The Future of the Power Sector is Bright—and Clean

President Biden’s Investing in America agenda is driving rapid progress in the power sector toward clean, reliable, and affordable electricity through major investments supported by the Inflation Reduction Act (IRA) and Bipartisan Infrastructure Law (BIL). Several recent analyses show that the United States can achieve significant deployment of clean electricity—and make progress towards the President’s goal of 100% carbon-pollution-free power by 2035—while maintaining reliability of the electricity system, cutting costs for families and businesses, and saving lives through reduced air pollution.

Many utility companies have recognized the benefits and committed to achieving 100% clean electricity or net-zero carbon emissions in the coming decades. More than 500 utilities have committed to deep reductions in carbon pollution, with most of these committing to achieving net-zero emissions or 100% clean electricity. For example:

• Xcel Energy has committed to an 80% reduction in emissions by 2030 and 100% carbon free electricity by 2050,  
• Great River Energy is planning for 90% carbon-free power by 2035 and 100% by 2040; 
• Dominion Energy is committed to net-zero emissions across its 18-state territory by 2050;  
• DTE Energy in Michigan has committed to an 85% reduction in emissions by 2035 and net-zero carbon emissions by 2050; and 
• Tampa Electric Company has committed to an 80% reduction in emissions by 2040 and net-zero by 2050.

Reliability of the power system is the engine that drives our economy, and we are confident that a clean electricity system can be achieved while maintaining or enhancing our strong level of reliability. The Department has a long history of assessing reliability at increasingly high levels of clean electricity and under possible extreme weather conditions. Other technical studies have demonstrated that we can achieve 70% to 90% levels of clean electricity while maintaining reliability overall and during stressful weather and demand conditions, including a review of 11 national studies and specific regional studies examining California and New York grids.

DOE’s National Renewable Energy Laboratory recently released an analysis, Evaluating Impacts of the Inflation Reduction Act and Bipartisan Infrastructure Law on the U.S. Power System, showing that the IRA and BIL along with related technology advances have the potential to drive transformational benefits:

• Clean electricity could represent more than 80% of total electricity generation in 2030. 
• Power system costs could be slashed by $50 to $115 billion through 2030, saving consumers money.  
• Power-sector carbon dioxide emissions could decline by 84% in 2030 relative to 2005 levels, avoiding climate damages of $880 billion.  
• Associated reductions in other air pollutants can help prevent up to 11,000-18,000 deaths through 2030. The resulting savings from these health benefits are valued at as much $190 billion. 

Many other studies confirm that the IRA can not only supercharge clean energy deployment but also save consumers money. This includes studies that come from the Energy Information Administration and non-governmental groups such as Resources for the Future, EPRI, Rhodium, Princeton, and Energy Innovation.

The IRA and BIL have given utilities and the power sector the tools they need to cut costs and cut pollution, and the power sector isn’t wasting any time. For example, the following electric utility announcements demonstrate that the IRA is already lowering consumer electricity costs while increasing clean power deployment:

• Florida Power & Light announced that it will refund its 5.8 million customers ~$400 million in savings because of the IRA’s incentives for solar energy. 
• DTE Energy plans to build a growing amount of clean energy, saving consumers $500 million thanks to the incentives in the IRA. 
• Xcel, in Colorado and Minnesota, referred to the IRA as "huge win.” Xcel estimated that the IRA could lead to $1.4 billion in consumer savings through 2034 for its Minnesota customers. 
• WEC Energy Group, a Milwaukee-headquartered utility holding company, projects long-term customer savings of around $2 billion from its planned investment in clean energy, calling the IRA a “true game changer for customer affordability.”  

Clean hydrogen and carbon capture and storage are two critical technologies that can directly reduce emissions from power plants. BIL authorized DOE to invest billions of dollars in supporting infrastructure, such as $8 billion in clean hydrogen hubs, $2.25 billion in CO2 storage, and $2.1 billion in CO2 transportation infrastructure programs. The IRA created or expanded tax credits for these technologies, incentivizing additional private sector investments such as Competitive Power Venture’s announced 1,800 GW natural gas combined cycle generator with carbon capture. All together, these investments and incentives, paired with cost reductions and performance improvements from decades of industry progress, mean that clean hydrogen and carbon capture technologies are available.

The IRA also offers additional opportunities for communities that are currently home to retired or retiring coal power plants. Projects in these “energy communities” are eligible for a 10 percent tax credit bonus under the IRA, providing a clear incentive for direct investment into these communities by clean energy developers. The IRA’s Advanced Energy Project Credit provides a carve-out of at least $4 billion for clean energy manufacturing tax credits located in coal communities, those where a coal plant or mine has already been closed. DOE’s new Energy Infrastructure Reinvestment loan program has $250 billion in loan authority to provide loan guarantees for projects that retool, repower, repurpose, or replace legacy energy infrastructure that has ceased operations.These incentives are a tremendous opportunity for energy communities to transform coal plants that have already closed into an asset in the dynamic clean energy economy.

Through the IRA and BIL investments in energy communities and technologies—and private-sector uptake of these technologies – the U.S. can achieve cleaner air, better public health, and more money back in families’ pocketbooks while maintaining reliability. These investments are just one piece of President Biden’s Investing in America Agenda, which will continue to drive progress in the months and years to come.