In the case of news, we should always wait for the sacrament of confirmation – Voltaire
For the first time since the build-out of the US electric power system in the first half of the twentieth century, renewable energy sources surpassed coal in the nation’s monthly electricity generation mix. The Energy Information Administration (EIA) reported in June that electricity generation from renewable sources overtook coal for the month of April, reflecting several short-term phenomena and long-term trends which we explore here.
We Had Seasons In The Sun (And Wind And Rain)
As with recent reports of gusty days in which wind generation supplied virtually all of electricity demand in US “wind belt” states, the excess of renewables over coal nationally in April is a remarkable testament to the pace of renewables penetration. Though unimaginable just a few years ago, these events must be viewed in proper context.
The electric power sector consistently sees its lowest coal demand in April. Each dip in the chart shown in the US Monthly Generation link above falls during that year’s April, when temperatures are more moderate and demand for heating and air conditioning is lower. Consequently, many natural gas, coal, and nuclear generators schedule routine maintenance for the spring and fall, and many coal plants spent part of April offline for planned, temporary outages.
Wind generation is typically highest in the spring and fall as changes in the sun’s position causes a layering effect of hot and cool air that are the thermal forces behind wind. Remember also, that renewables are not just wind and solar, but hydropower too. Spring is an especially productive time for hydroelectric generators since melting snow pack feeds rivers and drives increased electricity generation downstream.
For all these reasons, coal generation is expected to rebound this summer, surpass renewable generation and reclaim its spot alongside natural gas as the country’s largest electricity providers. In fact, the EIA’s Short-Term Energy Outlook projects coal will generate more electricity than renewables for the rest of 2019 and for 2020 as a whole.
These caveats should not divert attention from the long-term trends at play. Even if coal quickly regains its position over renewables in the US generation mix, April’s occurrence portends a changing landscape for electricity generation.
Long Time Coming, Long Time Gone
Long-term energy forecasting can be a perilous task. The EIA’s Annual Energy Outlook (AEO) is about as complete and sophisticated an assessment as there is for projecting US energy futures. Yet in 2007, the AEO projected that coal would account for just over half of US electric power generation in 2020 – in 2018, the actual contribution was just under 28 percent. The abundance of cheap natural gas emerging from the then under-realized hydraulic fracturing/horizontal drilling practices, the emergence of federal and state environmental policies that placed challenges in front of coal, and the steep decline in the cost of wind and solar generation technologies all have turned the power market on its head in a fairly short period of time.
Despite declarations by the Trump Administration that it will act to save the coal industry, US coal plant closures continue apace. The EIA reports that since the beginning of 2015, 47 gigawatts of coal capacity has been retired, about one-sixth of the total fleet, with practically no new coal capacity coming online to replace it. If there is going to be a reversal of fortune for US coal, there are few signs of it now.
Meanwhile, renewable generation costs continue to plummet. Even with the uncertainty surrounding falling generation costs and rising electricity prices, improved product design, better manufacturing efficiency, and policy incentives mean renewable generation costs have fallen into grid parity territory, frequently able to compete directly with conventional fuels.
Analysts expect energy markets to evolve in a way that reinforces, not reverses, these trends. BloombergNEF’s New Energy Outlook 2019 projects that “coal collapses everywhere in the world, except in Asia, and peaks globally in 2026.” For the US, EIA’s latest outlook projects that coal will continue to drop precipitously out to 2030 and settle into about 17 percent of the generation mix by 2050. By then, renewables are expected to account for 31 percent of the mix and natural gas, 39 percent. But this is without the implementation of any new policies aimed at reducing carbon emissions from the power sector. If such policies are put in place, renewables’ contribution would rise, natural gas’s would fall and coal’s share could be pretty close to zero, according to an inter-model comparison study last year that I co-authored with research colleagues from academia, government and industry.
How Long Has This Been Going On?
Those who get pleasure from pursuits other than carefully tracking US energy statistics might fall loosely into two groups. There are those who occasionally see a rooftop solar panel on a drive to the store and are surprised to learn that renewables are more than a mere smidgeon of our power supply. And there are those who pay closer attention to these issues and thought they read earlier that renewables were already dominating the landscape. Let’s speak to the second group for a moment.
I recently wrote about last year’s stall in the growth of global renewables generation capacity. Though the word “stall” is in the headlines, the subtext is that renewables have been a significant source of new capacity additions globally for several years now. The US has played a big part of this trend. In January, for instance, the EIA reported that of the 24 gigawatts of generation capacity (roughly equal to 24 nuclear plants) anticipated to come online in 2019, nearly half will be from wind, and nearly 20 percent will be from solar, with most of the rest provided by natural gas. And that has been the story for several years now. Nearly half of utility-scale capacity installed in 2017 came from renewables. In 2018, natural gas was responsible for more than 60 percent of new capacity additions, but the vast majority of the rest came from wind and solar, while coal accounted for the majority of retirements.
At the same time, EIA reports the eight gigawatts of enacted or planned 2019 capacity retirements are dominated by coal (53 percent), natural gas (27 percent), and nuclear (18 percent), with one hydroelectric plant in the state of Washington and other smaller renewable and petroleum plants accounting for the remaining 2 percent.
Readers can therefore be forgiven for asking, “Didn’t renewables pass coal already?” But that overlooks the difference between new capacity, total capacity and total generation. New capacity additions are but a relatively small part of total capacity that has built up over many decades. Natural gas and coal units account for two-thirds (44 and 22 percent, respectively) of the 1,200 gigawatts of total generating capacity in the US now. Hydro accounts for about eight percent and, even with the large uptick of the last few years, wind and solar together account for just more than ten percent of total capacity. So if the current trends of renewable capacity additions and coal plant closures continue, it will still take some time for their total capacities to cross paths. Meanwhile, capacity utilization – the amount of capacity used over the course of the year to actually generate electricity – is higher for coal plants than for renewables, which are subject to the variability of the wind, sun, rain and snow.
Will this Keep on Keeping On?
Though it is important to place April’s events in careful context, it really is remarkable that renewable power outpaced coal generation for the month. Roughly a decade ago renewables accounted for about one-tenth of all US power generation (virtually all of that was hydro) and coal produced more than half. This is the first time renewables generation exceeded coal for any length of time since coal surfaced as the major power source in the early-mid 20th century, but it is not likely the last. The share of renewable capacity is growing steadily, while coal capacity continues to decline through retirements.
Looking ahead, policies can disrupt the generation trajectories in either direction. At the federal level, policy efforts have been mixed. Just in the last few weeks, President Obama’s Clean Power Plan was replaced by the Trump Administration’s Affordable Clean Energy Rule, which is much less stringent for coal power plants and less of an inducement for renewables than the Clean Power Plan. Federal tax credits for wind and solar will start to phase out in January, 2020, which will put to the test whether the now lower-cost renewable sources can compete head-to-head with coal and natural gas without the federal subsidies.
But in energy policy, much of the action is at the state level, where governors, legislatures, and regulators have the power to control what types of electricity is produced. Twenty-nine states and Washington, DC have renewable portfolio standards which require a minimum share of electricity used to come from renewable sources. And several states, including the nation’s largest, California, have recently declared goals to achieve either 100 percent renewable or 100 percent carbon-free electricity by mid-century. If these standards hold, and other states follow suit, then the question will move from whether we will again see renewable generation exceed coal – we most surely will – to what the pace of the transition will be and how can the electric power system optimally balance the changing forces of supply and demand.
[Will Niver of the Duke University Energy Initiative contributed to the research and writing of this article.]