Coal Generation Drops 25% Or 500 Billion Kilowatt-hours Since Its 2007 Peak: What Will The Next 5 Years Bring For Coal Generation?

In 2007, when coal-fired generation was peaking at over 2 trillion kilowatt-hours of production, nobody saw it coming. What came was a colossal drop in coal-fired generation over the next 5 years.

From 2007 to 2012, the nation's leading source of power experienced an incredible 25% decline in output. Coal generation fell an astounding 500 billion kilowatt-hours, with the deepest drop in 2012.
http://www.eia.gov/electricity/annual/html/epa_03_01_a.html.

Indeed, in 2012 alone, coal-fired generation fell more than 200 billion kilowatt-hours or 10% of its 2007 peak.

Coal's reversal of fortune is truly remarkable from the vantage point of 2007. Then coal was rising and more than 150 new coal plants were in the development pipeline.

Several things turned the bright future coal generation had in 2007 into a 25% drop in production by 2012. The price of natural gas crashed from a high of $13 per thousand cubic feet in July 2008 to a low of less than $2 in April 2012. The falling gas price made gas-fired generation low-cost and turned a slow increase in natural gas generation into a rapid rise. The gains of natural gas came at the expense of coal but not renewable energy.

Non-hydro, renewable energy production also soared 120% from 2007 to 2012 and generated 113 billion kilowatt-hours more. Indeed, non-hydro renewable energy and gas together replaced 413 billion kilowatt-hours of the 500 billion kilowatt-hours decrease of coal generation in this 5 year period.

Finally, the demand of electricity that had meant an ever-increasing electric market stalled, as a result both of the near depression that began in November 2007 and ended in July 2009 and rising energy efficiency across the economy.

What will the future bring for coal? 2013 has seen a modest rebound of around 5% from the 2012 low. Even so coal-fired power plants will produce less electricity this year than they did in 2011. And more coal plant retirements will take place over the next 5 years, and the odds, therefore, are high that coal generation soon will fall below the recent lows set in 2012.