U.S. markets close in 3 hours 7 minutes

What Would Converting America to Entirely Renewable Energy Cost?

Joel Anderson

Politics today are as acrimonious and divisive as they’ve ever been, but there is one issue where there appears to be some general agreement: renewable energy. Plenty of polling has shown that a large majority supports shifting the nation’s power grid away from fossil fuels and toward renewable energy. In a Morning Consult/Politico effort from 2019, roughly two-thirds of registered voters — including a plurality of Republicans — said it was important that Congress set a date for the country to reach net-zero carbon emissions.

While transitioning to renewable energy is a priority that most people can agree on, it gets harder when you start to discuss precisely how that might happen — as anyone following the current Democratic primary can attest. The field still includes eight different potentials, and while there’s broad agreement among them that reaching net-zero carbon emissions is crucial to the country’s future, there isn’t nearly as much agreement about how to implement such an ambitious plan.

To help you better understand this important policy debate, GOBankingRates judged each Democratic candidate’s renewable energy plan along a single factor: the potential dollar cost for replacing those old, polluting power plants with new ones that rely on sustainable sources. It’s impossible to say how all of these costs will play — there are simply too many different factors — but by using today’s costs and looking at just how much of the nation’s current capacity would need to be replaced, you can arrive at an informative figure. Take a closer look at just what it might cost Americans to achieve a carbon-free future, and which approach comes with the highest potential price tag.

Last updated: Feb. 27, 2020

The Plans

The key differences in the energy plans advanced by the various Democratic candidates tend to involve America’s three largest sources of electrical power: coal, natural gas and nuclear.

While there’s general agreement among the candidates that coal should be phased out, other sources create more consternation. Some want to begin retiring nuclear plants while others think they’re an important part of a carbon-free future. There’s also disagreement as to whether the importance of cheap natural gas from fracking as a fuel source can make up for the various ways in which it damages the environment.

The majority of the candidates’ plans reference the year 2050 as the goal for a carbon-free nation.


Bernie Sanders

It will probably come as no surprise to anyone following politics that the most aggressive plan comes from Sen. Bernie Sanders. Sanders rolled out his ambitious $16.3 trillion climate plan that highlights just how he envisions the United States reaching a carbon-free future.

The plan notably includes an outright ban on fracking, retiring nuclear plants and phasing out the use of all fossil fuels for generating electricity.

Find Out Why: Americans Still Believe Trump Is the Best President for Their Finances, Survey Finds

Tulsi Gabbard

Rep. Tulsi Gabbard of Hawaii hasn’t offered up nearly as much detail on her renewable energy plans, but she did introduce the Off Fossil Fuels for a Better Future Act back in 2017. The legislation calls for the U.S. to transition to 80% of electricity generated by clean sources by 2027 and 100% by 2035. Additionally, she’s expressed support for banning fracking and shuttering nuclear plants.

Elizabeth Warren

Sen. Elizabeth Warren, yes, has a plan for this. Just not her own, per se, as Warren notably opted to sign on with the plan advanced by Washington Gov. Jay Inslee that calls for 100% carbon-neutral electricity by 2030. She’s also in favor of phasing out nuclear power — though less aggressively than Sanders — and banning fracking.

Tom Steyer

Billionaire Tom Steyer stands with Sanders, Warren and Gabbard in calling for a ban on fracking, but he’s also qualified that by saying he doesn’t think it can happen overnight. His clean power plan calls for a 100% clean-energy economy by 2045 and an end to building new nuclear plants but not phasing out existing ones.

Pete Buttigieg

South Bend Mayor Pete Buttigieg breaks with the more progressive candidates in his party in regards to banning fracking and phasing out nuclear plants, though he states that both would be goals in the long term. He does, however, call for doubling clean energy production by 2025 and 100% clean energy generation from electricity and new cars by 2035.

