Transforming the U.S. power grid to 100% renewable energy is a costly proposition.
According to U.K.-based research firm Wood Mackenzie, it will cost the United States approximately $4.5 trillion to convert the existing electrical grid into a 100%-renewable system (RE100).
“We estimate the cost of full decarbonisation of the US power grid at 4.5 trillion, given the current state of technology,” the report says. “That’s nearly as much as what the country has spent, since 2001, on the war on terror.
“From a budgetary perspective, the cost is staggering at $35,000 per household – nearly $2,000 per year if assuming a 20-year plan,” it adds.
The report said the $4.5 trillion figure takes into account everything that would be needed to transition to a completely renewables-powered grid.
“The price includes building and operating generation facilities, making capacity payments, investing in transmission and distribution infrastructure, delivering customer-facing grid edge technology and more,” it says.
900 GW of Storage, HVT Requirements at Heart of Costs
The Wood Mackenzie report focused on several high-price-tag facets of the renewables goal. First, the country will need to produce 900 gigawatts (GW) of storage to make grid stability possible. Considering the current battery capacity available in the entire world, 900 GW would require a massive amount of technological advancement.
“The inadequacy of the energy storage supply chain is apparent and is compounded by technology gaps,” the report said. “The recent proliferation of smaller, short run lithium ion storage plants fails to deliver the longer duration storage capability critical to balancing seasonal swings in wind energy production or extended resource droughts stemming from major weather events.”
In addition to the absence of sufficient battery storage, the United States would have to overcome a lack of high-voltage transmission.
The United States has around 200,000 miles of high-voltage transmission. The RE100 goal would require twice that.
“If we assume that RE100 requires doubling installed generating capacity, it could theoretically double HVT requirements,” the report noted. “Assuming 200,000 miles of new HVT at an average price of $3.5 million/mile adds $700 billion.”
Fossil Fuel Companies Will Face “Existential Crisis”
The report went on to point out that RE100 is only possible through the elimination of fossil fuels. While the shift away from fossil fuels presents an opportunity for investment in subsequent emerging energy economies, it’s a death knell for fossil fuel companies.
“The price tag may not be the highest hurdle to overcome. Eliminating fossil fuels represents a transformative investment opportunity for stakeholders of the new energy economy,” Wood Mackenzie noted. “But for legacy participants in the energy industry, it also creates an existential crisis. Companies – and in some cases, whole industries – must evolve or perish.”
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