Renewable electricity generation set to surpass coal, which continues to decline, in 2020

Energize Weekly, May 20, 2020

Renewable electricity generation is set to surpass coal-fired generation in 2020, as coal continues to slide, having hit a 42-year low in 2019, according to the U.S. Energy Information Administration (EIA).

The EIA is projecting a 25 percent drop in coal-fired generation in 2020 and an 11 percent increase in renewable generation, leading to renewables producing 36,600 gigawatt-hours (GWh) more electricity than coal.

This comes after coal-fired generation posted its lowest output since 1976 in 2019 with an 18 percent drop to 966,000 GWh when compared to 2018. It was the largest one-year decline on record.

Coal production is forecast to be 453 million tons in 2020, a 24.3 percent decline from 2019 and a 31 percent decline from 2018. Oil and natural gas production will also be down for the year, according to the EIA.

There are several forces at work, the agency said in its May Short-Term Energy Outlook.

Wind and solar will continue to be the fastest-growing sources of new generation in 2020 with a projected 20.4 gigawatts (GW) of new wind capacity and 12.7 GW of utility-scale solar.

Meanwhile, aging coal-fired plants continue to close or be switched to natural gas. After hitting a peak of 318 GW in 2011, capacity has continually fallen, reaching 229 GW in 2019, a 28 percent loss.

Low natural gas prices have also been a challenge for coal as the natural gas spot price has fallen 38 percent from its November 2019 high to $1.65 for a million British thermal units.

Another factor has been the novel coronavirus pandemic that swept the country and throttled the economy.

“EIA expects retail sales of electricity in the commercial sector will fall by 6.5 percent in 2020 because many businesses have closed and many people are working from home,” the agency said. “Similarly, EIA expects industrial retail sales of electricity will fall by 6.5 percent in 2020 as many factories cut back production.”

Residential-sector electricity sales are expected to fall by 1.3 percent in 2020 because of lower electricity demand as a result of milder winter and summer weather.

Overall, the EIA is forecasting that total U.S. electric generation will fall 5 percent in 2020, with most of that drop hitting coal-fired plants. Natural gas-fired generation is expected to remain flat.

Natural gas production for the year is also expected to decline 5 percent to 94.3 billion cubic feet a day as a result of “the weakening economic outlook from the impact of efforts to reduce the spread of the 2019 novel coronavirus (COVID-19),” the agency said.

The weakening economy and lower electricity sales and revenues also militate for renewables. “Renewable energy is typically dispatched whenever it is available because of its low operating cost,” the EIA said.

The oil market has also reeled under the impact of the COVID-19 pandemic on the economy, which has led to “a steep drop in demand for petroleum products and crude oil prices,” the EIA said.

As a result, the EIA’s Short-Term Energy Outlook sees declines in U.S. oil production for 2020 and 2021. After posting average daily production of 12.2 million barrels a day in 2019, output in 2020 will drop to 11.7 million barrels a day and fall again in 2021 to 10.9 million barrels a day.

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