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IEEFA U.S.: EIA puts its stamp on the electricity-generation transition

January 14, 2020
Dennis Wamsted

The transition reshaping the U.S. electric sector is picking up speed: The federal Energy Information Administration (EIA) said Tuesday that by 2021 renewable energy generation in the U.S. will overtake coal—advancing at a rate that would have been almost unthinkable just 10 years ago.

Specifically, in 2021, the EIA projects that coal generation will total 815.5 billion kilowatt-hours (kWh). It sees utility-sector renewables producing 843.4 billion kWh. In a November commentary, IEEFA projected a similar crossover for 2021, estimating renewable output that year at 845 billion kWh and coal generation at 800 billion kWh.

These EIA 2021 projections would put renewables (which EIA defines as including wind, solar, hydro, geothermal and a small amount of biomass) at 21.6% of overall U.S. electricity generation, topping both coal (estimated at 20.8%) and nuclear (19.7%). Gas is expected to remain essentially flat at 37% of the overall generation market.

AS A REFRESHER, IN 2010 COAL ACCOUNTED FOR 46% OF THE U.S. ELECTRICITY GENERATION MARKET,
while renewables totaled just over 10%, and the bulk of that was hydropower. Solar generation in 2010, according to the EIA, amounted to just 1.29 billion kWh; by 2021, solar’s output is expected to top 122 billion kWh. Similarly, wind generation amounted to 94.6 billion kWh in 2010, a total that is expected to top 393 billion kWh in 2021.

Rooftop solar is missing from renewables calculations

It’s important to note that the numbers above are for utility-scale generation. There is also a significant amount of small-scale renewable production, particularly rooftop solar, that is not calculated in these figures because it is generally for onsite use. The EIA projects a significant increase in rooftop capacity by 2021, with an estimated addition of 11 gigawatts (GW), bringing the total amount of installed capacity to more than 32GW. All told, the agency expects these small-scale units to generate 52.3 billion kWh, up sharply from the estimated 2019 total of 35.2 billion kWh.

Interestingly, this national transition has been occurring a year or two more quickly than anticipated in Texas, a point we made in an April 2019 commentary about the first month in which renewables nationally outproduced coal. At that time, we noted that wind and solar in Texas had outproduced coal for the first quarter of the year, another first and as significant as the national milestone in April.

The quarterly result in Texas was no aberration. Data released last week by the Electric Reliability Council of Texas (ERCOT), the transmission operator running the system that supplies 90% of the state’s electric load, showed that for the entire year, wind and solar produced 81.1 million megawatt-hours (MWh) of electricity in Texas while coal generated 77.8 million MWh. On a percentage basis, wind and solar accounted for 21.1% of the market, while coal’s share fell to 20.3%.

The speed of change in Texas stands out

As with the national transition, the speed of change in Texas stands out. In 2014, coal still accounted for 36% of ERCOT’s electric generation, producing 122.5 million MWh; in contrast, wind accounted for less than 11% of the system’s generation, and solar wasn’t even being tracked separately. The transition began to speed up in 2016, when wind generation jumped to 15% of the market and solar generation was broken out as a separate resource, accounting for 0.2% of ERCOT’s supply.

WHILE MOMENTOUS, THE NATIONAL FIGURES PROJECTED BY THE EIA ARE ALSO LIKELY STILL TO BE CONSERVATIVE. The data agency’s January Short Term Energy Outlook (which includes its first projection of 2021 results) estimates that 18.5GW of coal-fired capacity will be closed through the end of 2020. IEEFA’s own analysis indicates that this total is likely to be significantly higher, probably more than 23GW—which will skew the generation numbers for coal downward at an even faster pace.

In addition, the continuation of low gas prices and high storage levels through the current winter heating season, a period when many utilities traditionally would ramp up their coal generation while dialing back gas-fired output, is also likely to depress the overall numbers for coal.

In short, the transition away from coal, rapid as it has been, is not going to slow down anytime soon. Rather, the numbers indicate it is most likely to speed up.

Dennis Wamsted is an IEEFA editor and analyst.

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Dennis Wamsted

At IEEFA, Dennis Wamsted focuses on the ongoing transition away from fossil fuels to green generation resources, focusing particularly on the electric power sector.

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