Is Georgia Power’s New Plan Enough to Reach Net Zero by 2050?
Georgia Power Company, a subsidiary of utility giant Southern Company, proposed a 20-year energy plan with state regulators in December 2021. Among the high points:
- Closing most coal by 2028 and the rest by 2035;
- Purchasing existing gas-fired capacity but not building new gas plants; and
- Doubling the utility’s renewable generation.
There’s no question that the shift in Georgia Power’s projected generating resources is significant — especially the shift away from coal. But given the continued reliance on gas implied by the plan, will the utility be on track for climate alignment and for meeting its parent company’s goal of net-zero emissions by 2050?
RMI analysis from the Utility Transition Hub shows that the company’s dramatic cuts in greenhouse gas emissions have already achieved its 2030 target of a 50 percent reduction, but these reductions are likely to level off by 2035. Based on the utility’s 2022 filing, the company is not on a 1.5°C-aligned pathway, with projected emissions in 2030 well above a level consistent with an economy-wide, 50 percent reduction in emissions, which the latest climate science shows is required to avoid the worst effects of climate change.
What’s the Big Deal?
Most utilities file long-term energy plans — often called Integrated Resource Plans, or IRPs — but Georgia Power’s IRP is unusually important. For starters, Georgia Power is one of the five largest utilities in the country in terms of power generation, and its decisions reverberate across the utility industry. It also operates some of the largest coal facilities in the country, including its Scherer and Bowen plants.
In addition, IRP proceedings are especially high-stakes affairs in Georgia. In most states an IRP tends to be an informal, nonbinding plan, but in Georgia these dockets are full-blown adversarial proceedings, with formal discovery and evidentiary processes. The process culminates in a binding Georgia Public Service Commission (PSC) order that forms the basis for cost recovery of the utility’s future capital investments. And Georgia Power has used previous IRPs to telegraph progress in the clean energy transition, from announcing the retirement of several older, smaller coal-fired units in 2013 to proposing a Renewable Energy Deployment Initiative in 2016 to proposing more renewable commitments and additional coal retirements in 2019.
Going Beyond the Headlines
A close look at Georgia Power’s power generation mix and stated plans shows the challenges of reaching a net-zero, climate-aligned pathway. The utility’s steep emissions reductions between 2010 and 2015 were largely due to coal-to-gas switching, driven by a vast new domestic supply of shale gas. (Note: the analysis does not include a full life-cycle emissions assessment, including upstream emissions from gas production and transportation.) The company has continued to retire its least efficient coal plants and operated its remaining coal facilities at much lower rates, which leaves very little coal left to replace.
Replacing coal with gas has enabled Georgia Power to slash its direct emissions, but it also leaves the company with a generation mix that is heavily reliant on fossil resources. Further progress toward the company’s clean energy transition will require gradual replacement of its gas-fired generation with clean energy portfolios of renewable energy, energy efficiency, storage, and distributed energy resources.
Where’s the Load Growth?
Georgia Power’s seemingly low projections for demand growth could widen the gap between the utility’s plans and a net-zero trajectory. To fully decarbonize the US economy by 2050 — including electrifying buildings and transportation as well as a significant portion of heavy industry —we will need over twice as much electricity in 2050 as we do today, according to RMI modeling.
Georgia is no exception. While most of Georgia’s homes are already all-electric, the state will need vastly more clean electricity to power millions of new electric vehicles. A 2020 study by the Electric Power Research Institute projects that 75 percent of vehicle miles traveled in Georgia and Alabama will be electric by 2050.
Georgia’s industrial sector provides yet another opportunity for reducing greenhouse gas emissions through electrification. There are hundreds of industrial boilers throughout the state, many of which are used in the food processing, wood manufacturing, and other industries, as well as for space and water heating in institutional buildings. These facilities are prime candidates for electrification via industrial heat pumps and/or electro-boilers, and represent significant load growth potential for Georgia Power.
Yet according to the demand forecasts made publicly available in Georgia Power’s IRP, the company believes it will sell approximately 17 percent more electricity in 2041 than it does today. This suggests the utility is not currently planning for the rapid electrification and decarbonization of Georgia’s cars, trucks, and industrial facilities.
Georgia Power’s IRP recognizes the inevitable transition away from coal-fired generation. Yet the company’s greenhouse gas emissions in 2041, at the end of the 20-year planning window, will still be well above what climate scientists recommend in order to align with a 1.5°C future. These challenges are not unique to Georgia Power, as few utilities have targets — let alone submitted resource plans — consistent with achieving climate alignment. As the proceeding commences, Georgia Power should consider the following options to chart a more equitable and affordable path to achieving its net-zero ambitions:
Financing tools for the energy transition. Georgia Power’s coal plants will be retired before they have been fully depreciated, or prior to the end of their originally planned lifetime. Under conventional utility ratemaking, customers will be asked to shoulder the burden of recovering the remaining plant value. Financing tools such as ratepayer-based securitization could save Georgia ratepayers millions of dollars and simultaneously unlock capital for community and worker transition and investment in clean energy. Legislation enabling securitization has been introduced in the Georgia legislature this session.
Federal policy. The financing programs and tax credit reforms that were proposed in the Build Back Better Act would both accelerate the utility transition and save customers money. The most critical policies are expanded clean energy tax credits, including a $25/megawatt-hour production tax credit for carbon-free generation and a 30 percent investment tax credit for battery storage and transmission over the next 10 years. Making these tax credits eligible for direct pay will further increase their benefits. An analysis by RMI found that these policies would save Georgia Power customers over $272 million by 2030, and would reduce emissions by 60 percent. In support of its own transition plans and on behalf of all its customers, Georgia Power and its parent company should support these climate provisions.
More transparency in IRP data. As is common practice for IRP submissions by utilities across the country, Georgia Power has redacted data related to projected emissions and the generation mix over time. Our analysis provides an estimate of Georgia Power’s potential future generation mix and emissions based on past operation of its generation fleet and publicly available IRP data. However, given the interest that investors, advocates, and ratepayers have in understanding the emissions consequences of future generation mixes, it is reasonable to ask that utilities like Georgia Power provide a more detailed breakdown of their future resource mix as part of their public filing in planning processes moving forward.