US renewables output to outstrip coal in 2021

The US Energy Information Administration’s (EIA) January Short Term Energy Outlook (STEO) forecasts that renewable energy’s share of US electricity generation in 2021 will be larger than that for either coal-fired generation or nuclear generation – not just for a week or a month but for the whole year.

In February the EIA revised its forecast, and lowered its expectations for renewable’s share of the generation mix slightly, but it still expects it to hit 21,4% in 2021, while coal will drop to 21,2%, with nuclear accounting for just under 20%. The first time that US renewables output was higher than coal for a whole month was in April last year.

No going back

This positive trend is in a very real sense a path of no return.

US construction of both new coal and nuclear plants has all but ground to a halt in recent years with new generation plant being fairly evenly split between natural gas-fired generation and renewables.

With no new coal plant being built, coal is being locked out of future US electricity generation. According to a forecast the EIA made in March last year, no new coal or nuclear plant construction is likely after 2023.

Shifting generation mix

The reasons for this steady shift towards a lower greenhouse gas emissions (GHG) generation fleet are rooted in history, public activism and, perhaps more surprisingly, also related to the US’s rapid expansion of shale oil production.

Shale wells generally produce a mix of gas and liquids and US gas production has boomed (in German) alongside the production of shale oil, making gas very cheap in the US. Gas has become so abundant that even a sharp rise in pipeline exports to Mexico, the creation of an LNG export industry and increased domestic consumption have failed to push prices higher.

In addition, the US’s major phases of coal plant construction took place between 1965 and 1985, which means that existing coal plant are old and coming to the end of the lives. The age profile of US nuclear plants is similar with an average age of about 39 years.

Environmental pressure groups have targeted new coal and nuclear plant construction, opposing projects at every turn. This has caused delays adding to costs, while concern over the environment has encouraged US utilities to aim for cleaner forms of energy generation.

As each coal or nuclear plant comes to the end of its life, a decision has to be made: the falling cost of renewables, cheap gas and the desire to reduce GHG emissions have coalesced behind a mix of renewables and efficient gas-fired generation as the clean and affordable option.

The EIA sees 18.5 GW, or 8% of remaining US coal-fired capacity, retiring in 2019 and 2020. This comes on top of a high level of retirements in the preceding years. At the same time, five nuclear plants are scheduled to retire in 2020 or 2021.

Meanwhile, renewables capacity continues to grow, with an additional boost expected over the next decade from the gathering momentum behind the US’s nascent offshore wind sector.

Emissions implications

US electricity consumption is flat, as a result of efforts to increase efficiency, more use of combined heat and power plants and because the EIA expects milder summer weather in 2020 and 2021, which will reduce the use of air conditioning.

In its STEO, the EIA predicts US electricity consumption will fall by 0.4% in 2020 and remain steady in 2021, while real GDP will continue to grow by 2.0% and 1.8% respectively.

With no growth in electricity consumption, higher renewables output translates into a larger percentage share of overall generation.

The EIA says natural gas-related emissions rose by 4.2% in 2019 and will increase further by 1.3% in 2020, but fall 1.5% in 2021. In contrast, coal related-emissions fell 12.7% in 2019 and are expected to drop by a further 10.7% in 2020 and 3.4% in 2021.