Energize Weekly, April 3, 2019
Nearly three-quarters of the nation’s coal-fired electric generation could be matched or undercut on cost by local wind and solar installations, according to analysis by Energy Innovation and Vibrant Clean Energy.
The report projects that the portion of the coal-fired fleet economically challenged by renewable generation will grow from 211 gigawatts (GW) in 2018 to 246 GW in 2025—almost the entire U.S. coal capacity.
“Coal generation is at a crossroads in the United States, or more precisely at a ‘cost crossover,’” the study said. “This cost crossover raises substantial questions for regulators and utilities as to why these coal plants should keep running instead of new renewable power plants.”
Energy Innovation is a San Francisco energy think tank and consultant promoting clean energy alternatives. Vibrant is a Boulder, Colo.-based developer of data and software to aid utilities in integrating renewable generation.
For each coal-fired plant in the country, the study calculated the marginal cost of energy—the cost for fuel, plant upgrades, operation and maintenance—and compared that with the cost of available sun and solar generation within 35 miles of the plant.
The study did not look at transmission costs or the cost of closing coal-fired units, nor did it consider importing wind and solar from outside the 35-mile radius.
“The crossover between new renewable and coal running costs is just one important part of shutting down existing coal plants,” the study said. “Any decision on how to proceed will require further modeling of grid impacts and alternative sources of reliability services, as well as the possibility for even cheaper renewables replacements farther away than the 35-mile maximum radius.”
Still using this rough measure, the study calculates that in 2018, 94 GW of existing U.S. coal capacity was substantially at risk from new local wind and solar that could undercut coal operating costs by at least 25 percent.
By 2025, that group of coal units will grow 140 GW—almost half the U.S. fleet—even as federal renewable energy tax credits phase out.
The cost of operating a coal-fired plant, being used 33 percent of the time or more, ranged from $25 a megawatt-hour (MWh) to $104 MWh. For plants used less frequently, with lower capacity factors, the costs are even higher.
Cost for solar in 2018 ranged from $28 a MWh to $58 a MWh, while wind costs were $13 to $88 a MWh. Renewable costs were tied to the regional variation in the quality of the wind and solar resources.
By 2025, local wind could replace 76 GW of coal-fired units, and solar could supplant 111 GW at 25 percent lower costs than running the coal-fired power plants, the study said.
There are marked regional differences. In the Midwest, there could be an increase in at-risk coal plants by 2025 as the price of solar puts pressure on the high marginal costs of the region’s coal plants.
Almost all coal plants in the PJM, the nation’s largest regional grid and wholesale power market covering the Mid-Atlantics states and part of the Midwest, are at risk to coal replacement by 2025 on a straight energy-value comparison.
Many of the coal-fired plants in the PJM get a large part of their revenue from the grid’s capacity market, which assures on-demand capacity. The capacity markets are “unfriendly to solar,” the report said.
In the Southeast, coal plants also face a substantial replacement risk by 2025 from solar, which in many areas is half the cost of coal-fired generation. “The trend is so strong that it is hard to imagine Southeastern utilities not relying heavily on solar and complementary load shifting resources to replace the coal and save customers money,” the report said.