2015 prediction — coal plant closures peak, while renewables and gas surge to new highs 

Source: Daniel Cusick, E&E reporter • Posted: Monday, April 13, 2015

The transformation of the U.S. electricity sector will quicken in 2015, as the country is expected to rely on more natural gas, solar and wind energy than ever before, according to new projections published yesterday by Bloomberg New Energy Finance.

Coal plant closures are also expected to peak this year, with 23 gigawatts of capacity coming offline in anticipation of tough new federal regulations targeting power plant emissions of mercury and other pollutants, Bloomberg analysts said in the firm’s “Midterm Outlook U.S. Power” for 2015.

Record additions of renewable energy generation, including roughly 9 GW of wind power and 9 GW of solar power, will help offset much of that lost coal-fired generation, along with a projected record burn of natural gas by utilities.

“Gas burn will rise to back-fill lost generation from retiring coal,” Bloomberg says in its analysis. “But also, remarkably low gas prices have boosted burn totals by allowing efficient gas turbines to undercut the cost of coal-fired electricity.”

The bottom line, according to BNEF, is that “The U.S. power sector will do more for climate change in 2015 than any other year, ever.”

A spokesman for the Edison Electric Institute, the chief lobbying organization for investor-owned utilities in Washington, D.C., said in an email that officials had not yet reviewed the findings and declined further comment.

BNEF estimates that U.S. carbon dioxide emissions for 2015 will be roughly 2.1 billion metric tons, 16 percent below 2005 levels. “On an emissions rate basis [tons per megawatt-hour], 2015 will be the cleanest year in over 60 years for which we have historical data,” the analysis said.

Will Nelson, BNEF’s head of North American analysis, said in an interview that the shift will be particularly pronounced in the eastern United States, where utilities will burn record volumes of shale gas while also relying on larger amounts of utility-scale and rooftop solar energy.

Wind power is expected to continue to see strong gains in the Midwest and Great Plains, especially Texas, while solar power should continue to see strong growth from California and the Southwest to a growing number of states in the East such as Massachusetts, New York and North Carolina.

Utility-scale solar installations are expected to reach an all-time high of 4.9 GW in 2015, thanks to the completion of a handful of 100 MW or larger solar farms in California. “The next two years will be utility-scale solar’s time in the sun,” the BNEF report says.

For rooftop solar, BNEF projects that that United States will install a record 1.9 GW of residential solar capacity this year, along with 1.6 GW of nonresidential rooftop PV.

‘Once coal plants retire, they do not come back’

Rapid renewable energy expansions should continue through 2016, Nelson said, after which new capacity should level off as key federal tax credits for wind and solar power begin to wane.

The production tax credit (PTC) for wind expired at the end of last year after a surge in project startups in 2014, while the investment tax credit (ITC) for solar and other renewables is expected to step down from 30 percent to 10 percent in 2016.

Coal plant retirements over the next two years will also be widespread, according to BNEF, but most concentrated in the East, from the Mid-Atlantic to southern Appalachia and the Ohio and Mississippi valleys. “The Appalachian coal region is being challenged more directly and more deeply than the Powder River Basin coal from Wyoming,” Nelson said.

BNEF characterizes coal’s challenge as “a three-pronged assault” from low natural gas prices, an aging power plant fleet and stringent environmental compliance.

As those new regulations — including the Clean Power Plan targeting utility-sector CO2 emissions — take effect, BNEF projects that more than 50 MW of coal-fired generation will be shuttered.

“What makes this year unique is the depth and permanence of the carbon cuts,” Nelson said. “Once coal plants retire, they do not come back — and renewable installations last for decades.”

Proponents of coal-fired power, while acknowledging the mounting regulatory pressures faced by electric utilities, have resisted the idea that coal cannot compete against gas and renewables as a domestic energy source.

“Coal provides nearly 40 percent of America’s electric power, making it the most used feedstock for electricity generation,” the American Coalition for Clean Coal Electricity said in a release highlighting the first of a series of energy forums featuring presidential candidates.

It added that the coal-based power industry has been a leader “in developing ways to use our most reliable, affordable and abundant resource more cleanly and efficiently than ever before, investing nearly $120 billion so far to reduce emissions by 90 percent and putting in an additio