060 will likely be necessary to address climate and environmental risks
Demand for electricity in the U.S. will need to double from today's level of ~4 TWh to 8 TWh by 2060, driven mostly by electrification of the ground transportation system
Coal and nuclear electricity generation units are entering advanced age and will be mostly retired by 2060 as emissions, maintenance, and safety issues increase operating costs and force closure
By 2060, electricity will likely be generated almost fully by wind and solar (requiring 70 GW/yr of incrementally new capacity), and supplemented by hydro and storage
Total annual combined cost for electricity supply and transportation fuels will decline from ~4% of GDP today to 1% by 2060, driven by declining renewable generation and storage costs

Summary

Key Driver

Key Driver - Emissions Reduction

Risks associated with climate and environment require that emissions be largely eliminated by 2060

The future electricity supply structure will be driven largely by environmental risks
Evidence is strong and widely accepted that human made emissions are causing negative side effects for the climate system
Emissions reduction is prudent given the large downside risk, especially considering short-term harm to health and well being for all life, regardless of climate
Consensus suggests human made emissions should be largely eliminated by 2060 to adequately mitigate climate risk

Emissions

Emissions Sources

Over half of emissions can be addressed through non-emitting sources (electricity generation sector) and electrification (transportation sector)

50-60% of current U.S. greenhouse gas emissions are from electricity generation and transportation and can be addressed directly through non-emitting generation and electrification of the transport fleet
The remaining emissions from industrial, commercial, residential, and agricultural sources can be addressed through a variety of application specific measures

Demand

Electricity Demand

Total electricity demand growth including electrification of ground transportation is expected to be 3% annually

The demand for electricity in the U.S. between 1950 and 2007 increased ~13x at an average annual rate of 4-5% , and has since been fairy flat at ~4,000 TWh/yr
Going forward, baseline demand is expected to increase at annual rate 0.7%, or an additional 1,400 TWh/yr by 2060
Electrification of existing ground transportation demand will require an additional 1,700 TWh/yr by 2060
Ground transportation miles traveled are expected to increase at 0.5%/yr per year, representing an incremental 400 TWh/yr by 2060
With these components combined, total demand for electricity in 2060 would be 7,500 TWh/yr, requiring a total annual rate of increase of 3% which is less than historical levels

Hydro

Hydro generation is likely to stay around current levels of ~280 TWh/yr going forward

Hydro is the oldest major source of electricity and a valuable part of the system with a unique combination of dispatch control and zero emissions
Total U.S. generation has been fairly flat since the 1970's, averaging ~280 TWh/yr
Existing facilities are likely to remain operating with refurbishments, although difficulty with siting new facilities means output is likely stay around current levels

Nuclear

The existing nuclear fleet is entering advanced age and will mostly be retired retired by 2050 and not replaced due to high cost and waste concerns

The average age of the current nuclear fleet is 38 years and is facing increasing high maintenance costs and safety concerns
These units can be assumed to continue operating until an estimated lifespan of 60 years due to benefits of zero emissions, stable output, and low variable operating costs
The main challenge of nuclear is the escalating capital cost (currently ~$10,000/kW, $100-150/MWh all-in) which is unfavorable relative to the quickly declining cost of renewables and storage
Therefore, it is unlikely any new units will be built in the U.S.

Coal

Most coal capacity will retire between 2020 and 2040 due to advanced age, increasing competition from gas, and environmental pressures

The current coal fleet has an average age of 40 years and is facing increasing operating obstacles on several fronts
These units can be assumed to continue operating until an estimated lifespan of 60 years although at a decreasing intensity due to increasing maintenance costs, competition from gas, and environmental regulations
The all-in cost of new coal (~100/MWh) is high relative to new gas (~$50/MWh) and the declining cost of renewables
It is unlikely any new units will be built in the U.S. due to high cost and environmental pressures

Natural Gas

Gas will continue to play an important role as a medium-term bridge fuel to a low emissions future

Gas will be required to fill any deficit left between increasing demand and nuclear and coal retirements
Emissions from gas generation contain less than half the CO2 compared to coal (0.4t/MWh vs. 1 t/MWh) and are free from heavier components such as mercury, metals, acids, and particulates
However, gas generation will require a CO2 price to be competitive with coal on a variable cost basis, and also need to peak soon to achieve near zero emissions by 2060

Wind and Solar

Wind and Solar

The capacity of renewables will need to increase by 70 GW/yr to meet demand and eliminate emissions in the U.S. by 2060

Wind and solar are the lowest cost forms of renewable electricity generation at less than $50/MWh with strong resource, and declining at 5-10% per year
These technologies are the likely long-term choice for emissions-free energy required to supply traditional load and transportation electrification
The ideal ratio of wind and solar is location specific and dependent on a combination of cost and the resource portfolio effect which stabilizes output and reduces need for storage
Annual incremental addition of 57 GW solar and 13 GW wind would be required to meet demand at an energy ratio of 70/30 and average capacity factors of 25% and 40% for solar and wind respectively

Land Area

Solar and wind facilities will require 4% of lower 48 state area to meet total demand in 2060

Solar capacity is typically built at a density of 80 MW/sq.mi, and wind at 8 MW/sq.mi
Wind requires extra land for air flow considerations, although this can be utilized for other purposes such as agriculture or battery storage
The land area required to supply 7,200 TWh (net of hydro) in 2060 with a solar/wind energy ratio of 70/30 will be 330x330 miles which is 4% of the contiguous U.S., or the size of Nevada

Land

Storage

Intermittency of solar and wind will require storage to balance supply with demand

Storage will be required to match demand for electricity with the intermittent supply of solar and wind in real-time
The exact quantity of storage will be location specific and driven by a total system cost optimization of the renewable resource portfolio
Taking an estimate of a full day of storage on average, 7,500 TWh of total annual supply will require 20 TWh of storage, or 125 GW of incremental 4-hour duration storage additions per year

Cost

Total annual combined cost of electricity supply and transportation fuel will decline from 4.5% of GDP today to 1.5% by 2060

The current total cost of electricity supply in the U.S. including capital, fuel, non-fuel operating, and grid costs is ~2% of GDP
Fuel for ground transportation represents another ~2.5%
Combined cost for total electricity supply and transportation fuel would initially increase to 5% of GDP, although decline to 1.5% by 2060, driven by the declining cost of solar, wind and batteries

Cost

Recommendations

Policy makers should focus on implementing market mechanisms which can facilitate the transition to lower emissions, rather than prescriptive policies to manage outcomes directly

This analysis serves as a template to demonstrate feasibility of largely eliminating emissions by 2060
Cost efficient outcomes would best be accomplished through an emissions market with a gradually decreasing cap
Economic solutions will naturally be brought forward by investors if policy and market signals are clear, transparent, and free from external forces
The rapid rate of renewable deployment will require streamlining of regulatory bottlenecks for development, such as land access and permitting
Conditions in the United States are a basis for this analysis, although the economic dynamics are broadly applicable to other regions. One key regional difference is the price of natural gas and coal which are fully supplied by domestic sources in North America, although in most other parts of the world they are imported on margin from international seaborne markets at higher cost. Renewable resource also varies by geographic region.

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