The cost of utility-scale solar and onshore wind has been cost-competitive with fossil fuel-based generation sources for several years even before the federal government stepped in with generous subsidies to incentivize deployment of clean energy. In particular, operating costs for solar and wind after they are built are much lower than fossil fuel plants, meaning there is often net present value in replacing an aging coal or gas plant with a staged deployment of solar, wind, and or storage projects that can be modularly built to steadily phase-out a plant that is costly to run. The economics make sense to move to renewable investment fully, so even back in 2021, 83% of new power generation coming online in the US was from clean energy sources.
However, a recurring theme of Sustainable Advantages is that worldwide or even national trends don’t tell the whole story. Electricity markets are not free markets and vastly differ from region to region because of geography, population density, and regulatory policies. While Vermont passes a requirement for 100% clean electricity by 2035 only 10 years after shutting down its nuclear power plant, Texas subsidizes new gas plants in the face of renewable generation within the state causing the gas industry in West Texas to sell its gas at negative prices to avoid capping wells that have no demand to service at various times of the year.
Last week’s piece on how the grid mix changes in the summertime across the US got me thinking about the differences in generation depending on whether a market is vertically integrated (i.e. a utility is granted a monopoly by the state to generate, distribute, and charge for electricity) or if there is a deregulated wholesale electricity market in the region. As last week, I’m using Grid Status to generate all of the charts in this post.
Shocking coal in the Northwest
Stretching over Wyoming, Montana, and most of Nevada to the Pacific Ocean, the Northwest region is covered by vertically integrated monopolies that are home to some of the best hydropower, wind, and solar resources in the US. The front range of the Rocky Mountains in Wyoming and Montana has wind speeds as consistent as anywhere in the US that lend themselves to small and huge wind turbines. Outside of the coastal areas of Oregon and Washington, solar isolation is comparable to much of Texas, where solar deployments are plentiful and profitable. The Cascades have the best hydropower geography in the US and the population is almost completely contained within coastal cities where burning coal is generally an unpopular solution to power generation. Even Basin and Range is located within the region, which already is home to the most geothermal plants in the US. Why then does ~20% of the summertime load get serviced by coal-fired power plants?
The answer is likely because 41% of the coal produced in the US comes from Wyoming. The least populated state in the US is driving the region with the best mix of renewable energy to forego the opportunity for lower electricity prices and reduce pollution across the region in order to prop up the declining industry. Even in the spring, the Northwest region gets 15% of its electricity from coal. Vertical integration has not served this market well. This area should already have the cheapest and cleanest electricity in the US while exporting to hungry nearby California and Las Vegas. Instead, Wyoming’s politics dominate the region.
Building solar in the desert Southwest
The American Southwest is one of the sunniest places on Earth and is home to Phoenix, perhaps the city that has grown the most since air conditioning became widespread. Hot summers, lots of sun, and a growing population should mean solar is booming.
It is finally starting to show up! The Southwest is the only vertically integrated market where summertime peak solar makes up close to 20% of the total electricity generated. There’s lots of room to grow on the solar side and New Mexico is already building into its wind potential while constructing the largest wind project in the US with the SunZia wind project adding 3.5 GW to the grid along with much-needed transmission lines in 2026. The Southwest is politically diverse and there seems to be no particular dominant faction these days. That should hopefully result in a steady buildout of market-friendly renewable resources.
Southeastern struggles wait for nuclear
The Southeast is perhaps the most factional region in the US. The region is dominated by Duke Energy, TVA, and the Southern Company which report data differently to the EIA. That means we get 4 charts: Carolinas, Florida, Tennessee (and parts of surrounding states), and Georgia/Alabama known as Southeast. It’s a power-hungry region with the most nuclear power anywhere in the United States and the only region to start a reactor since 1993. There is little available onshore wind capabilities, but solar is available, especially in Florida where mild winters mean that power consumption spikes highest in the summer daytime when solar is plentiful. Notably, the Southeast powers the manufacturing base of the US, with the most industry-friendly policies of anywhere in the US.
Each of these different factions within the Southeast region requires its own deep dive, but the major theme is that natural gas is heavily featured in the power supply despite not being sourced from anywhere in the region. New gas plants are mostly planned for Tennessee and North Carolina, while Georgia’s new nuclear plants have headed off a need for new plants for a while despite a flurry of new manufacturing announcements in the state from building batteries to cars to solar panels. Georgia’s completion of the Vogtle reactors and the presence of Oak Ridge National Lab in Tennessee suggest this is the region where new nuclear investment is most likely to occur. Despite multiple approved sites to begin construction at ready sites, the utilities aren’t currently actively constructing any new nuclear plants citing reasons from Westinghouse declaring bankruptcy to community opposition over water usage. There’s plenty of opportunity here for companies flush with money for AI investment to develop clean power resources with nuclear energy as Microsoft has done with the proposed repower of the Three Mile Island site. In the meantime, the Southeast will continue to have fits and starts with solar and storage in a tumultuous policy environment that seems to swing with every election.