Battle for control of America’s mammoth utility industry set to intensify

When you think of the US solar energy market, places such as Florida, California, New Mexico or Arizona might be the first to spring to mind. But that’s not where Dublin-headquartered BNRG Renewables is seeking to plough ahead.

The company has become a major player in the American solar scene, building, owning and running seven sites in Oregon as well as developing 350 megawatts of solar in Maine. It’s also working in several states along the mid-Atlantic coast. Despite the fact that Oregon and Maine are northerly coastal states better known for rain and cloud cover, they’ve been ripe for the picking.

“Despite the perception that they have a lower solar resource in Oregon and Maine, it’s still pretty good. BNRG has a 13-year track record of designing and building solar projects in ‘grey sky’ countries,” says director, David Maguire. “To compare, the solar resource in Maine is nearly 50 per cent more than at our sites in Ireland that we are developing.”

Maguire says the initial attraction in these states when starting out in the US in early 2016 was tied to a lack of development in the local industry, BNRG’s use of cutting-edge photovoltaic modules and good market fundamentals.

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“We designed based on where solar would be by the time we came to build the projects, not on the technology (or price) available at the time . . . These projects will place BNRG firmly on the map as the most active solar company in New England.”

Future production

It’s no surprise that a majority of Americans see solar as the future of utility-level energy production. The US has always been a market leader in developing and selling cutting edge renewable technology.

What’s more, though the average cost of producing a megawatt hour of electricity will stand at $40.20 by 2023, solar and wind installations will produce at between $2.60 and $3.60 cheaper, according to a September 2019 report in USA Today.

While all this is happening, almost 300 coal-fuelled power plants representing 40 per cent of the country’s coal power capacity have shuttered over the last decade, 50 of those during Donald Trump’s administration.

All combined, this should mean that renewables, from solar to wind to hydro and beyond taking centre stage as the world’s biggest economy moves away from coal.

And yet they are not.

That’s because utility-grade renewables are not the only game in town today. Even with coal’s decline, solar and wind are taking only a small share of its place. And while it’s never been more profitable to go green, the US relies on renewables for just 11 per cent of energy consumption, a figure that sees it lag behind a host of other developed countries.

That’s because America is increasingly entrenching in a fossil fuel of a different stripe: natural gas.

Gas plants

Currently there are around 2,000 natural gas power plants in operation across the country that account for around 36 per cent of America’s energy source, placing it way ahead of its closest competitors, coal and nuclear.

As of last September, 177 natural gas plants were either planned or under construction. Here in the Midwest, where shale has opened up a whole new world for traditional energy companies, a host of new facilities are in the works, such as Caithness Energy’s $1.6 billion Guernsey Power Station in eastern Ohio.

A half dozen new natural gas plants have opened throughout the state in recent years with announcements of two new plants coming in the past six months alone.

The combined value of the top 10 oil and gas projects under construction last year hit $206 billion, though a coronavirus-induced global economic slowdown and rock-bottom prices are sure to cut a sizable chunk out of those efforts in the months and even years ahead. Several companies behind new or recently-built gas-powered plants refused requests by The Irish Times to visit their sites. Emails seeking comment went unanswered.

“Natural gas is so cheap here. Because of the boom in shale, gas production in the United States is extremely cheap, particular compared to other markets in Europe and Asia,” says Samantha Gross of the Brookings Institution in Washington DC.

Natural gas is thought to emit half the carbon dioxide compared to burning coal as well fewer poisonous fumes and heavy metals. These traits have seen it characterised as a ‘bridge fuel’ between fossil fuels of the past and the renewable revolution of the future.

But that future still seems a long way off: This year, about 60 per cent of the US’s energy needs are expected to be derived from either natural gas or coal. Renewables, excluding hydro, account for only about 10 per cent. That’s despite the huge cost associated with constructing natural gas plants, and leaks from oil and gas facilities resulting in the release of an estimated 13 million metric tonnes of methane into the atmosphere every year.

