June 19, 2020 Read More →

Moody’s: U.S. coal consumption to drop below 500 million tons in 2020, outlook remains bleak

Platts:

Renewable facilities are expected to generate more power in the U.S. than coal-fired stations in 2020, a first for the course of a full year, driven by a decline in demand for coal units’ services due to the coronavirus pandemic, Moody’s Investor Services said June 18.

While US power generation was down 5.4% year on year through mid-May, “this has not affected all fuels equally, with gas and renewables increasing their share, nuclear holding steady and coal’s share shrinking to 17.5% as of May 15, 2020 from 24.8% in the same period of 2019,” Moody’s said in the report.

“Moody’s forecast last year was for coal to fall below a 20% generation share in 2023, so the current situation brings forward that level by several years,” the report said.

With the decrease in coal-fired generation, thermal coal markets will feel the “knock-on effects,” Moody’s said, of an industry “which is already struggling against the headwinds of a shrinking market.” The drop in coal-fired generation is expected to lead to a decline of 100 million mt in US thermal coal consumption in 2020 for a second consecutive year, putting total US use below 500 million mt.

Additionally, “the decline in power demand could hasten the decline of coal generation by further weakening the economic viability of already-challenged coal plants and prompting permanent switching” to gas-fired output, Moody’s said.

“As a result, even if demand returns, the power market may choose alternative power sources as coal plant closures accelerate and more renewable generating capacity is brought on stream to displace it,” it added.

[Olivia Kalb]

More: Renewables to overtake coal-fired generation for first time in US in 2020: Moody’s

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