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What would it take to decarbonise the US electric grid by 2035?
7/9/2022
News
A new report from the National Renewable Energy Laboratory (NREL) has found that several key challenges still need to be understood and addressed over the next decade to enable the speed and scale of deployment necessary to achieve 100% clean electricity, or a net zero power grid, in the US by 2035. Achieving this goal would be a major stepping stone to economy-wide decarbonisation in the US by 2050.
‘There is no one single solution to transitioning the power sector to renewable and clean energy technologies,’ says Paul Denholm, lead author of the study, which was undertaken in partnership with the US Department of Energy and with funding support from the Office of Energy Efficiency and Renewable Energy.
In all scenarios modelled in the study, new clean energy technologies need to be deployed at an unprecedented scale and rate to achieve 100% clean electricity by 2035. As modelled, wind and solar energy provide 60–80% of generation in the least-cost electricity mix in 2035, and the overall generation capacity grows to roughly three times the 2020 level by 2035 – including a combined 2 TW of wind and solar.
To achieve those levels would require an additional 40–90 GW/y of solar on the grid and 70–150 GW/y of wind by the end of this decade – more than four times the current annual deployment levels for each technology. If there are challenges with siting and land use to be able to deploy this new generation capacity and associated transmission, nuclear capacity helps make up the difference and more than doubles today’s installed capacity by 2035.
Across the four scenarios, 5–8 GW of new hydropower and 3–5 GW of new geothermal capacity are also deployed by 2035. Diurnal storage (2–12 hours of capacity) also increases across all scenarios, with 120–350 GW deployed by 2035 to ensure that demand for electricity is met during all hours of the year.
Other emerging carbon removal technologies, like direct air capture (DAC), could also play a big role in 2035 if they can achieve cost competitiveness, suggests the study.
‘The US can get to 80–90% clean electricity with technologies that are available today, although it requires a massive acceleration in deployment rates,’ says Brian Sergi, co-author of the report. ‘To get from there to 100%, there are many potentially important technologies that have not yet been deployed at scale, so there is uncertainty about the final mix of technologies that can fully decarbonise the power system. The technology mix that is ultimately achieved will depend on advances in R&D in further improving cost and performance as well as the pace and scale of investment.’
The new report comes on the heels of the enactment of the landmark Inflation Reduction Act (IRA), which, in tandem with the Bipartisan Infrastructure Law (BIL), is estimated to reduce economy-wide greenhouse gas emissions in the US to 40% below 2005 levels by 2030.
The impact of the IRA and BIL energy provisions are expected to be most pronounced for the power sector, with initial analyses estimating that grid emissions could decline to 68–78% below 2005 levels by 2030. The longer-term implications of the new laws are uncertain, but they likely will not get the US all the way to 100% carbon-free electricity by 2035, notes the NREL.
None of the scenarios presented in the report include the IRA and BIL energy provisions, but their inclusion is not expected to significantly alter the 100% systems explored – and the study’s insights on the implications of achieving net zero power sector decarbonisation by 2035 are expected to still apply.
US Inflation Reduction Act set to boost CCUS uptake
Meanwhile, the US IRA bill is expected to boost global carbon capture use and storage (CCUS) capacity, which is nearing 1bn t/y, according to the latest analysis from Wood Mackenzie.
More than 50 new projects have been announced this quarter, but more is needed to meet net zero goals by 2050, states the market analyst. Currently, the CCUS capacity pipeline is close to aligning with Wood Mackenzie’s 1.5°C pathway to 2030, but it will need to grow seven-fold by 2050 to reach the capacity required for net zero.
The biggest challenge is the lack of embedded policy and regulation for CCUS projects, with the rate of growth and demand for CCUS outpacing various governments’ abilities to legislate.
The US is a global leader in CCUS, reports Wood Mackenzie, supported by its 45Q tax credit incentive for carbon sequestration launched in 2008. This tax incentive will be enhanced and extended following the signing of the IRA into law. The US’ planned CCUS capacity pipeline currently stands at almost 250mn t/y. The IRA will help incentivise smaller-scale capture projects, attract more industries, and promote investment into technologies including DAC.
Meanwhile, Wood Mackenzie reports that great strides have also been made for licensing and permitting for geological CO2 storage throughout 2Q2022, with an increase in licensing activity in Norway, Russia and Australia, and the UK launching the ‘first of its kind’ CO2 storage licensing round in the North Sea.
North America and Europe continue to emerge as hotspots for CCUS activity. North America accounts for over two thirds of current global capacity in 2022, with activity mainly focused in Alberta, the Gulf Coast and US Midwest. Going forward, North America’s share of global CCUS capacity is expected to reduce to 2030 as hub projects across Europe scale up.
China and Southeast Asia are forecast to have the biggest demand for CCUS in the 2040s, but this will require further regulatory and policy implementation.
