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U.S. renewables will surpass coal by 2021

Recent trends for coal, which has been declining rapidly, and for renewables, which have been growing rapidly, indicate that by 2021 the power generation totals for both will run at least side-by-side, and the odds favour renewables, according to recent IEEFA analyses.



However, the balance will be affected by unpredictable factors such as climate and changes in public policies, but coal and renewables are rapidly moving in opposite directions in terms of market share. If the crossing point does not occur in 2021, it will undoubtedly do so in 2022.


The decline of coal

Two of the largest coal-fired power plants in the U.S., the Navajo three-unit, 2,250-megawatt (MW) plant in northeastern Arizona, and the Bruce Mansfield 2,490 MW plant in western Pennsylvania, closed this month. The last giants will fall in the rapid reconfiguration of the U.S. power generation sector.

As a result of these and other closures (IEEFA forecasts a closure of at least 24,000 MW of coal capacity from 2019 to 2021), the Energy Information Administration (EIA) is projecting that coal’s share of the power generation market will decline to 25% this year (from 28% in 2018) and continue to fall in 2020, to just under 22%.

In addition, according to the EIA, coal-fired power generation will fall to 993 billion kilowatt-hours (kWh) by 2019, falling below one billion kWh for the first time in 40 years.

This estimate, drawn from the EIA’s “November 2019 Short-Term Energy Outlook”, represents a 12.7% drop from the previous year, and the agency projects an even steeper decline of 13.4% in 2020, reducing coal production for the year to 860 billion kWh.

IEEFA sees the trend continuing beyond 2021; the question is how fast it will happen. If the sector’s output falls an additional 13% in 2021, annual generation would be reduced to approximately 748 billion kWh. Even if a more conservative rate is projected, for example, the 7% annual decline recorded since 2015, coal-fired generation would still fall to 800 billion kWh in 2021.


Continued growth of renewables

Meanwhile, renewable energies have gained market share in the last five years. The EIA predicts that these combined resources will produce 721.5 billion kWh this year, almost 40% more than in 2015, when renewables generated 525 billion kWh.

The EIA foresees a growth in renewable energies next year, essentially from wind and solar sources, which would bring total production to just over 784 billion kWh.

The question then is how much renewable energy will grow in 2021? It is not unreasonable to argue that solar and wind generation will coincide with EIA growth rates for 2019 and 2020. For large-scale solar and rooftop, it would translate into expected increases of 19% and 21%, respectively, while for wind the increase would be 10.8%.

The EIA estimates that the amount of large-scale solar energy installed will increase to more than 50 gigawatts (GW) by the end of 2020, compared to 31.5 GW in 2018. The agency also forecasts that the total amount of rooftop solar energy will increase to 28.6 GW by the end of 2020, up from 19.5 GW in 2018.

Solar capacity in 2021

Looking ahead to 2021, SEIA projects that 17.6 GW of solar capacity will be installed that year as utilities and developers take advantage of the overdue tax credit for residential systems and the expected decrease in the commercial tax credit.

On the wind side, EIA has installed a capacity of more than 122 GW in 2020, compared to 94.2 GW in 2018. The American Wind Energy Association (AWEA) estimates that installed wind capacity exceeded 100GW in the first half of 2019; it also says that an additional 22.6GW of wind capacity is being built.

According to their data, by 2021 or shortly thereafter, total installed wind capacity in the U.S. will reach 145 GW, significantly higher than EIA’s forecast of 122 GW by 2020.

Adding the projected increases in wind and solar energy mentioned above to the other three renewable components (hydroelectric, geothermal and biomass), which, by argument, have been left at their 2020 levels, puts renewable generation in 2021 at approximately 845 billion kWh, 5.6% more than the conservative projection for coal-fired generation in the same year of 800 billion kWh (see graph below).


Renewable energies

By then, renewable energies will have reached other milestones. The EIA is already projecting that total renewable generation in the second quarter of 2020 will surpass coal, based on a crossover first recorded in April 2019, when, for the first time, renewable generation surpassed coal in a single month.

As IEEFA pointed out at the time, this milestone was partly due to seasonal problems (spring being a period of relatively low demand for coal and relatively high production for wind and solar energy). But the transition is occurring rapidly now in other months, particularly in the summer and winter months of high demand.

In 2015, coal-fired generation exceeded 100 billion kWh in eight out of twelve months, but that phenomenon is rapidly becoming a relic of the past. In 2019, coal is expected to exceed 100 billion kWh only twice (in January and July, and barely 100.3 billion kWh in each of those months).

Next year, the EIA projects that coal will not be able to reach the 100 billion kWh mark in a single month. And perhaps just as important, next April, the EIA predicts that coal generation will fall below 50 billion kWh, a number unthinkable by low.

Until now it was thought that it would still take several years for renewable energies to constantly beat coal, but the data are misleading and clearly show that this is already happening and that there is no longer any reason to doubt: renewable energies are surpassing coal.


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