If you think the conversion from the old to new U.S. energy systems is taking an insufferably long time, consider the fate of coal. Ten years ago, coal dominated energy production, accounting for half of the nation’s electrical output. Today — despite a relaxed regulatory regimen aiming to revive coal plants — the United States is projected to generate more electricity this year using renewables than coal, something that has never happened before.
Coal plants have become relatively expensive to operate, causing many utilities to abandon the energy source, which is notorious for being the dirtiest of the fossil-fuel family. Witness the announcements from large power companies such as Duke Energy and Xcel Energy to shutter at least four dozen large coal plants by 2025. Meanwhile, no U.S. utilities have plans to build new coal facilities.
The latest report from the Energy Information Administration estimates total U.S. coal consumption will fall by nearly one-quarter during 2020, and coal plants are forecast to provide only 19 percent of the nation’s electricity. This marks the first time coal is expected to generate less electricity than either nuclear or renewable power.
“The grid is changing so much faster than anyone expected,” Daniel Cohan, an associate professor of civil and environmental engineering at Rice University, recently told The New York Times. “A decade ago, I was teaching my students that coal was the ‘baseload’ source that runs all the time, and solar was something you might sprinkle in if you want to pay more. Now coal’s been pushed to the margins and it’s wind and solar that are the cheapest options.”
Indeed, the cost of building large solar and wind farms has dropped over the past decade by more than 80 percent and 40 percent, respectively, and the cost of natural gas has fallen to historic lows, thanks to the fracking boom.
The shrinking cost and advancing technology of solar and wind farms has prompted utilities and large technology companies to invest in renewables rather than coal. A prime example is Amazon, which announced five new renewable energy projects in China, Australia and the United States as part of the company’s commitment to reach 80 percent renewable energy by 2024 and 100 percent renewable energy by 2030.
To date, Amazon has announced 31 utility-scale wind and solar renewable energy projects and 60 solar rooftops on fulfillment centers and sort centers around the globe. Together, these projects, totaling more than 2,900 megawatts of capacity, will deliver more than 7.6 million megawatts of renewable energy annually, enough to power 680,000 U.S. homes.
Mike Consol (m.consol@irei.com) is editor of Real Assets Adviser. Follow him on Twitter @mikeconsol to read his latest postings.