By - Jim Vess

U.S. coal production drops to a 57-year low, renewables overtake coal-fired generation

Energize Weekly, July 15, 2020

U.S. coal production is projected to plummet to its lowest level in more than half a century in 2020 as coal-fired electricity generation slips behind renewable generation, according to the federal Energy Information Administration (EIA).

In its July short-term energy outlook, the EIA cut its previous 2020 coal production estimate by 5.4 percent to 501.3 short tons for the year, 29 percent lower than 2019. It would be the lowest output since 1963 when 477.2 million short tons were produced.

The power sector – which consumes 90 percent of the coal produced in the U.S. – is expected to use 377 million short tons in 2020, 30 percent less than in 2019.

In part, that is due to natural gas displacing coal due to lower prices in 2020. The spot price of Henry Hub gas is expected to average $2 per million British thermal units (BTU) for the year compared to $2.66 million per BTUs in 2019.

In May, the Henry Hub spot price averaged $1.63 for a million BTUs, the lowest price since at least 1989, the agency said.

An expected rebound in natural gas prices in 2021 to $3.22 per million BTU will help revive coal production, which EIA forecasts will rise to 536 million short tons.

Still, the EIA long-term outlook for coal and coal-fired generation is one of decline.

“By the end of 2020, coal production and consumption at the power sector are expected to drop 53.8 percent and 61.3 percent, respectively, from 2010 values, while natural gas production is estimated to increase by 62.6 percent during the decade,” the EIA said.

In 2020, renewable energy generation will overtake coal on an annual basis for the first time, the EIA said, accounting for 20.1 percent of all electricity, compared to 17.6 percent for coal.

By 2021, renewables will account for 21.9 percent of generated electricity and coal, buoyed by higher natural gas prices, will generate 21.2 percent of the nation’s electricity.

“The increase in the share from renewables is the result of expected additions to wind and solar generating capacity,” the EIA forecast said.

Natural gas will provide 40.6 percent of the total electricity consumed in in 2020 and 35.6 percent in 2021, the agency said.

Operators of at least 15 coal-fired plants this year announced plans to retire their units. Meanwhile there were 1.8 gigawatts (GW) of wind power deployments in the first quarter of 2020, double the amount in the first quarter of 2019. There were also 1.9 GW utility-scale solar installations in the quarter, a 65 percent year-on-year increase.

The largest of the solar installations to come online was the 240-megawatt Misae Project, in Childress, Texas, backed by INGKA Holding BV, which is owned by IKEA. NextEra Energy has the most projects in development through 2024 – a total of 5.9 GW.

Despite the difficult prospects for coal, Brook Mining Company LLC received the first permit for a new mine in Wyoming in more than 50 years on July 7 from the state Department of Environmental Quality (DEQ). The mine will be eight miles northwest of Sheridan, Wyo.

The Powder River Basin Resource Council, an environmental group, had challenged the mine in a filing saying the application was “vague and unrealistic.” The group voiced concerns about the mining operations impacts on air and water quality and wildlife.

“Our staff put an incredible amount of time and effort into reviewing this application and ensuring that all laws, rules and regulations were followed,” Todd Parfitt, DEQ director, said in a statement.

Marcia Westkott, the chair of the Powder River Basin Resource Council, said in a release, “the fact that the Wyoming Department of Environmental Quality placed 12 conditions on the permit is an indication that the Brook Mine permit is inadequate and incomplete.”

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