A green energy transition is essential to stave off the worst effects of climate change. At the same time, switching electrical sources in a nation so heavily dependent on fossil fuels means addressing several imposing obstacles. It’s important to understand these challenges to know how the country can address them.
Rapidly Growing Power Demands
One of the biggest difficulties facing the clean power transition is the sheer amount of energy the U.S. needs. The nation consumed roughly 4.07 trillion kilowatt-hours (kWh) of electricity in 2022 alone. That figure has also grown in all but 11 years since 1950.
While many electronics, vehicles and equipment today are more efficient than older versions, energy demands are still rising. Part of the demand spike comes from an uptick in industrial activity. Artificial intelligence (AI) and the data centers needed to power it also consume a huge amount of power, so as AI grows, so does the nation’s electrical consumption.
The U.S. has increased its renewable power capacity in recent years, too. However, installing new solar panels and wind farms takes a long time, so this growth has struggled to keep up with demand. As a result, the market has been unable to move beyond its reliance on fossil fuels.
Reliability Concerns
Meeting such a demand spike is also easier with fossil fuels than with clean alternatives. That’s because many renewables are less consistent. Solar panels only produce electricity when the sun’s out, and turbines only spin in the wind, so neither can generate power on demand when communities need it.
Geographic restrictions play into the challenge, too. Iceland can meet 70% of its energy needs with geothermal heat pumps, but that’s partially because there’s so much volcanic activity in the area. Similarly, turbines work best in windy areas, and solar is most feasible in areas of significant sunlight, but conditions vary widely across the U.S.
Given these varying environments, renewables are viable as an immediate solution in parts of the U.S. but not others. Accounting for this uneven distribution will require updated electrical grids and energy storage solutions, which are expensive.
Infrastructure Complications
Increasing the nation’s share of clean power means investing in new infrastructure. That can turn key players in the industry away, as it doesn’t always fit in line with expectations of quick lead times and economic efficiency.
Delays are common in construction — so much so that 60% of firms saw lower payments within a single year from missing deadlines. Renewable infrastructure and the necessary grid upgrades to support it also carry high initial costs. As a result, adding clean energy capacity entails a level of investment and temporary financial losses that many companies aren’t comfortable with.
Renewable power does lower ongoing expenses over time, so it eventually makes up for these costs. However, the initial price is too steep and the payoff timeline too long for some businesses to justify it when expanding fossil fuels is cheap and quick.
Dwindling Sustainability Incentives
Government shifts pose another obstacle to the green energy transition. In previous years, tax breaks for sustainability initiatives made investing in renewables a more economically viable option. However, some of those incentives are now going away.
President Donald Trump signed an executive order with a section on terminating the Green New Deal, which covers a range of programs aimed at promoting sustainability projects. Actions like this may remove tax credits and other incentives that make it easier for organizations to invest in clean energy. As such, the high costs of investing in green power may remain high.
Public support for sustainable incentives remains high. As many as 79% of U.S. adults are in favor of tax credits for companies developing carbon capture technologies. Without monetary help from the government, though, energy corporations may still find going green economically challenging.
How Can the Energy Industry Navigate These Obstacles?
As imposing as these roadblocks seem, progress is possible. The U.S. power industry can navigate its current challenges by embracing a few key strategies.
Diversification
One of the most important shifts is to diversify the grid’s energy sources. No one type of renewable energy can meet all of the country’s needs, and each source has unique advantages and disadvantages. Consequently, investing in multiple sources instead of focusing on one path forward will be more effective when addressing reliability and capacity concerns.
Diversification can also help spread out costs to balance returns on investment. It can take nearly 11 years to build a nuclear reactor, but installing solar panels is relatively quick. As such, solar can provide near-term clean energy gains and savings while the industry waits on its nuclear investments, which will provide more consistent power supplies once active.
Collaboration
The U.S. electrical industry will also need to collaborate. High initial costs and infrastructure complications are easier to manage when multiple parties can pool their resources and work toward a unified goal. Such cooperation is particularly important across different subsectors, such as oil and gas companies working with hydroelectric plants, as each side brings unique expertise.
Similarly, private companies can collaborate with government officials. Promoting tax credits and similar incentives for green energy investments will make it easier for the sector to switch over to clean sources. Ensuring elected officials understand businesses’ concerns and goals can lead to more helpful legal changes.
Social and Economic Strategies
The industry should also consider how the transition may affect its customers and employees. Fears over job loss in fossil fuel facilities and worries of high costs can undermine support for going green. A lack of support, in turn, makes it difficult to execute these projects effectively and may influence government programs.
While renewables are the cheapest form of electricity in many areas, there may be some short-term price hikes as companies manage the initial installation. Cost guarantee programs and more efficient transmission services, like using smart meters, can address these concerns to gain public support. Fossil fuel organizations can offer re-skilling programs to move workers to renewable sectors to prevent job loss.
A Green Power Transition Is Challenging But Possible
Shifting to clean energy will take time, investment and some strategic planning. The road ahead is difficult, but once more people and corporations recognize these obstacles, they can forge a way forward.
The U.S. must become less reliant on fossil fuels. Acting on that goal starts with recognizing what’s standing in the way and looking for opportunities to work around these challenges.
