Value of technology in the U.S. electric power sector: Impacts of full portfolios and technological change on the costs of meeting decarbonization goals

Power sector decarbonization is an important pillar of climate mitigation efforts, but perspectives differ about the relative competitiveness of generation technologies and how limited portfolio approaches (e.g., where non-renewable generation options are prohibited) could alter the costs and likelihoods of reaching emissions reduction goals. The existing literature on impacts of technological availability and cost on electric sector planning typically use models that do not have sufficient technological, spatial, and temporal detail to adequately resolve the economic competitiveness of variable renewable energy vis-à-vis dispatchable generators. Using a state-of-the-art energy-economic model, this work examines impacts of technological availability and advanced generation technologies on U.S. electricity market outcomes across a range of regional, market, and policy contexts. We show that decarbonization costs are 11%–76% higher as technological options are removed from consideration (incremental compliance costs for a 95% CO2 reduction below 2005 levels are roughly twice as high when new nuclear, carbon-capture-equipped units, and transmission are not allowed). However, the economic and technical implications of limited portfolios depend on the market and policy contexts (e.g., costs are higher with stringent targets, more extensive end-use electrification, and lower gas prices) and the costs and capabilities of the remaining options. The analysis demonstrates how lower temporal and spatial resolution models likely understate the value of technology by omitting key economic and technical features of high variable renewable pathways. Additionally, the analysis quantifies how technological change can lower costs of emissions reductions by 7%–73% and how low-cost battery storage can provide a hedge against higher costs when technological portfolios are limited.