Even Trump Can’t Stop the Wave of Coal Plant Closures
On June 1, President Trump announced the United States was withdrawing from the Paris climate accord. The decision was unpopular, even among many conservatives.
The announcement came on the heels of a flurry of executive orders to roll back emission reduction targets in an attempt to help the coal industry.
But they aren’t having the effects Trump intended.
A day after the Paris announcement, Kansas City Power and Light Company gave him a slap. It said it was retiring five of its coal-fired power-generating units.
In fact, utilities across the U.S. are closing one coal plant after another. Since 2010, utilities have shut down more than 250 of them.
Initially, the closures were small, older plants. However, recent ones have been plants that are larger and younger.
The most recent estimate from the Energy Information Administration is that almost 90 gigawatts of coal-fired capacity will disappear by 2030. And that’s under business as usual.
The reason? Simple economics. Dirty coal can’t compete with cleaner natural gas, solar and wind. And as excited as environmentalists are, the switch away from coal has little to do with emissions regulations. It’s mostly based on cost.
Between now and the end of 2018, 46 coal-fired units at 25 plants in 16 states are switching to natural gas or closing altogether. That will eliminate about 30 million tons of coal demand worth about $1.1 billion at 2016 prices.
This is a transformative shift in how utilities plan to generate electricity – a shift I expect will continue for the foreseeable future.
Intense competition from natural gas and renewables is reality.
Energy’s Reality Shift: Economics and Efficiency
Energy market fundamentals are changing – and it’s beyond the president’s or any one person’s control.
In fact, there are other forces at work besides economic ones. Take a look at the way electricity consumption has fallen after peaking in 2010…
There is a clear trend of lower electricity demand.
The reason? Energy efficiency.
Improved construction and stricter building codes are making new homes and office buildings more efficient than ever. Lighting and climate control systems are smarter than ever.
That means new buildings use less energy than ones built even a few years ago do. It’s technology marching on, as I like to say…
Imagine this: Between now and 2030, America will add more than 60 billion square feet of new residential and commercial space.
But here’s the best part: We probably won’t need any more power plants. In fact, we may even need fewer than we have today.
It’s all thanks to improved energy efficiency.
And don’t forget about residential solar. This distributed energy source is making a huge difference.
Last year, solar photovoltaic (PV) systems brought negative energy demand growth in Hawaii, California and New Jersey. That trend is going to only expand to other states.
I love this next chart from 2013. It shows “conservative forecasts” for distributed solar PV in the top seven solar power-producing states…
Just four years ago, the estimate for solar PV installations in California was 1,600 megawatts (MW)…
How much did California actually install in 2016?
Try 5,211 MW.
That handily proves Fessler’s Second Law of Technology: “When it comes to technology, changes happen much faster than anyone expects they will.”
That’s more than three times the amount of solar PV forecast just four years ago.
And that is happening everywhere in the U.S.
Efficiency Gains, New Solar PV, Wind Farms and Energy Storage
These new forces at work are causing a fundamental shift in our energy landscape…
In a sense, we’ve declared a moratorium on the construction of new power plants between now and 2030.
What if we’re wrong, and we actually need to build one or two?
It probably won’t be a big deal. But one thing’s for sure: They aren’t going to run on coal.