The energy transition – this time it’s for real

Transitioning from coal to cleaner energy has been an essential and ongoing conversation for the industry in recent years, especially as the price of natural gas has remained low and renewables have become more pervasive. We’ve made considerable progress, but we can – and should – do more to realize our goal of a decarbonized energy grid.

Greater collaboration will create a movement

With new research and technological innovations accelerating the pace of change, we have built momentum, and the alignment of energy stakeholders is now critical to maintaining it. That sense of unity, along with greater collaboration across the industry, will ensure that this is not just a moment for the energy transition, but a movement.

Increasingly, our customers and policymakers are setting ambitious clean energy targets, and even though the roadmaps to reach such goals have not been worked out in detail, the pledges themselves have a powerful signaling effect. The next priority is finding ways to hit these targets.

Collaboration between policymakers, investors, industry and suppliers, all working toward the same goal, makes us optimistic.

The financial sector, another key stakeholder, is taking climate change and the United Nation’s Sustainable Development Goals seriously. Through their investments, financial institutions are putting pressure on whole sectors of the economy to reduce greenhouse gas emissions, and venture capitalists are backing new technologies with substantial funds. This collaboration between policymakers, investors, industry and suppliers, all working toward the same goal, makes us optimistic.

Rapid progress in decarbonizing the power sector

Where will we see the most rapid progress? Decarbonization of the power sector, though it started 20 years ago, is accelerating. We look at this happening in two phases. The first involves the continued retirement of coal-fired power generation, replaced with a combination of renewables and cleaner natural gas, dramatically cutting carbon emissions.

The second phase consists of replacing natural gas with renewables and a mixture of short and long-duration storage of renewable energy sources, such as wind and solar. Lithium ion batteries will undoubtedly be part of the short-duration storage solution; and hydrogen will be important to unlocking long-duration storage. That’s the model behind the Advanced Clean Energy Storage project in Utah, where Mitsubishi Power, a group company of MHI, and Magnum Development are using a vast underground salt dome to store green hydrogen for later use.

Adjacent to the Advanced Clean Energy Storage project is the Intermountain Power Project (IPP) owned by Intermountain Power Authority (IPA) and operated by the Los Angeles Department of Water and Power (LADWP). This is the last coal-fired power plant providing power to the State of California, and it is scheduled for retirement in 2025. IPA awarded Mitsubishi Power a contract for two M501JAC power trains to replace the retiring coal-fired plant with a power plant that can use both natural gas and hydrogen fuel.

Mitsubishi Power has guaranteed the 840-megawatt project for commercial operation using a blend of 30 percent green hydrogen and 70 percent natural gas by 2025, and 100 percent green hydrogen no later than 2045. Because it’s connected to the Los Angeles power grid by an existing high voltage direct-current (HVDC) transmission line, the facility will ultimately provide 100 percent carbon-free power to hundreds of thousands of homes.

The flow of money to advance technology such as green hydrogen is notable, but we should not overlook the green assets that already exist.

Making use of existing green assets

The flow of smart money to advance climate change technology such as green hydrogen and new synthetic fuels for aircraft, ships, trucks and cars is a notable trend, but we should not overlook the green assets that exist today: For instance, the U.S already has over 105 gigawatts (GW) of installed wind capacity, equivalent to more than 100 nuclear power plants.

This is largely onshore. Meanwhile, after years of anticipation, the offshore wind sector looks poised for phenomenal growth. United States ocean resources have the capability to generate 2,000 GW of wind, twice the annual demand of the country. Efforts are underway along the Atlantic seaboard to get 20 GW of installed capacity in place by 2030, representing some $80 billion in investment and potentially providing over 80,000 high-paying jobs.

Clearly, more needs to be done to make the energy transition a reality. A federal tax credit to encourage investment into long-term storage would, no doubt, boost decarbonization. Educating investors would help them embrace more advanced green energy sources such as hydrogen. But when we step back from our day-to-day work, we’re immensely encouraged. We see an ever-evolving industry, a new sense of collaboration and a world confronting the challenges of climate change with ingenuity and zeal.