US coal-based generation to be outplayed by renewables in 2020: GlobalData

Coal-based electricity generation has fallen to its lowest level in the US, representing a 23.5% share in the generation mix. With the COVID-19 crisis in place, and climate concerns taking a bigger stage, renewable-based generation might cast a shadow over the coal-based generation this year, says GlobalData, a leading data and analytics company.

Somik Das, Power Analyst at GlobalData, comments: “Coal-based electricity dropped to a 42-year low in 2019, with the share falling by almost 16% in comparison to 2018. On the contrary, generation from renewables increased by 3.8% compared to 2018, where renewables accounted for 19.1% of the generation. The COVID-19 outbreak is expected to hurt coal-based generation further as electricity generators reduce coal-based electricity generation in response to reduced electricity demand.”

Utilities are looking at renewables over coal, committing to their goals of addressing climate change. This is expected to expedite the closures of coal-fired power plants since they are already challenged to compete with natural gas, wind and solar sources, which are all currently at par or cheaper sources of electricity generation than coal.

Das adds: “The COVID-19 outbreak has added further woes to the already troubled coal-based generation that was facing stiff competition from the cheaper sources of generation. With plunging electricity demand following the temporary shutdown of factories, offices and retailers; utilities chose other sources of energy over coal. While the operational cost of coal power plants (when compared to gas, solar, wind, or nuclear) is more expensive, with long-term power purchase agreements for coal-based power generation in place with multiple rural communities, industries and companies, it is less likely that the use of coal would completely end soon.

“The aging coal-based power infrastructure, a steep decline in cost of building renewable projects (especially wind and solar), and a low-cost natural gas scenario are likely to push coal-based power generation share in the minority in the generation mix.”

Das concludes: “Low gas prices and the COVID-19 pandemic has acted as a catalyst, initiating the move towards low carbon energy transition in the US. GlobalData estimates that by 2025, generation from coal will drop by another 22.1%, compared to 2020, representing 17.5% of the generation in the US power mix.”