Amy Klobuchar

Sen. Amy Klobuchar also advises a more measured approach that doesn’t immediately end fracking or retire nuclear power plants. She says that natural gas should eventually be replaced by solar and wind but represents an important transitional step in the present. She also seems to support the idea of “safe nuclear power,” as well as cleaner coal technologies. It’s worth noting that Klobuchar has been active in the Senate on climate change; the first bill she ever introduced sought to track greenhouse gas emissions from major industries.

Joe Biden

Former Vice President Joe Biden also falls short of calling for a complete ban on fracking and doesn’t see ending the use of nuclear power as part of his plan. However, he wants to fund more research into making nuclear energy safe and incorporate better regulation of existing fracking wells. His climate plan sets the goal of a 100% carbon-neutral economy by 2050.

Michael Bloomberg

Former New York City Mayor Michael Bloomberg also calls for keeping fracking — with better regulation to ensure safety — and nuclear power in place. He does this even as he calls for a “rapid” transition away from fossil fuels in electricity generation. Like Gabbard, Bloomberg’s plan is rather skimpy on detail.

Three Basic Approaches

Now, that’s a lot of candidates with a lot of plans, each of which has its own important traits. But, for the purposes of doing some broad, sky-level cost estimates, let’s break them into three basic schools of thought:

  • The “progressive” camp with Sanders, Gabbard and Warren all calling for a ban on fracking and phasing out nuclear.
  • The “progressive plus nuclear” camp — which is currently just Tom Steyer — that agrees with the progressives about banning fracking but not about the complete close-out of nuclear plants.
  • The “moderate” camp with Biden, Buttigieg, Klobuchar and Bloomberg, all of whom see nuclear power and the cheap natural gas from fracking as part of the solution, at least in the near future.

How America Gets Its Power

As of 2018, electricity in the United States was still largely a matter of burning fossil fuels. While the growth in renewable energy in the last decade has been rapid, the massive power demands of the entire country still mean there’s a long way to go before dreams of a carbon-free power grid are possible.

Discover: Energy-Saving Tips and Tricks That Will Save You a Bundle

Coal

Coal has long been among the most prominent and inexpensive ways to generate electricity — but also among the most pollutive. While coal represents 27.5% of the electricity used by Americans, it produces 65% of the carbon pollution generated by power plants. And that’s just carbon pollution. The dirtier air created by coal smoke also makes it the deadliest form of power, killing between 7,500 and 52,000 Americans every year.

Natural Gas

Natural gas burns much cleaner than coal, but it’s still a fossil fuel that creates carbon pollution when it’s produced. It’s also the largest source of electricity for Americans, producing 35.2% of our power and 33% of carbon pollution from power plants.


Nuclear

Nuclear power is the source for about a fifth of America’s electricity as of 2018 — 19.4% to be exact. What’s more, it doesn’t produce any carbon pollution and is one of the safest forms of power available: no American has ever been killed or exposed to harmful radiation levels because of a nuclear power plant in the United States, unless they were an employee of that plant — and even there, the cases are extremely rare. However, the strict regulations that help make nuclear power so safe also make it very expensive.


Hydroelectric

Hydroelectric power is produced by dams that harness the natural flow of waterways to generate electricity. It currently generates 7% of the power used by Americans, but expanding hydroelectric capacity is only possible when there are natural features that lend themselves to a dam. So, while it produces no carbon pollution, it’s also not scalable.


Solar

Solar power involves converting the energy of sunlight into electricity, either directly by way of photovoltaic cells or by focusing sunlight to a single area to generate heat, what’s known as concentrating solar power. In both cases, though, there’s no carbon pollution generated. While solar power is on the rise, it only represents a mere 1.5% of the electricity generated in the United States.


Wind

Wind turbines can capture natural air currents and convert that energy into electricity without any carbon pollution. While solar might get more attention, wind power has been a lot more successful to this point, with 6.5% of America’s electricity demands met by wind power.


Other

There are a variety of other methods for generating electricity, though none that form more than 2% of total generation. These sources collectively account for less than 2% of carbon pollution from electrical power. Some are in the category of burning a fuel — including biomass and fuel oil plants — while others are renewable sources that are harder to make greater use of, like geothermal energy.


