Like many of you, I have been following the events around NRG and David Crane that have occurred over the past few months. Crane, like a growing number of utility executives, believes that America is transitioning from fossil fuels to renewables for electricity generation. Further, he believes pressure from investors (who don’t necessarily agree with him) was a significant reason for his departure. In an interview, he noted, “We never attracted a shareholder base that was interested in clean energy.”
Take heart, Crane. The recent Supreme Court brake-pressing on the Clean Power Plan notwithstanding, I do know that institutional investors are becoming more interested in renewable energy. Large investors such as Oregon Public Employees Retirement Fund and California State Teachers’ Retirement System have announced plans to increase their investments in such projects.
And it’s not just a growing number of investors who want clean energy; it’s also a growing number of utility customers. Our Energy Pulse research shows more and more interest in renewables among electricity consumers. The True Believer segment continues to support a transition to renewables ASAP, and they are willing to pay the price. In addition, we are starting to see ancillary evidence that other segments are interested as well. Recent focus groups we’ve conducted show that even Working Class Realists (our least affluent, least environmentally engaged segment) are interested in participating in voluntary green energy programs from their utility, because they believe in this cause. Even Cautious Conservatives, who often support coal as the cheapest energy source, seem to recognize that wind and solar are going to eventually replace coal and natural gas.
And this transition may be just on the horizon. The electric utility industry has already experienced a fairly impressive transformation in a relatively short period of time. Just six years ago, coal accounted for roughly 50% of electricity generation. Now, for the past five months, natural gas has surpassed coal as the leading source of power in the U.S.
As utility-scale renewable project costs continue to get closer to grid parity, we could see yet another fairly quick transformation in the generation mix in some areas of the country. In fact, Suzanne attended the Electric Light and Power Executive Conference this week, and Michael Liebreich from Bloomberg forecast that America should be 24% renewable by 2040 (which sounds less impressive when you see their forecast for Germany: 77%).
The shift is happening, and it’s unfortunate that David Crane was a casualty as he blazed the trail. I think history will reveal he was just slightly ahead of his time.