Replacing Coal Plants With Renewables Is Cheaper 80% of the Time

A new report shows that the economics may not even support running U.S. coal plants, let alone building them.

US coal exports

About 80% of U.S. coal plants are now more expensive to keep running than to swap out for new wind and solar capacity, according to a report from Energy Innovation, a non-partisan climate and energy think tank.

While renewables cost more than fossil energy for much of the last century, prices for new wind and solar have dropped so quickly in recent years that they were already cheaper than new coal. This report shows that the price differential holds true for a growing amount of existing coal, as well. “This is becoming true for more and more plants moving forward—and at an accelerating pace,” said Eric Gimon, a senior fellow with Energy Innovation and a co-author of the report.

Coal has been steadily declining as a fixture of the U.S. energy mix for more than a decade due to combined pressure from activists and market forces. The Sierra Club, which runs the Beyond Coal campaign aimed at eliminating coal power in the U.S., says that 339 plants have either been retired or are on their way to retirement since 2010, leaving just 191 still operating indefinitely. (Michael R. Bloomberg, the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News, has committed $500 million to launch Beyond Carbon, a campaign aimed at closing the remaining coal-powered plants in the U.S. by 2030 and slowing the construction of new gas plants.)

Coal use has dropped so precipitously that it’s no longer the leading stationary source of air pollution, according to another new study out Wednesday. The report from researchers at Harvard University found that as of 2017, burning biomass and wood for energy led to more detrimental health effects than coal. That same year, burning gas caused more deaths than coal in at least 19 states.

Still, coal plants produce about a billion tons of carbon emissions annually. President Joe Biden has committed the U.S. to reducing its greenhouse gas emissions by at least 50% compared to 2005 levels by the end of the decade, and energy modelers say that almost all remaining coal plants would need to be shuttered for the U.S. to meet this goal. The analysis from Energy Innovation should be an encouraging sign for those following the country’s progress.

The think tank’s numbers differ slightly from the Sierra Club’s. Researchers there looked at 235 existing coal plants in 2019, minus seven that were already slated for retirement, and calculated costs for fuel, operations, and ongoing capital expenses. Then they compared those figures against weighted regional averages of the cost to build wind and solar from scratch and found that 182 plants, representing 72% of existing coal generating capacity, were no longer justifiable based on the economics.

Energy Innovation’s analysis doesn’t include all the considerations a real-world utility might take into account. For instance, it focuses narrowly on operation and construction and doesn’t factor in the added cost of decommissioning existing facilities. Perhaps a larger omission, the calculations don’t include the price of batteries, which are necessary to overcome the intermittency of wind and solar.

Given this, the authors said that in some cases, the cost comparisons might not hold up. Still Gimon said, the report should be seen as a “barometer” of the changing economics of coal-fired electricity.

About Stu Turley 3230 Articles
Stuart Turley is President and CEO of Sandstone Group, a top energy data, and finance consultancy working with companies all throughout the energy value chain. Sandstone helps both small and large-cap energy companies to develop customized applications and manage data workflows/integration throughout the entire business. With experience implementing enterprise networks, supercomputers, and cellular tower solutions, Sandstone has become a trusted source and advisor.   He is also the Executive Publisher of www.energynewsbeat.com, the best source for 24/7 energy news coverage, and is the Co-Host of the energy news video and Podcast Energy News Beat. Energy should be used to elevate humanity out of poverty. Let's use all forms of energy with the least impact on the environment while being sustainable without printing money. Stu is also a co-host on the 3 Podcasters Walk into A Bar podcast with David Blackmon, and Rey Trevino. Stuart is guided by over 30 years of business management experience, having successfully built and help sell multiple small and medium businesses while consulting for numerous Fortune 500 companies. He holds a B.A in Business Administration from Oklahoma State and an MBA from Oklahoma City University.