January 25, 2019 Read More →

EIA sees continued steady decline in coal production, coal-fired generation

S&P Global Market Intelligence ($):

U.S. coal production is expected to decline from 762 million tons in 2018 to 608 million tons in 2035 before stabilizing through 2050, according to the U.S. Energy Information Administration’s Annual Energy Outlook 2019, released Jan. 24.

The decline is largely the result of further coal-fired retirements and competitive price pressure from natural gas and renewables generation.

U.S. power generation from coal is projected to drop from a 28% share in 2018 to just 17% of total generation by 2050 in the reference case. The share of natural gas generation is expected to rise from 34% to 39% in the same time period, while renewable generation goes from 18% to 31% of U.S. generation. A continuing decline in natural gas prices and increasing penetration of renewable electricity generation, the report states, has lowered wholesale electricity prices and led to lower utilization rates and operating losses for many of the coal and nuclear power plants in the U.S.

With the assumption that utilization rates will increase at the coal plants that are not retired, under the EIA’s model coal-fired generating capacity declines even faster than U.S. coal-fired generation through 2050, with 101 GW, or 42% of existing coal-fired capacity, projected to retire by 2050. Much of the coal-fired capacity retiring, 86 GW, is expected to occur between 2018 and 2035.

The EIA has consistently underestimated the climb of renewable energy in its models but said in 2018 it would make changes aimed at getting renewables right in the future. The reference case includes only current laws, including tax credits and air regulations, and does not attempt to account for potential policies that could affect the electricity generation sector. For example, the Trump administration has made numerous efforts that could push generators toward using more coal.

More ($): EIA projects plant retirements will drive 20% cut in US coal production by 2035

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