November 9, 2018 Read More →

New wind and solar generation costs fall below existing coal plants

Financial Times:

The cost of new wind and solar power generation has fallen below the cost of running existing coal- fired plants in many parts of the US, threatening to wreck President Donald Trump’s hopes of reviving the mining industry.

New estimates published on Thursday by Lazard, the investment bank, show that it can often be profitable for US generation companies to shut working coal plants and replace their output with wind and solar power.

The calculations suggest that closures of coal-fired plants are likely to continue, eroding US demand for coal and jeopardising Mr Trump’s ambition to “put our coal miners back to work”.

The falling cost of renewable energy is adding to the pressure from cheap gas and stagnant demand for electricity, which have cut US coal power output by more than 40 per cent since 2007.

Retirements of US coal-fired plants are expected to hit a record high this year, and companies including FirstEnergy and American Electric Power have in the past few months announced further closures. Many of the plants being shuttered are reaching the end of their working lives, but even some relatively new capacity is being shut because it is no longer economically viable.

The Trump administration has been looking at ideas for subsidising coal and nuclear plants, on the grounds that the increasing reliance of US grids on gas and renewable energy exposes them to risks of blackouts in extreme conditions such as a period of severe cold weather. A first attempt launched last year was rejected by federal regulators, however, and although Mr Trump has alluded to a new plan, the administration has not yet published any formal proposals.

“There is a lot of smoke and not much fire,” said Seth Feaster of the Institute for Energy Economics and Financial Analysis, a think-tank that supports renewables.

“Policy is not easy to turn on a dime, even if you want to.”

Utilities are making investment decisions that could last for decades, he added, and are unlikely to change course based on a policy that could be abandoned if Mr Trump fails to win re-election in two years’ time.

($) New wind and solar generation costs fall below existing coal plants

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