How Has This Changed?

Before you can talk about what it might cost to make major changes in the future, you have to understand how things have changed in the last decade or two and how that’s affected America’s carbon emissions. And while the rapid growth of renewable energy is one of the biggest stories of that period, the most consequential change would be the shift from coal to natural gas.

Fracking Is Driving Out Coal

One of the reasons why some moderate Democrats aren’t as sanguine about banning fracking is the fact that it has already played a crucial role in reducing American carbon emissions. The process of hydraulic fracturing produces a lot of natural gas, and its rapid expansion has meant that natural gas has become a lot cheaper and prompted the replacement of many coal plants with natural gas.

All this has meant that coal — which was responsible for roughly half of American electricity as recently as 2005 — has been in a precipitous decline for over a decade, ultimately getting eclipsed as America’s largest power source in 2016. And, over that same time period, America’s carbon emissions have gone down, owing a lot to the fact that natural gas power plants produce roughly half as much carbon pollution as coal plants to produce the same amount of energy. From 2007 to 2018, greenhouse gas emissions fell by about 10%, even as total electricity generation held steady.

For those Democrats who favor a ban, that’s clearly not enough to counterbalance the environmental damage the fracking process can produce, but it is a connection that can muddy the issue for some.

How Much Does Renewable Energy Cost?

So, it’s one thing to understand how much of our current energy capacity would need to be replaced to completely phase out fossil fuels, but to get the whole story you still need to know what it would cost to replace it. A detailed answer to that question probably isn’t possible. There are just too many different types of renewable energy, each with a different set of costs and circumstances where it might be the best option.

However, to keep things simple, we’ll proceed using the current levelized cost of energy, aka LCOE, a metric for measuring how much the combined costs of installation, fuel and maintenance will be over the plant’s lifetime; the LCOE for installing new utility-scale solar power is $60 per megawatt hour.

Cost To Replace Coal

  • Total power generated in 2018: 1.15 billion megawatt hours
  • Total cost to replace: $68.76 billion

Cost To Replace Natural Gas

  • Total power generated in 2018: 1.47 billion megawatt hours
  • Total cost to replace: $88.12 billion

Cost To Replace Nuclear

  • Total power generated in 2018: 807.08 million megawatt hours
  • Total cost to replace: $48.43 billion

Why It Might Cost a Lot Less

It’s safe to assume those projected costs would come down considerably if/when this massive project gets underway. Economies of scale would greatly reduce the cost of installing all that solar. The U.S. Department of Energy set a goal of cutting the cost of installing new, utility-scale solar in half by 2030 to $30 per megawatt hour — something that seems more than realistic given that they hit the $60 goal initially set for 2020 by 2017. In fact, the cost per megawatt for a new solar plant has been in rapid decline for awhile. That same LCOE figure for utility-scale solar just 10 years ago? $280 per megawatt hour.

Why It Might Cost Even More

Unfortunately, you can’t simply pencil in a plan to replace all of that energy capacity with solar panels alone because of, well, nighttime. Or cloudy days. Solar is what’s known as an “intermittent” source, meaning that it’s not predictable or consistent in the power it generates. Consumers need a reliable source of electricity regardless of the weather on a particular day.

For many, the answer to this is “solar plus storage,” which is to build facilities that can house lithium-ion batteries that could be charged when renewables are producing and then tapped if/when demand is larger than the current capacity.


Cost of Energy Storage

One 2018 report from researchers at the University of California, Irvine, looked into how much energy storage would be needed for a system that relies primarily on renewable energy by examining hourly U.S. meteorological data from 1980 to 2015.

They found that a grid that relies on 80% solar and wind power — essentially the result of the “progressive plus nuclear” approach — would need about 12 hours of storage to be able to weather any shortfalls. And that alone would come to $1.9 trillion based on a cost of $350 per megawatt hour — or a little over 12 times as much as the renewable energy it would be there to back up.

