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A global analysis of the progress and failure of electric utilities to adapt their portfolios of power-generation assets to the energy transition

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  • Galina Alova

    (University of Oxford)

Abstract

The penetration of low-carbon technologies in power generation has challenged fossil-fuel-focused electric utilities. While the extant, predominantly qualitative, literature highlights diversification into renewables among possible adaptation strategies, comprehensive quantitative understanding of utilities’ portfolio decarbonization has been missing. This study bridges this gap, systematically quantifying the transitions of over 3,000 utilities worldwide from fossil-fuelled capacity to renewables over the past two decades. It applies a machine-learning-based clustering algorithm to a historical global asset-level dataset, distilling four macro-behaviours and sub-patterns within them. Three-quarters of the utilities did not expand their portfolios. Of the remaining companies, a handful grew coal ahead of other assets, while half favoured gas and the rest prioritized renewables growth. Strikingly, 60% of the renewables-prioritizing utilities had not ceased concurrently expanding their fossil-fuel portfolio, compared to 15% reducing it. These findings point to electricity system inertia and the utility-driven risk of carbon lock-in and asset stranding.

Suggested Citation

  • Galina Alova, 2020. "A global analysis of the progress and failure of electric utilities to adapt their portfolios of power-generation assets to the energy transition," Nature Energy, Nature, vol. 5(11), pages 920-927, November.
    • Handle: RePEc:nat:natene:v:5:y:2020:i:11:d:10.1038_s41560-020-00686-5
    DOI: 10.1038/s41560-020-00686-5
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    Cited by:

    1. Brown, Marilyn A. & Tudawe, Ranal & Steimer, Hamilton, 2022. "Carbon drawdown potential of utility-scale solar in the United States: Evidence from the state of Georgia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 161(C).
    2. Danlu Xu & Zhoubin Liu & Rui Shan & Haixiao Weng & Haoyu Zhang, 2023. "How a Grid Company Could Enter the Hydrogen Industry through a New Business Model: A Case Study in China," Sustainability, MDPI, vol. 15(5), pages 1-21, March.
    3. Kyriakos Maniatis & David Chiaramonti & Eric van den Heuvel, 2021. "Post COVID-19 Recovery and 2050 Climate Change Targets: Changing the Emphasis from Promotion of Renewables to Mandated Curtailment of Fossil Fuels in the EU Policies," Energies, MDPI, vol. 14(5), pages 1-44, March.
    4. Samuli Patala & Jouni K. Juntunen & Sarianna Lundan & Tiina Ritvala, 2021. "Multinational energy utilities in the energy transition: A configurational study of the drivers of FDI in renewables," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(5), pages 930-950, July.
    5. Grace D. Kroeger & Matthew G. Burgess, 2024. "Electric utility plans are consistent with Renewable Portfolio Standards and Clean Energy Standards in most US states," Climatic Change, Springer, vol. 177(1), pages 1-18, January.
    6. Shan, Rui & Kittner, Noah, 2024. "Allocation of policy resources for energy storage development considering the Inflation Reduction Act," Energy Policy, Elsevier, vol. 184(C).
    7. Steffen, Bjarne & Karplus, Valerie & Schmidt, Tobias S., 2022. "State ownership and technology adoption: The case of electric utilities and renewable energy," Research Policy, Elsevier, vol. 51(6).
    8. Cheng, Qian & Liu, Pan & Feng, Maoyuan & Cheng, Lei & Ming, Bo & Luo, Xinran & Liu, Weibo & Xu, Weifeng & Huang, Kangdi & Xia, Jun, 2023. "Complementary operation with wind and photovoltaic power induces the decrease in hydropower efficiency," Applied Energy, Elsevier, vol. 339(C).

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