Utilities ‘undermining’ global transition to net-zero emissions, University of Oxford research claims

Just 10% of utility companies have prioritised renewables over the past two decades, according to research from the Smith School of Enterprise and the Environment, University of Oxford.

It argues that there has been “missed opportunity for progress” on global climate commitments, amid claims that utility firms could have expanded renewables-based power generation capacity faster than gas or coal-fired capacity.

The study, published in Nature Energy, relied on a machine-learning technique to analyse the activities of more than 3,000 different companies over two decades.

Its authors say it is the first to investigate electric utilities on a global scale.

It means the utility companies expanded their renewables-based power generation capacity faster than their gas or coal-fired, according to the conclusions drawn from Galina Alova, study author and researcher at the Smith School of Enterprise and the Environment, University of Oxford.

Speaking to Windpower Monthly, Alova said: “The transition of the electricity sector to renewable energy does not only imply considerable expansion of the use of renewables, it also requires the phase out of fossil-fuel-based power generation.

“One could expect that at a minimum, the utilities whose business models have been traditionally dominated by fossil-fuelled power-generation assets would cease growing this capacity, and ideally phase out their existing portfolio sooner rather than later, to enable the sector’s low-carbon shift. However, this is not what I’ve seen in the data.

“I found that the majority of even those electric utilities that have been prioritising renewables, have in parallel also continued growing their fossil-fuel-based portfolios, although they did so at a slower rate, she added.”

While many countries and businesses have committed to reaching net-zero greenhouse gas emissions by 2050, the study suggests that utilities are missing a vital opportunity to build a renewables-based business.

Although there have been a few high-profile examples of individual electric utilities investing in renewables, Alova said the study shows that overall, the sector is making the transition to clean energy “slowly or not at all”.

“This research highlights a worrying gap between what is needed to stop global warming, and what actions are being taken by the utility sector,” she added.

The report concluded that while independent power producers are leading the renewables charge in global capacity, most traditional utility firms are still not moving fast enough.

The 10% of firms that looked to growth in gas-fired power plants were led by US utilities, keen to exploit American shale gas reserves, followed by Russia and Germany.

Just 2% of companies grew their coal-fired power capacity ahead of renewables or gas, led by Chinese utilities, which included more than 60% of coal-focused companies, followed by India and Vietnam.

“Utilities’ continued investment in fossil fuels leaves them at risk of stranded assets — where power plants will need to be retired early — and undermines global efforts to tackle climate change,” Alova said. 

“The global transition to a low-carbon future might be further jeopardised by the strain that Covid-19 pandemic has put on public and private finance, as well as supply chains, resulting in delay or cancellation of new renewable energy projects.

“This could be especially detrimental to developing countries that are dependent on green development finance.”

The report concluded that while independent power producers are leading the charge of renewables in global capacity, more traditional utility firms are still not moving fast enough.

The 10% of firms that looked to growth in gas-fired power plants were led by US utilities, keen to exploit American shale gas reserves, followed by Russia and Germany.

Just 2% of companies grew their coal-fired power capacity ahead of renewables or gas, led by Chinese utilities, which included more than 60% of coal-focused companies, followed by India and Vietnam.

The paper found most companies that had taken steps to make renewable energy a priority were in Europe.