http://ieefa.org/ieefa-u-s-april-is-shaping-up-to-be-momentous-in-transition-from-coal-to-renewables/
[links and images in online article]
Dennis Wamsted April 25, 2019
IEEFA U.S.: April is shaping up to be momentous in transition from coal
to renewables
Signs of a tipping point in national power-generation mix
The future of the U.S. electricity generation industry may have arrived,
and it is not good news for struggling coal-fired generating plants.
This month, for the first time ever, the renewable energy sector (hydro,
biomass, wind, solar and geothermal) is projected to generate more
electricity than coal-fired plants, which totals about 240 gigawatts
(GW) of still-operating capacity. According to data published this month
in the Energy Information Administration (EIA) Short-Term Energy
Outlook, renewables may even trump coal through the month of May as well.
As the chart below indicates, the EIA sees renewable generation topping
coal-fired output sporadically this year, and again in 2020. The
estimates in the EIA outlook show renewable energy generating 2,322 and
2,271 thousand megawatt-hours (MWh/day) per day in April and May,
respectively. This would top coal’s expected output of 1,997 and 2,239
thousand MWh/day during the same two months.
To be fair, there are seasonal considerations. Of particular note, is
the long-held practice of taking coal plants offline during the lower
demand periods of the spring (and fall) to perform maintenance and
upgrades to ensure that they are ready for the higher demand of the
summer and winter seasons. In addition, spring tends to be peak time for
hydro generation.
That said, this represents a momentous development driven by the deep
transition under way in the electric generation arena. It is also
likely, particularly given IEEFA’s forecasts for continued declines in
the amount of installed coal-fired capacity, and steady increases in the
amount of installed solar and wind generation, that renewable output
will begin outpacing coal more and more frequently—just as occurred with
natural gas (see IEEFA’s recent research, Record Drop in U.S. Coal-Fired
Capacity Likely in 2018, and, for a broader overview, Coal Outlook 2019:
Domestic Market Decline Continues).
It is worth noting that the first instance of natural gas-fired
generation exceeding coal’s output happened not so long ago—April 2015
(also likely to do with seasonal variations in demand). Subsequently,
the two major fossil fuels—coal and gas—went back and forth on market
share through early 2018, with coal generating more in the winters and
natural gas winning the summer generation battle (see chart below). The
final monthly crossover point occurred in January 2018, and natural gas
has held the uncontested top spot in electricity generation ever since.
On an annual basis, the two fuels each accounted for about 33% of the
electricity market in 2015; since then, their trajectories have taken
different paths. By 2018, natural gas’s share had climbed to 35% while
coal’s had dropped to 27%. The trends for both are expected to continue.
The tipping point for renewable energy actually may already have been
reached in Texas, where natural gas, wind and, increasingly, solar, are
steadily pushing coal out of the system. According to data from the
Electric Reliability Council of Texas (ERCOT) – the transmission
operator running the system that supplies 90% of the state’s electric
load – wind and solar generation topped coal’s output in the first
quarter of 2019, the first time that this has happened on a quarterly
basis. Overall, wind and solar capacity generated 19.41 million MWh
during the first quarter, beating the 18.97 million MWh pumped out by
the state’s coal-fired plants. Wind and solar output topped coal in
March and April 2018, but had never done so before for a full quarter.
(ERCOT’s monthly generation data can be found here.)
It is also worth noting, that ERCOT coal-fired generators produced less
electricity during the first quarter of 2019 than they did in the
comparable 2018 period, in spite of stronger total demand compared to a
year ago. In other words, in the highly competitive Texas power
generation sector, coal is winning a smaller chunk of a bigger market.
The shift in Texas will not end overnight, as the state’s coal plants
are used heavily during the hot summer months, but the gap is closing.
In 2018, solar and wind output totaled 78% of coal’s generation and, as
the first-quarter data indicate, the race is narrowing.
The gap will probably close even further over the next few years as wind
and solar projects in the state’s development queue are built and
brought online. According to the latest ERCOT data, 283 wind and solar
projects totaling more than 12 GW of generating capacity have signed
interconnection agreements and arranged financing (the data can be found
here). It is impossible to determine if all those projects will be
built, but it is reasonable to expect that a significant percentage will
indeed enter commercial service in the near term, a development that
will further speed the energy transition in oil-rich Texas.
Coal’s proponents may dismiss these monthly and quarterly ups and downs
in generation share as unimportant, but we believe they are indicative
of the fundamental disruption happening across the electric generation
sector. As natural gas achieved earlier, renewable generation is
catching up to coal, and faster than forecast.
Dennis Wamsted is an IEEFA editor and analyst.
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