Cutting Carbon While Keeping the Lights On, RMI Shows Opportunities to Lower Costs & Reduce Emissions in the US Power System

RMI has released two reports showing practical, cost-effective, near-term steps to rapidly decarbonize America’s electricity sector while maintaining reliability

Boulder, CO – March 10, 2021 The US power system will need to transition rapidly over the next decade not only to meet a need for greater resilience but also to prevent the worst effects of climate change. To help meet these urgent needs, today RMI released two new reports which provide practical, cost-effective, near-terms steps to unlock the transformation of this sector towards a clean energy future.

The first report addresses an ongoing theme in the US power sector: the apparent tension between reliability needs and the economically driven shift from costly legacy coal-fired power plants, to new, cleaner, low cost-alternatives. Cutting Carbon While Keeping the Lights On shows that large parts of the US power system have significant over-capacity of coal- and gas-fired power plants. This excess capacity means that over half of the nation’s coal can be retired today and replaced with renewables without compromising reliability reserve margins.

“Our analysis clearly shows that there is excess generation in much of the United States, and that this excess capacity presents an opportunity to quickly replace expensive, outdated resources with cleaner and lower cost technology.” said Chaz Teplin, a principal in RMI’s Carbon-Free Electricity program and an author of the paper.

RMI finds that 27% of the US coal fleet, mostly in the Northeast and Southeast United States, could be retired by 2025 without replacement. An additional 29% can retire if cost-effectively replaced with wind and solar, meaning that over half of the nation’s coal fleet could retire over the next four years, lowering utility bills.

But retiring un-needed, legacy coal plants is only the beginning. Utilities will also need to make significant investments in clean energy to support changing demand, including from transportation and building electrification. The second report, How to Build Clean Energy Portfolios, identifies a need for $300–$750 billion in new investment through 2030, as well as processes to allow utilities, regulators, and policymakers to cost-effectively procure clean energy.

This report builds on leading examples from across the United States of new procurement practices that promote competition between resource types and allow the best solutions to be chosen at the lowest cost. These modern practices can replace outdated utility procurement processes that favor technologies like coal- and gas-fired power plants, and provide a level playing field for renewables.

“Leading utilities are showing how updated procurement processes can harness competition and save customers money with a transition to clean energy,” said Lauren Shwisberg, manager at RMI and an author of the report.

The next decade will be an intensely dynamic time for the US power industry. It presents a unique opportunity for utilities, regulators, and policymakers to seize upon the rapid cost declines of clean technologies, unlock competition, and realize economic, carbon, and societal benefits. The power sector is poised for a better future but must act decisively and prudently to make this a reality for customers, their shareholders, and society at large.

Cutting Carbon While Keeping the Lights On

How to Build Clean Energy Portfolios,

Courtesy of Rocky Mountain Institute