Gross, however, argues that the choice between solar and wind on one hand and gas on the other isn’t black and white.

“We are definitely building natural gas plants in the US, but renewables are the largest source of new power in the United States,” she says. “Natural gas can run all the time, while renewables can’t. It really depends on what you’re trying to use that power for.”

Troublingly for environmentalists, it’s not only natural gas that’s coming to the fore. Recovery from vast shale oil deposits in west Texas and North Dakota turned the US, in September, into a net exporter of oil for the first time. By November, the country was producing 12.8 billion bpd, a record, and around 25 per cent more than Saudi Arabia.

Diesel’s power

And while diesel-powered vehicles are phased out and electric car sales reach record levels in Europe, diesel engines are going mainstream in the US auto world. Manufacturers such as GM have even set out to build diesel engines for their iconic Chevy Tahoe, Suburban and Silverado models for the first time.

Though only three per cent of current US auto sales are of diesel, industry experts expect that to rise significantly in industries where horsepower is needed – resource extraction, agriculture, construction and the hauling industry – as Americans get a first taste of diesel’s power and comparative efficiency. As a result of this and the cheap, US-produced petroleum, American consumers have been ditching mid-sized cars for gas-guzzling SUVs and trucks.

Natural gas, for its part, is getting in on the transport game, too. The Indiana-headquartered Cummins Engine Company has seen increasing sales of its diesel- and natural gas-powered heavy-duty truck engines in recent years, chiefly manufactured for use in America’s $800 billion haulage industry.

Much of this is despite the fact that, according to monitoring organisations, fires, explosions and fatalities on the millions of miles of oil and gas pipelines crisscrossing the country happen on a near-daily basis. Major incidents such as a fire at the massive ExxonMobil refinery in Baton Rouge, Louisiana on February 11th last and at a petrochemicals plant in Deer Park outside Houston in March last year, continue to be a semi-regular occurrence.

Politics continues to play a major role in deciding whether natural gas or renewables will become the fuel of the future. In addition to abandoning the Paris Climate Accord, the Trump White House has moved to eliminate or roll back restrictions on laws governing the oil and gas industries. A massive government bailout of big oil to soften the blow brought by the pandemic is on the cards. BNRG Renewables’ David Maguire cites the Trump administration as the biggest roadblock to a thriving renewables sector.

Meanwhile, at the state level fossil fuel lobbyists still maintain a grip over politicians. Last July, the news site Vox published a story under the headline: ‘Ohio just passed the worst energy bill of the 21st century’. It describes a law that sees taxpayers’ money being used to bail out four failing coal and nuclear power plants, in addition to gutting efficiency and renewable energy standards.

Deep-pocketed fossil giants such as BP are admitting a need to "reinvent" themselves and are embarking on climate-conscious efforts such as storing huge amounts of carbon dioxide underground, in Texas. ExxonMobil, Chevron and others have announced a $1 billion fund to reduce emissions from methane by one-third by 2025.

Yet for renewables the fight is still very much alive.

Accelerate transition

California with its 40 million residents are committed to going entirely green by 2045. Here in the Midwest, states such as Indiana have taken a stand against the pressures of the fossil fuel industry.

When utility provider Vectren proposed to replace its coal plants with a new, $900 million natural gas plant, local regulators baulked. They feared that the falling cost of renewables in the years to come would render such a major investment uneconomical. Local authorities in a plethora of states – California, Nevada, Colorado and elsewhere – are turning away from natural gas in droves.

"If we're going to reduce greenhouse gas emissions to levels that scientists say is necessary, we need to rapidly accelerate the transition to renewable power and avoid investment in new gas infrastructure," says Gregory Wetstone, president and CEO of the American Council on Renewable Energy (ACORE).

“Recent studies have shown that portfolios of clean energy resources are already cheaper than 90 per cent of currently proposed new natural gas plants.”

The battle, then, for control of America’s mammoth utility industry is only set to grow in the months and years ahead.