The United States has the ambition to be 100% decarbonized by 2050, with emissions slashed in half by 2030. That means homes, buildings, industrial facilities, data centers, transportation, and so much more will need to have net zero power sources. In 2021, renewables accounted for 12% of total energy consumption, with that number creeping higher and higher yearly.
However, if that number is to get to 100% the U.S. Department of Energy (DOE) says investment in nuclear, hydrogen, and energy storage must increase from $40 billion to $300 billion by 2030, with continued acceleration through 2050.
There’s only one hitch: self-sustaining markets for these industries don’t exist yet, and government money only gets industries poised for liftoff. It’s up to public and private investment to launch the industries and keep them flying.
That’s where the DOE’s new series of reports come in. Titled “Pathways to Commercial Liftoff,” the first of these reports details key challenges and solutions to propel nuclear, hydrogen, and energy storage industries, as well as the steps and funding needed to scale them to the stars.
The report is not a plan or policy stance on the part of the DOE. Instead, as Lucia Tian, senior advisor to the DOE’s chief commercialization officer, said in a webinar introducing the reports last week, the goal is to strengthen relationships between the public and private sectors.
The liftoff report is one of the first steps the Biden administration is taking to map out how the plethora of climate funding wrapped up in the Inflation Reduction Act, CHIPS Act, and Bipartisan Infrastructure Law will be used. Within the DOE’s cache are tens of billions of dollars all for the purpose of clean energy.
How they are used will determine if the U.S. reaches climate goals. Past our goals, the ultimate ambition is to create a new market for next-generation energy technologies because keeping warming levels at bay will be an ongoing effort. Sustaining a clean energy economy is a crucial step in doing so.
Yet investors are wary. While these technologies are proven, the industries themselves need a jump-start so investors know there will be a return on investment.
What is the potential of nuclear, hydrogen, and long-duration energy storage?
The DOE believes nuclear, hydrogen, and clean energy storage each have enormous potential in helping us reach complete decarbonization. For one, nuclear can provide the additional carbon-free power needed through 2050 to support other renewables. The DOE estimates we will need 550–770 GW of additional power by that year. To put that into perspective, just one gigawatt is enough to power about 750,000 homes.
With demand increasing, nuclear could give other renewables a boost, providing a minimum of 200 GW of additional power the DOE estimates. This would be enough to power 160 million homes.
Similarly, clean hydrogen “has the potential to scale from nearly zero today to about 10 million metric tons per year” by 2030 the report reads. By 2050, this could expand to 50 million metric tons annually, across industrial, transportation, and power sectors. Right now, most hydrogen is derived from fossil fuels, but if clean hydrogen can scale, the DOE believes it could reduce U.S. emissions by 10% by 2050.
Lastly, the DOE believes in the potential of energy storage. Long-duration energy storage, or LDES, is necessary for all renewables to reach their fullest capacity.
In comparison to clean hydrogen, the long-duration energy report “makes clear the technologies are a little bit earlier in the commercialization process,” Tian said at the webinar. In asking the DOE chief commercialization officer, Vanessa Chan, what role LDES will play and how we can get it to liftoff, Chan said that LDES is critical.
“It helps us overcome intermittency when the sun isn’t shining or the wind isn’t blowing while simultaneously improving our grid resilience,” Chan said. “This will then let us reduce the need for new natural peakers,” she added referring to peaking power plants, “and improve energy security by diversifying supply chains.”
While the space is still maturing and investors may be cautious, “there are over 100 LDES providers spanning a wide range of technology types which are really vying for this market,” Chan said. But to get LDES, hydrogen, and nuclear to liftoff, the technologies will need both public and private investment to drive down costs.
The U.S. grid may need roughly 225-460 GW of LDES, the report says, representing $330 billion in cumulative capital investment. Despite the high upfront costs, analysis shows that LDES will lead to $10-20 billion in savings a year through 2050.
Reaching the full potential of nuclear and hydrogen is going to cost a pretty penny as well, amounting to $700 billion by 2050. $35-40 billion of that is required by 2030 to reach nuclear’s 200 GW potential.
How can we reach that potential?
By now, you may be thinking that the cost of reaching the potential of nuclear, hydrogen, and LDES is much more than what is invested in clean energy by the Inflation Reduction Act, for example. However through, a combination of government spending and public and private investment, the DOE believes we can get to commercialization.
Investors are already putting money into the clean energy transition. For the first time in 2022, clean energy saw as much investment as fossil fuels, with solar, wind, and electric vehicles leading the charge. That year, over $1 trillion was invested in renewables around the world.
As Chan said at the webinar, the goal of the DOE’s report is to “buy down risks” for LDES, nuclear, and hydrogen so that the role they play in the transition can be just as realized as solar, wind, and EVs.
Hydrogen alone represents an investment opportunity of “$85-215 billion through 2030,” the report reads. Already the DOE has earmarked $8 billion toward funding up to 10 regional “hydrogen hubs,” with the goal of creating infrastructure to address investors’ concerns about safely transporting hydrogen fuel. With hope, that $8 billion will mobilize multitudes more in investment.
Aside from meeting energy needs, the DOE also shows how these particular technologies can provide jobs previously fulfilled by fossil fuels.
Jigar Shah, the director of DOE loans, explained at the webinar that advanced nuclear can create jobs for communities weaning off of coal. However, like LDES, it needs to be de-risked.
The DOE says that to reach climate goals, the U.S. needs at least 10 new nuclear reactors of the same design in development across the country by 2025. However, with many projects tangled in red tape and speculations that the slow development may lead to fewer projects in the U.S., 10 new reactors is a tall order.
Nevertheless, coal-to-nuclear transitions could be nuclear’s saving grace. As Shah explained, “up to 80% of coal power plant sites may be eligible for advanced nuclear plants allowing utilities to invest in a new plant to repurpose the existing footprint while preserving and expanding high-paying jobs in local communities.”
“Waiting until the mid-2030s to deploy at scale will lead to missing targets and/or significant supply chain overbuild,” he added. So how do we get there? Shah explained that costs and risks lead some utilities to be weary, so intervening to manage completion risks through grants or government ownership will be necessary.
Converting coal plants to nuclear isn’t the only opportunity for a just energy transition.
“An equitable solution has multiple elements to it,” David Crane, director of the Energy Department’s Office of Clean Energy Demonstrations said. “On the question of skilled labor, I think there is full alignment between the DOE and every corporate leader that I’ve meant.”
“If we look back historically, the burden of supplying energy in the United States has fallen heavily on select communities who basically enabled modern life for all Americans, but haven’t always enjoyed the benefits in proportion to what they’re supplying to the rest of America,” he said.
As they plan for the next generation of energy in the United States, the DOE wants these communities “to participate fully in the benefits of the value they’re providing to the rest of Americans.”
For the next reports, the DOE will be looking at carbon management which includes both carbon capture and storage (CCS) and direct air capture (DAC), industrial decarbonization, and the grid with a focus on virtual powerplants. According to Chan, all of these technologies play a role in propelling us towards net zero.
“Really these three technologies [nuclear, hydrogen, and LDES] are the tip of the iceberg,” Chan said. “This is an all-hands-on-deck situation, but it's also an all-technologies-on-deck situation. What we want to do is ensure we’re looking at all technologies that can help towards the present, ambitious climate goals.”
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