PSEG has relied on fossil fuels to keep the lights on for the past 116 years. Now, New Jersey’s largest and oldest power company is pledging to deliver carbon-free electricity to fight climate change.
The $30 billion utility provider announced Thursday that it’s on track to slash carbon emissions by 80% by 2046, compared with 2005 levels. And PSEG (PEG), which also serves more than a million customers on Long Island, is setting an ambitious goal of getting down to net-zero carbon emissions by 2050.
To get there, the power company is shutting down its coal plants, betting big on offshore wind and working hard to keep its existing nuclear plant alive. PSEG said it won’t build or acquire any new fossil-fueled power plants, including those running on dirt-cheap natural gas.
PSEG is joining a growing list of power companies going all-in on the clean energy revolution. The movement reflects the rapid decline in renewable energy costs and a growing push by households, businesses and state governments to respond to the threat of climate change.
“We believe climate change is real. There is this crescendo that’s building,” PSEG CEO Ralph Izzo told CNN Business.
Izzo noted that PSEG’s main market, New Jersey, is a coastal state, making it vulnerable to the rising sea levels caused by climate change.
“Climate change represents the pre-eminent challenge of our generation,” he wrote in a letter to stakeholders announcing the goals. “It’s far past time we moved beyond simply ‘heeding warnings’ to acting on them.”
Last month, PSEG announced an agreement to sell its stake in a pair of coal plants in western Pennsylvania. The company plans to shut its final coal-powered unit, located in Connecticut, within 18 months.
‘The writing is on the wall’
The renewable energy movement has celebrated a series of recent milestones that demonstrate the momentum behind it.
In April, the renewable energy sector narrowly surpassed the installed capacity of coal for the first time in history.
Late last year, Minneapolis-based Xcel Energy (XEL), once a coal-first company, became the first largest American power company to set the challenging goal of delivering zero-carbon electricity by 2050.
“The writing is on the wall in terms of what’s going to happen in this energy transition,” said Luke Lewandowski, director of Americas Power & Renewable research at Wood Mackenzie. “Even though we have an administration that is trying to support the fossil fuels industry, most utilities understand it will be short-lived. It’s like a last gasp.”
States embrace clean energy
However, many US states have moved in the opposite direction of Washington.
In March, New Mexico enacted a bold plan that aims to source half the state’s power from renewable energy by 2030. New Mexico plans to be 100% carbon-free by 2045. California and Hawaii have also passed 100% clean energy targets.
In New Jersey, Governor Phil Murphy released a blueprint last month to get the state to 100% clean energy by 2050.
The centerpiece of that plan is taking advantage of New Jersey’s vast coastline by developing massive offshore wind facilities.
Last month, New Jersey named Denmark’s Orsted as the winning developer to build an 1,100-megawatt wind project off the coast of Atlantic City. The project, dubbed Ocean Wind, is the state’s first large-scale offshore wind farm. PSEG has an option to be an equity investor in the wind farm, which is scheduled to be completed in 2024.
PSEG’s plan not to open new fossil fuels comes just after it recently expanded its footprint in that space, capitalizing on the abundance of natural gas in the United States. The company has finished three natural gas plants over the past year-and-a-half, but now it’s planning to shut down some of the less efficient gas plants.
PSEG also supplies natural gas to customers in New Jersey, and it will continue that business. The carbon-free goal is for its power business.
The goal of going carbon-free is hardly a slam dunk.
The company said getting there “assumes advances in technology and public policy.”
Izzo said that the “absence of a consistent national policy that recognizes the damage caused by carbon” has resulted in a less efficient system that varies state-by-state. He reiterated his call for the federal government to enact a carbon tax.
“We’re hopeful that by putting a price on carbon and unleashing the power of the market place, these technologies will develop,” Izzo said.
Nuclear isn’t going away
In the meantime, PSEG’s is advocating for policymakers to preserve its two NJ nuclear plants, noting that they provide more than 90% of the state’s zero-carbon electricity and a third of its total power.
“It would be crazy to think we could get an 80% reduction in carbon while our existing nuclear fleet retired,” Izzo said.
PSEG is not, however, trying to open new nuclear facilities.
Lewandowski, the Wood Mackenzie analyst, said that while nuclear is “clean-burning” and provides high-paying jobs, there are questions about safety and nuclear waste.
“There is the risk of catastrophe,” Lewandowski said.
Those risks have been brought back to the forefront by “Chernobyl,” the gripping Emmy-nominated HBO miniseries on the worst nuclear disaster in history. (HBO, like CNN, is owned by AT&T.)
It’s also becoming expensive to maintain and refurbish existing nuclear plants, let alone build new ones.
“Nuclear is an attractive piece of the puzzle, but it’s not as cost competitive,” Lewandowski said.