And that gets even pricier when you remove the 20% of power coming from a source other than wind or solar — i.e., the “progressive” approach. To get to 100% solar and wind, you have to be ready to cover all eventualities — including rare, once-in-a-lifetime weather events — and the report found that it would require three full weeks of energy storage. If you assume that the costs of storage would increase proportionally, that would put the total price tag at $79.8 trillion. Or, to put it another way, roughly quadruple the nation’s current annual GDP.

Once again, it’s important to note that basing this on current costs is likely going to massively overestimate final costs. After all, installing solar plants costs a fifth what it did in 2010, so there’s every reason to believe this rapidly developing technology is only going to get cheaper.

Put It All Together

So what does that all mean? Here’s a look at the high end and low end for each of the approaches championed by the various Democratic candidates. The high end uses current costs and the low end uses the 2030 goal of $30 per megawatt hour and assumes that costs for storage will decline at about the same rate as solar has in the last 10 years — or about an 80% drop.

Cost of the “Progressive” Approach

  • High End: $80 trillion
  • Low End: $16.06 trillion

The combined cost of replacing natural gas, coal and nuclear comes to $205.31 billion, or a little over $100 billion at the $30 per megawatt hour target for 2030. Of course, that ends up basically being a rounding error when you consider the enormous cost of installing enough energy storage to cover consumers for all weather eventualities. However, when you consider the reduction in solar costs over the last decade, we might be able to assume a similar reduction over the next 10 years — reducing the price tag to around $16 trillion. On the whole, the high-end estimate translates to a little over $240,000 per American, while the low end would be a little under $50,000.

It’s worth noting that some candidates with progressive climate action plans also have plans to pay for the exorbitant cost, which include creating tens of millions of new jobs, implementing higher taxes and fees on the fossil fuel industry, generating revenue from clean energy wholesale, scaling back on global oil dependence and more.

Cost of the “Progressive Plus Nuclear” Approach

  • High End: $2.1 trillion
  • Low End: $996.44 billion

Once again, the $156.88 billion necessary to build out solar to replace coal and natural gas ends up being a tiny fraction of the cost compared to the necessary energy storage. Even projecting an 80% reduction in the cost of batteries and the associated technology, the 12 hours of storage needed to supplement a system that’s 80% solar/wind and relies on nuclear, hydroelectric and other sources for the balance would require about $1 trillion. On a per-person basis, the high end represents a little over $6,350 spread out across everyone in the country, while the low end would be just over $3,000.

Cost of the “Moderate" Approach

  • High End: $68.76 billion
  • Low End: $34.38 billion

Here’s where you can see why some moderate Democrats aren’t as willing to consider a ban on fracking and/or phaseout of nuclear, even if there are other compelling reasons for pursuing those goals. If you’re only replacing coal with solar/wind, you can theoretically eliminate about two-thirds of the carbon pollution currently produced by America’s power plants while keeping over half of its current capacity intact. That would mean avoiding the need for that costly storage. Looking at these costs per person, that would be just over $200 on the high end and about $100 on the low end.

Why Inaction Is the Costliest Option

Of course, all of this discussion of the cost to do something needs to be compared to the alternative: the cost of doing nothing. The damage that climate change threatens to wreak on the American economy makes even the costliest estimates for these plans look downright thrifty. A 2019 study from the National Bureau of Economic Research estimated that if carbon emissions continue at their current rate, it could cost the nation 10.5% of GDP by 2100 — or about $2 trillion per year based on current levels.

That includes some $1 trillion in real estate wealth and public infrastructure located in coastal areas, according to the Fourth National Climate Assessment. The assessment cites estimates for annual losses in some sectors of the economy in the hundreds of billions of dollars — potentially eclipsing the GDP of many U.S. states.

So, while there might be considerable disagreement amongst the Democratic candidates as to which policy will ultimately benefit the country the most going forward, it does seem clear that simply ignoring the problem is likely to cost the most in the end.

More From GOBankingRates

This article originally appeared on GOBankingRates.com: What Would Converting America to Entirely Renewable Energy Cost?