Thursday, August 1, 2013

Surprise Fact: New Coal Plants Built In First Half Of 2013 Will Generate More Power Than New Wind And Solar Combined

The report of coal-fired electricity generation's death remains exaggerated.

Coal produces 40% of America's power, has gained market share at the expense of natural gas in 2013, and 3 new coal plants opened in the first half of 2013 that totaled 1,569 megawatts.

Though the new coal capacity is considerably less than all the additional wind and solar of all types built in the first half of 2013, the coal plants will generate more electricity as a result of their higher capacity factor.  The coal plants will operate in most hours of the year near maximum output.  While wind farms produce some electricity in most hours of the year, they rarely operate at maximum output.

For wind to produce as much electricity as the 1,569 megawatts of new coal, about 4,500 megawatts of wind would be required. Wind has often installed that much or more in the course of a year, but had a soft first 6 months of 2013, when 959 megawatts was installed.

For solar to match the production of 1,569 megawatts of new coal, approximately 7,500 megawatts of new solar would be needed. Solar has never done that in one year but will soon.  At this point, a total of 10,000 megawatts of solar operates across America after 5 years of booming solar installations.

Through 2020, three variables will determine substantially whether or not coal maintain's an electricity generation market share near 40% and not one of them is the EPA air toxic rule. The most important single factor will be the price of natural gas.  Low-priced gas cut coal's market share to 32% in April 2012. It could do it again.  The second and third variables are the wholesale price of electricity that again is largely a function of the price of gas and whether coal plants win or lose annual capacity auctions in the PJM power pool.

While coal is under competitive threat from natural gas, higher gas prices lessen that threat.  And though the stress is real on coal, new coal plants came on line in 2012 and continue to so in 2013.

1 comment:

  1. Where do you get this statement? "The coal plants will operate in most hours of the year near maximum output."

    You can't operate 29% of the installed base "most hours." And you certainly wouldn't be operating coal most hours when natural gas is cheaper, and accounts for 42% of the installed base.

    On top of that, as the cost of new wind and solar fall below the cost of coal, you're going to see less utilization of coal.