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EIA May short term energy forecast
Credit: EIA https://www.eia.gov/outlooks/steo/pdf/steo_full.pdf

Clean Power

Latest EIA Report Predicts Renewables In US Will Outpace Coal For All Of 2020

The EIA predicts renewables will supply more electricity to the US grid than coal for the balance of this year. The trend for renewables is up. The trend for coal is down and getting worse.

In its short term energy outlook report for May, the US Energy Information Administration predicts renewables will continue to provide more electricity to the grid than coal-powered thermal generating plants for all of 2020 — a first in US history. Part of that is due to reduced demand for electricity due to the coronavirus pandemic and part of that is due to unusually low prices for natural gas.

EIA May short term energy forecast

The EIA estimates coal generation will total 724.2 billion kWh in 2020, compared to 761 billion kWh of renewables. Just a year ago,  coal accounted for 959.5 billion kWh​ while the share of renewables was 688 billion kWh. Renewable generation will continue to outpace coal in 2021 — 833.8 billion kWh to 810.3 billion kWh — the EIA says. Many people are expecting renewables to overtake and pass coal, but Amanda Levin, a policy analyst with the Natural Resources Defense Council, tells Utility Dive that COVID-19 has increased the speed of the transition. “I do think that 2019 is going to be the last year that coal produces more power than renewables,” she says.

EIA estimates a 6.5% decrease in commercial and industrial electricity sales, as well as a 1.3% reduction in residential sales as the result of mild weather this winter and this coming summer. (An overheating planet may have something to say about that.) In all, US electric generation is forecast to drop by 5%, with fossil fuels hit the hardest.

Some coal producers have already fully or partially shut down operations due to declining demand. “EIA expects that these decreases in overall production will have a noticeable effect on supply, contributing to a steeper decline than would have occurred had these measures not been put into place,” the report says.

It costs money to bring an idle coal generating plant back online, while it costs next to nothing to activate a solar power plant or wind farm. Amanda Levin says, “So what ends up happening is when demand goes down, the most expensive last unit of energy purchased is the first to be taken offline.” Today, that means renewables, natural gas, and nuclear tend to be cheaper from a marginal cost perspective, and coal units are the first to be taken offline.

Of course, the unprecedented coronavirus pandemic means these are far from normal times, which means any projections are necessarily uncertain. EIA economist Tyler Hodge tells Utility Dive the crossover between coal and renewables is hard to predict accurately. There’s a possibility wind and solar projects could be delayed or postponed while declining coal forecasts are highly dependent on reduced electricity demand.

“At this point in time,” he says, “it’s probably more accurate to say that renewable energy sources will supply about the same amount of generation as coal over the next two years.” In fact, the EIA report suggests coal consumption could grow as much as 10% next year as the economy stabilizes and things get back to some semblance of normalcy.  Renewable generation is expected to grow by 11% this year even with the virus causing massive disruptions. EIA projects an additional 20.4 GW of new wind capacity and 12.7 GW of utility-scale solar capacity will come online this year, although that forecast is fraught with uncertainty.

“It’s important to recognize that this is really the inevitable conclusion of the energy transition that we’re on the path towards,” Joe Daniel, senior energy analyst with the Union of Concerned Scientists, tells Utility Dive. Reduced demand, coupled with low natural gas prices, have shown just how unnecessary most coal-fired plants are on the system, he says. “I think right now is a really critical moment for those utilities that do own coal because how they respond to the current economic realities is going to tell us a lot about their view and their stance on coal as a resource.”

The backdrop for all this is the news that more than 500,000 jobs have been lost in the clean energy industry as a result of the the coronavirus. That’s worrying, especially for the affected by the furloughs and job cuts. But the likelihood is those jobs will come back sooner than jobs in other industries that rely on the extraction and combustion of fossil fuels. In the final analysis, the virus may inflict more permanent damage on the fossil fuel sector than it does on renewables.

 
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