- Free market applauds utilities “making multi-billion-dollar gambles on the shift to cleaner energy”
- America’s energy sector is world’s fourth largest polluter
- Investors worth $1.8 trillion told utilities it’s time to adopt zero-carbon electricity targets
As the mantra goes: follow the money. This concept has worked for companies in all sectors, of all shapes and sizes, for centuries. Now it’s working for energy utilities, too. According to The Economist, more utility companies are placing their bets on renewable energy for the simple reason that renewable energy is where the money is (and will likely be for the foreseeable future). Take, for example, Xcel Energy, which has been investing heavily in wind and solar projects in eight states across the Midwest. As noted in the article: “it is one of the many firms making multi-billion-dollar gambles on the shift to cleaner energy.”
Consider these factors: (1) last year alone, America’s energy sector produced 4.2 billion MWh of electricity and, (2) 1.8 billion tons of CO2 in pollutants all while (3) barely generating more than one-sixth of all energy from renewables. These facts are ones that utilities everywhere are waking up to as America’s $400 billion energy industry is, in bulk emissions by country, the world’s fourth largest polluter.
The Economist notes that the changing landscape of the utility mindset towards renewables has been a slow one coming, though it’s not so much about altruism as it is about ensuring the profit from clean energy keeps coming, “For decades, to describe electric utilities as dull was not an insult but a summary of corporate purpose: keep lights on, rates low and returns steady.” However, the “corporate purpose” has changed, mainly because the old way of doing business isn’t bringing in the dollars like it used to—while the new ways are.
Investors in February, with $1.8 trillion in holdings, told utilities it’s time to adopt zero-carbon electricity targets. The bank Credit Suisse has estimated that utilities must spend upwards of $100 billion over the next 11 years to meet state’s renewables standards. For utilities like Xcel and others, there’s no turning back as the free market presses us forward on the Path to 100%.
What We’re Reading: “Can American utilities profit from the energy transition?” published in The Economist