February 28, 2020
By Andrés Gluski, President and Chief Executive Officer (CEO)
The future of energy depends on a responsible transition to renewables. For us, that means not only working with our customers to become one of the largest renewables solutions providers and developers in the world but also moving away from more traditional facilities. Today, we’ve accelerated this action with new goals: reduce our generation from coal to under 30% by the end of 2020 and less than 10% by 2030.
These numbers represent a significant increase over our 2018 commitment, which was made in conjunction with the release of a climate scenario report in accordance with the Task Force on Climate-related Disclosures (TCFD) recommendations. We understand that climate change creates financial risk for businesses, and TCFD created a way for us to speak about the issue in terms of economics — not just grams of carbon.
This context is ever important considering the move to a low-carbon economy is estimated to require a $1 trillion in investment each year. Before companies invest, they need to know where their businesses stand financially in the face of climate change. Shareholders want to know what’s being done to mitigate risk — both environmentally and to the bottom line. We’re also seeing this play out across industries as firms like BlackRock pledge sustainability as a “new standard for investing.”
Under 30% generation from coal this year and less than 10% in less than 10 years
We are increasing our target thanks to the tremendous progress we’ve already made in our transition to a greener future. In 2019 alone, we signed long-term PPAs for 2.8 GW of renewables. We’re on track to nearly triple our renewable portfolio to 22 GW by the end of 2024 versus 2016.
Our shifting portfolio includes pioneering solutions such as the “green blend and extend offering,” which systematically replaces coal generation with lower cost renewable energy and accelerates access to low-cost solar and wind for existing customers, while maintaining the reliability offered by the thermal assets.
Digital technology will also help expedite our shift to renewables, facilitate energy efficiency gains and underpin the deployment new energy solutions. Our strategic alliance with Google to use its Cloud technology is another example of AES’ innovation along with that of our digital applications partner Uplight.
The alliance builds on a previous agreement between Google and AES to provide long-term renewable power to Google’s data center in Chile. AES will collaborate with Google Cloud on energy management and opportunities to sponsor clean energy projects in a range of targeted markets in the US and Latin America that have the potential to help Google meet its clean energy objectives.
Batteries are a positive part of the equation
In the area of energy storage, our launch of Fluence in 2018 brought digital intelligence and control to operators around the world. The world leader in energy storage, Fluence has already deployed or been awarded more than 1.6 GW of energy storage projects in 21 countries.
We’re ushering in an era of firm renewables with award-winning projects like the Lāwa’i Solar and Energy Storage Project — the world’s largest operational solar-plus-storage system. Combining solar power with battery-based energy storage enables intermittent renewable generation to be converted into safe, reliable and higher-quality power. The Lāwa’i project, which was recognized with our industry’s top honor – the Edison Electric Institute’s 2019 Edison Award, is making Kaua’i more than 50 percent powered by renewables and forging the path for Hawaii to manage a cleaner energy mix.
Our first of its kind energy storage project in Chile captures hydropower without constructing a physical dam or using a water reservoir. AES Gener is creating a 10 MW “virtual reservoir” at its run-of-river Alfalfal hydroelectric plant near Santiago. Rather than traditional energy from pumped storage, grid-scale lithium-ion batteries allow the facility to generate electricity and to store it for later use without the physical infrastructure. This project can be scaled up to 250 MW of five hour energy storage.
The future of energy
As we protect the planet and secure our company’s financial future, our shareholders’ expectations of full sustainability increase, and our customers look for more meaningful ways to grow their businesses through green energy. We believe it’s our responsibility to continue to create energy solutions that fully address our customers’ needs for affordable and reliable low-carbon energy. Together, can we accelerate the future of energy.
AES President and CEO