“We need renewables and storage now” to cut costs and grow economy, says US energy giant

The head of one of the biggest energy companies in the United States says more renewables and storage are desperately needed to meet the country’s growing energy demand and cut energy prices, and warns the US will face a power crisis if their rollout is stopped.

“Our scale and experience tells us that all forms of power generation and capacity will be needed as the U.S. tries to keep up with demand,” said John Ketchum, the chief executive of NextEra Energy.

“And that same scale and experience also tells us that renewables and storage should continue to be a critical source of new energy and capacity across the country because they are lowest cost and can be deployed now.”

The assessment is in direct contrast to the policy position of the new Trump administration, which has vowed to “drill, drill, drill”, slow down and even stop the rollout of new wind and solar projects, and has withdrawn from the Paris climate treaty.

Trump has justified those actions by dismissing climate science as a “scam” and arguing – against all evidence – that fossil fuels are cheaper. Ketchum says that is not so.

“We need low cost reliable energy that can also deliver the capacity needed to support grid, and we need it now. Cost, capacity and speed are the 3 big issues that need to be addressed in meeting power demand. And as we have demonstrated in Florida, a mix of new renewables, storage and gas generation is the solution.”

NextEra is in a good place to make such a judgement. It owns Florida Power and Light, the largest electric utility in the US., and its Energy Resources division is a world leader in renewables and storage.

It operates the largest gas-fired generation fleet in the US and it is also one of the largest nuclear operators in the country, and it has a big investment in transmission.

It has invested more than $US150 billion in the last decade in wind, solar, battery storage, transmission, gas and nuclear upgrades, and plans to invest another $US120 billion over the next four years, taking its total capacity to more than 120 gigawatts, about twice the size of Australia’s main grid.

Ketchum says that one of the big drivers of electricity demand is from data centres, but it is not the only one.

“Power demand is everywhere, across all sectors and increasingly across utilities, municipalities and electric cooperatives,” Ketchum says.

“And as demand for power increases across all customer classes as we advance our domestic economic agenda, so does the potential price of power unless we bring new generation online quickly to meet that demand.

“Customers of all types are looking for low-cost ways to meet their growing power needs while reducing their exposure to higher power prices over time. Given the current power demand environment, it is more important than ever to unleash all forms of electric generation starting with renewables.”

Ketchum was speaking at the release of the company’s third quarter results last Friday, and used this graph to illustrate the advantage that renewables and storage have over other technologies in both speed and cost.

New solar can be built within 12 months and wind within 18 months, Ketchum said, and at a fraction of the cost of new nuclear, and half the cost of gas generation – even in the US where the price of gas is relatively low.

“Most of the conversations that we have with data center customers are around renewables,” Ketchum said.

“But obviously we have comprehensive expertise across the energy value chain whether it’s wind, whether it’s solar, whether it’s battery storage, whether it’s transmission, whether it’s gas coupled with a renewable solution and whether it’s nuclear.

“And I think we’re uniquely positioned in that regard because we do do it all. We know what it all costs.

“We have the data to support it all. And what we try to do is have educated discussions with our customer base to provide them with the low cost most comprehensive clean energy solution that addresses the demands that they see going forward to satisfy their business needs.”

Ketchum’s comments are also important in the Australian context, where the federal Opposition is proposing to follow in the footsteps of Trump and slow down, if not stop, the rollout of large scale renewables.

It also wants to pivot to nuclear, despite warnings from nearly every energy expert that this will be slow, hugely costly, and risk blackouts because of an over-dependence on ageing and unreliable coal generation. And it will result in a significant lift in emissions.

Ketchum revealed that NextEra is looking to restart its shuttered reactor, but says that are limited options for nuclear restarts, and there is no evidence that new nuclear can compete, including the much-hyped small modular reactors.

He says they are unlikely to appear before the end of the next decade, even in the US, and his company has been watching the SMR industry closely.

“There’s really 9, 11, it depends on your count of how many OEMs there are in the SMR area,” Ketchum says.

“We look at them all. We do technology reviews around them. We do financial reviews around them. A lot of them are very strained financially.

“There are only a handful that really have capitalization that could actually carry them through the next several years. And so that’s one piece.

“The second piece is, look, you’re looking at a first of a kind technology, particularly as you see renewables getting cheaper. I think on an economic basis it’s tough for SMRs to compete. The other thing that doesn’t get a lot of attention is nuclear fuel.

“The nuclear fuel supply chain has a lot of repair and work that has to occur. I think most of you know we passed sanctions against Russia on enrichment and conversion. We basically have to start in enrichment and conversion industry here in the US. It’s going to take a lot of time to get that up and running.

“Some SMRs, they don’t run off of low enriched uranium, they run off of HALU. HALU remains a bit unproven as well. And so when we stack all that together, that’s why we’re not bullish SMRs.

” We think it’s kind of a next end of the next decade alternative. It’s so far out in the future from a viability standpoint at scale. It’s why we’re prioritising other generation resources at this time. And I think renewables are, as I said in my prepared remarks, are here for the long haul.”