CERAWEEK: Utilities see place for gas, nuclear in power mix even if unpopular - S&P Global

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Highlights

Eliminating nuclear would be taking 'two steps backward'

Natural gas to have important role 'for some time'

Both part of pragmatic, albeit sometimes unpopular, approach

Washington — Grid reliability and affordability will require the preservation of natural gas and nuclear in the generation mix for years to come, despite opposition from environmentalists and some policymakers, electric utility executives said March 4 at the CERAWeek by IHS Markit conference.

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As the power industry strives to achieve net-zero emissions by 2050, Xcel Energy President and CEO Ben Fowke said he was filing plans with state utility regulators demonstrating how Xcel can reduce its carbon footprint 80% by 2030.

While it will not be easy, Fowke said Xcel's strategy for doing so entailed retiring coal plants, preserving the existing nuclear fleet and having 65%-70% of its energy needs met by renewable resources.

"And we're going to need a little natural gas to back that up to make sure we are reliable, we are resilient," Fowke continued. "Not all of those things are popular with all stakeholders, but that's the pragmatic view that we just have to be focused on because we can't sacrifice affordability and reliability."

With regards to nuclear generation, Fowke said he was starting to see signs that environmentalists were coming around to the idea that nuclear power will play a key role in the transition to a clean energy economy.

"It's 20% of the nation's mix, but it's 50% or more of the carbon-free mix," Fowke said. "And we can't take two steps backward before we take a step forward. I am deeply committed to preserving our nation's nuclear fleet."

For the last 20% of emissions reductions, Fowke said development of next generation, zero-carbon, dispatchable technologies -- be it advanced nuclear or some other means, such as hydrogen, carbon capture and storage, or long-duration energy storage -- must be underway now "so that we can achieve these important goals when the time is right, and the economics suggest it's plausible."

Not a lack of conviction

As for gas, Duke Energy President and CEO Lynn Good asserted that "it plays an incredibly important role today" and will continue to have a role into the future.

"That does not mean that in any way we lack conviction on carbon reduction," she said, noting Duke's goals to reduce emissions by at least 50% by 2030 and reach net zero by 2050. "But as we dispatch our system and look at how we create that balance, we need to have a conversation about technology, ... permitting, ... impacts to communities, reliability and affordability. And natural gas is filling an important role today to make all of this work, and we see it doing so for some time."

She added that the electric utility industry shared "the common goal of reducing carbon but needs to do so in a way that maintains reliability."

Fowke agreed, saying, "If we're going to hit these important interim milestones, we're going to have to recognize that natural gas is going to be an important component of that." But in addition to making sure that infrastructure is in place to safeguard reliability, "we have to make sure that the product that we're using is as clean as possible."

To that point, Fowke said the electric utility sector was working with upstream gas suppliers to reduce methane emissions, which he said have about 21 times the greenhouse gas impact of carbon. "I think our industry can make a lot of positive change with upstream suppliers, and it's going to be important because we do want [and need] to use their product."

He added that he has been trying to convince stakeholders and regulators to not make perfection the enemy of the great. "Our industry has done remarkable work, and we're prepared to do more. But we have to have an affordable, reliable system," he said.

Asked whether he's been persuasive when making those points, Fowke joked that he would know at the end of this year, if Xcel's integrated resource plans get approved by regulators.

The S&P Global Platts LNG Virtual Conference is gathering the industry to discuss navigation of the global pandemic and the associated risks, the ongoing transition of the global energy economy, policy implications of the 2020 US election and more.

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