IEEFA has published its U.S. Power Sector Outlook 2021. Its authors, Dennis Wamsted, Seth Feaster and David Schlissel summarise and explain the projections. They say that coal and gas are set to become the biggest losers as renewable generation climbs quickly. The future for wind and solar – coupled with storage to address intermittency – is looking very good. They present estimates from NextEra (the largest renewable energy developer in the U.S.) that show wind and solar, even coupled with batteries, will be cost competitive with coal and gas by 2023-24. That’s without subsidies. Projected coal plant retirements mean its share of U.S. power generation could fall to 10% by 2025. Meanwhile, utility-scale wind and solar accounted for over 10% of total generation in 2020 for the first time. Interconnection queues (planned additions to the grid) are being dominated by wind and solar – in some regions it’s 80% – which points confidently to the continued rapid growth of these generation sources, say the authors.
The speed and scope of the energy transition to renewables will pick up pace over the next two to three years, according to the Institute for Energy Economics and Financial Analysis’ U.S. Power Sector Outlook 2021.
Solar and battery storage adoption is enjoying almost exponential growth, and wind and solar technology improvements have helped turn the two resources into the least-cost option across the United States.
Wind/Solar, even coupled with Batteries, is getting cost competitive
“Coal will be pushed out of the electricity sector completely, with gas set to decline as well,” said Dennis Wamsted, an IEEFA analyst and Outlook co-author. “Cleaner and lower-cost wind and solar, coupled with battery storage, will drive fossil fuels out of the market.”
Coal plant retirements
Even a short-term increase in coal generation caused by higher gas prices is likely to be just that—a short-term increase. IEEFA’s analysis expects that coal’s share of the U.S. generation sector still could fall to 10 percent by 2025.
The increase in renewables is happening largely at the expense of coal. Wind capacity has doubled since 2012, and solar capacity has doubled since 2016. Utility-scale wind and solar accounted for more than 10 percent of total U.S. electricity generation in 2020 for the first time.
“This is just the start of a transition that is rapidly accelerating, driven by sharp declines in cost, stricter environmental regulations for coal generation and mounting public concern about climate change,” said David Schlissel, IEEFA director of resource planning analysis and outlook co-author.
Texas: 10 year record of Renewables displacing Coal
The 2021 Power Outlook observed that changes in Texas may be most indicative of changes happening in the electric sector. At the end of 2011, the state’s installed wind capacity was 9,603 megawatts (MW), making up 8.5 percent of the region’s electricity demand. By the end of 2020, installed wind capacity had climbed to 25,121MW, reaching a 22.8 percent market share. Coal generation, which had accounted for 39 percent of electricity needs in 2011, fell to 17.9 percent in 2020.
“The Texas transition will not be replicated precisely in other areas of the country, but the broad themes are certainly going to hold true, particularly the surge in new wind and solar generation through 2024,” said Seth Feaster, an IEEFA energy data analyst and Outlook co-author.
Dennis Wamsted is an editor and analyst at IEEFA
Seth Feaster is a Data Analyst at IEEFA
David Schlissel is Director of Resource Planning Analysis at IEEFA
This article is published with permission