As policies and economics combine to push the nation toward full decarbonization, the heads of two large US investor-owned utilities predict a significant increase in electricity demand.
Xcel Energy Inc. Chairman, President and CEO Bob Frenzel and Entergy Corp. Chairman and CEO Drew Marsh both acknowledged a potential "tripling" of electricity demand by 2050.
"Everything is going to need to electrify in some way," Marsh said during an executive roundtable April 18 at the Platts Global Power Markets Conference in Las Vegas.
New Orleans-headquartered Entergy and Minneapolis-headquartered Xcel Energy also are among the energy companies investing in new technologies, such as hydrogen and energy storage, as they navigate the decarbonization of the economy.
The executives pointed out the potential to utilize assets and infrastructure in place today to help ease the transition. "A lot of the opportunity is built off the foundation that already existed," Marsh said.
Frenzel said it is important to "clean up" the nation's existing electric system through investing in hydrogen and other carbon-free fuels as part of the process of pursuing electrification.
"I do believe there is real value in the pursuit of the clean molecule," Frenzel said, adding that direct air capture technology will likely rely on a significant amount of wind and solar generation.
Xcel Energy in late January entered into a partnership with Form Energy Inc. to build long-duration storage projects at two of the utility's coal plants in Minnesota and Colorado that are to be retired. The 10-MW, multiday iron-air batteries are scheduled to be connected in 2025.
In addition, Xcel Energy has received a $12 million grant from the US Energy Department to pilot high-temperature hydrogen production using excess steam and electric power from its 1,092-MW Prairie Island nuclear plant in Minnesota.
The Inflation Reduction Act (IRA) of 2022 also opens up new avenues for cleaner growth, the executives said. The IRA contains $370 billion in energy climate spending, including about $270 billion in tax incentives for solar, wind, hydrogen and energy storage projects.
Companies, however, are seeking more certainty around how to qualify and take advantage of the tax provisions in the new law. In addition, utilities face permitting challenges when it comes to building out the infrastructure needed to support a cleaner energy future.
"That is a tough nut to crack [but] we do need to crack it," Marsh said.
Balancing act
The CEOs also pointed out the importance of balancing reliability and affordability when working to achieve sustainability.
"You can't sacrifice the first two legs of the stool for the third," Marsh said.
"We are in a different world today from an electricity perspective," he added. "The cost to society of not having electricity is a lot bigger."
Entergy plans to add as much as 17 GW of renewable resources by the end of 2031 as part of its goal of reaching net-zero carbon emissions by 2050.
Certain technologies, such as batteries, are seen as complementing this transition but may not achieve the scale needed for balancing the grid.
"The scale of what we are talking about across the country is enormous," Marsh said, adding "there is a place for batteries," but other resources will need to support the system.
As an example, Entergy has announced plans to explore offshore wind potential in the Gulf of Mexico.
Xcel Energy has been "preserving our gas fleet" as it shuts down coal plants and targets cutting carbon emissions 80% by 2030, Frenzel said. The company does see opportunities in long-duration storage as it eventually moves away from traditional gas-fired generation and hits carbon-free power by 2050.
"There are lots of tools in the tool chest and as a company we are focused on utilizing all of it," Frenzel said.
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