The AES Corporation has set a target to reduce its carbon intensity by 70% by 2030 compared to 2016. This means that the amount of carbon dioxide emissions per megawatt hour of electricity generated will be cut by 70%. This target is higher than the 50% reduction that was previously announced.
How will AES do this? We are gradually increasing the share of low-carbon energy in our portfolio. AES will meet the future energy needs of its customers through a variety of generation sources, including renewables, energy storage solutions, Liquefied Natural Gas (LNG) and other low-carbon technologies.
Future growth across AES is heavily weighted toward less carbon-intensive sources of energy and related innovations that are critical to limiting the impacts of climate change. AES is pursuing these opportunities through four Clean Energy Growth Platforms: Renewable Energy; Energy Storage; LNG; and Smart, Energy-Efficient Grids.
The cost of wind and solar energy has fallen significantly in the last five years and is now cheaper than, or competitive with, fossil fuel-powered plants in many markets. We expect to sign contracts for 2-3 GW of energy from renewable sources per year, between 2018 and 2020, which would mean an increase of renewable capacity in our portfolio of 23% by 2022. AES also recently introduced its Green Blend and Extend offering, a win-win program which provides low-cost solar and wind energy for existing customers, while maintaining the reliability offered by fossil-fuel powered assets.
AES firmly believes that battery-based energy storage is a key technology to unlocking a cleaner energy future. The global demand for energy storage is expected to grow ten-fold in five years and to attract an estimated US$100 billion of investment, according to Bloomberg New Energy Finance. AES is a leader in energy storage and has one of the biggest fleets with over 450 MW of storage in operation, under construction or in advanced development. We have partnered with Germany’s Siemens to create Fluence to offer energy storage technology and services to our global customers.
AES is also developing pioneering solar-plus-storage projects in Hawaii, on the island of Kaua’i, which will utilize solar photovoltaic capacity and battery-based energy storage, to provide emissions-free energy for most of the day and night. In fact, the first of these projects, Lawa’i, was recently inaugurated and is now delivering 28 MW of solar and 100 MWh of battery-based energy storage.
By investing in LNG platforms, AES is improving the environmental well-being of consumers in the Caribbean and Central America by substituting carbon-intensive, and often expensive fuel oil and diesel, with clean-burning natural gas. AES has more than 15 years of experience in LNG terminal operation and in 2019, our second LNG terminal will become operational.
Smart, Energy-Efficient Grids
Global annual investment in energy efficiency is expected to grow by 180% to reach a value of $800 billion if countries implement their public commitments to lower carbon emissions, according to the Company’s Climate Scenario Report. One way in which AES is poised to take advantage of this trend is through the strategic investment we have made in Simple Energy, a company that works with utilities to help customers manage their energy use. Simple Energy’s customers work with over 30 million consumers so the potential for expansion is considerable.
In November 2018, The AES Corporation published its Climate Scenario Report* which shows that the company’s business model is resilient in three of the most common climate-change scenarios as defined by international organizations like the Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA). The report was the first by a U.S.-based, publicly listed energy company to implement the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), a body working under the auspices of the Financial Stability Board to provide benchmarks for the effect of climate change on global investments.
The three scenarios are: the “Sustainable Development Scenario” limiting the global temperature increase compared to the pre-industrial period to 1.5-2°, a “Greener Scenario” of a temperature increase of 2-3° and a “Business as Usual” scenario where the temperature rises by 3-6°. AES’ clean energy growth platforms of renewable energy, energy storage, LNG and smart, efficient grids position the company for continued growth in all the scenarios modeled in the Report.
Global efforts are underway to achieve the Sustainable Development scenario by reducing carbon emissions. Under the 2015 Paris Agreement, 195 countries have agreed to limit the increase to well below 2° this century and to work towards an increase of no more than 1.5°. The EU’s member states are discussing the policy pathways that would lead to a carbon-neutral economy by 2050. All of these pathways involve a significant increase in the share of renewables in the energy mix while many of them involve large-scale electrification of the transport sector and substantial improvements in energy efficiency.
AES’ Climate Scenario Report shows that our business model can not only survive but thrive under the main scenarios foreseen by these international organisations. As AES CEO, Andrés Gluski, wrote in the report: “We believe there is immense opportunity for companies that can play a critical role in tackling climate change. With our global presence and leading platforms across renewables, energy storage and LNG, AES is uniquely positioned to be such a company.”
* Read the report here AES Climate Scenario Report