In 2013, that figure more than doubled to 8.3 million MWh. And think about it ten years ago, the US generated only 6,000 MWh from photovoltaic solar cells. Solar power is gradually approaching price parity with other energy sources such as coal, with full-cycle unsubsidized costs of nearly 13 cents per kilowatt-hour versus 12 cents for most modern coal plants.
So, has the solar revolution finally arrived? Not really. Even after ten years of unbridled growth, solar power is barely making an impact on the US energy field. In truth, solar energy is only equal to the amount of electricity the nation produces by burning natural gas derived from landfills. And it’s just slightly more significant than the 7.3 million MWh we get from the combustion of human waste leaked from municipal sewer structures.
Ultimately, when all energy sources consumed in this nation are compared, the solar energy captured adds up to significantly less than 1 quadrillion Btu out of an annual total of 96.5 quadrillion.
The largest sources are traditional reserve resources. Oil is still above the rest with 36 quadrillion Btu, natural gas with 26 quads, and nuclear power with 8. Hydropower and biomass follow behind with 2.6 and 2.7 quads. The wind is only 1.5 quads. And coal – the great carbon-emitting monster of global energy sources – contributes 19 quads. That’s roughly 8 times all of the country’s wind and solar generation combined.
This is very important to remember in light of the EPA’s pending efforts to institute draconian new regulations governing carbon dioxide emissions from coal-burning power facilities. Coal emits about 1.7 billion metric tons of carbon dioxide annually out of the annual total of 5.3 billion tons.
The assumption, by policymakers like President Obama, is that the nation can reduce carbon emissions by shutting down coal plants, while making up for lost electricity by using more natural gas and building more solar and wind plants. In truth, natural gas has replaced much of the production of coal. In 2013, coal production from US mines fell to 995.8 million short tons. The last time it fell this low was in the late 1980s. Coal production peaked in 2008 at 1.17 billion short tons.
The president is instituting significant measures to control heat-trapping pollution from coal-fired power plants and to increase renewable energy production at state facilities, using his executive powers to solve climate change problems and prevent meltdowns. partisans in Congress.
The shortfall in demand has severely affected the largest coal miners in the United States. Over the last five years, shares of Peabody Energy BTU +1.5% are down 36%, Arch Coal is down 67% and Alpha Natural Resources ANR -1.67% is down 78%. By contrast, Solar City SCTY shares – 4.48%, up 400% in just 18 months.
However, coal is not dead. It’s certainly not close to that. “Even when the president is against coal, it’s like you’re against City Hall. But the truth will win,” says Andrew Redinger, managing director of KeyBanc Capital Markets, who has done investment banking work for coal and solar power developers. “I see coal coming back soon. The best thing for coal will be when we start exporting natural gas.”
This winter showed that “announcing the death of coal is premature,” says Bob Yu, an analyst at Bentek, a division of Platts. “The winter showed natural gas being used for heating. Coal use increased significantly this winter due to natural gas purchases by retail buyers.”
Consider what happened last winter during the chilling grip of the polar vortex. In January, natural gas shortages in the Northeast led to price spikes above $100 per mmBTU in some markets. Spot electricity prices in the Mid-Atlantic region peaked at $2,000 per megawatt hour for a short period. Natural gas saw so much demand for residential furnaces that power companies couldn’t even get what they needed for their power installations. Some had to resort to backup emergency generators that use much more expensive oil. So much for the so-called excess shale gas.
Natural gas prices have already tripled in two years. And the shift from coal to gas has already been reversed. From representing 40% of the national electricity mix in the first quarter of 2013, the share of coal grew to 41.4% in the first quarter of 2014. Natural gas fell from 25.6% of total energy production a one year to 23.8% in the first quarter of 2014.
This will buffer what has been a slow move away from coal. Utilities have been shutting down old coal-burning facilities ahead of stricter emissions regulations, with 4.7 gigawatts of coal-fired capacity shut down in 2013, up from 10.3 GW in 2012. An additional 60 GW of shutdowns will occur. for 2020. Analyst Yu says, “That may sound like a lot, but not relative to the entire energy mix.” The plants being shut down are many years old and are not yet equipped with the expensive “scrubbing” technology that can reduce harmful emissions by 90%, even when burning low-quality sulfur-containing coal.
In the large power plants of the Midwest, where coal still supplies more than 70% of the fuel, the costs of converting coal to power are so low that we will see a negligible shift to natural gas, especially as gas prices triple in two years. In fact, the issue is whether or not shale gas drillers will have the capacity to fill depleted gas storage before next winter. We should be fine. After all, predictions say that there are more than enough supplies of natural gas available as far as can be predicted. Once pipeline obstacles are removed, there should be enough gas for everyone wherever it is needed.
So what would it take for the United States to replace every coal-fired power installation (a total of 19 quads of power a year) with solar power and natural gas? Let’s consider it. Assuming a bonanza in natural gas turbine construction, coupled with an increase in gas-fired power plant operations at full capacity, we could significantly improve gas-fired power generation by 50% in five years, supplying about 13 quads. To offset the rest of coal’s share with solar power, we would need to increase the amount of electricity we get from solar power about six times to about 50,000 megawatt hours a year. Reaching that would mean a 20% compound annual growth in solar installations for a decade. Or almost 9% CAGR over 20 years.
This is feasible, in the short term. Electricity production from solar PV generation nearly tripled between 2009 and 2010. It more than doubled in 2011. And more than tripled in 2012. Achieving such a growth rate isn’t hard when you’re small; but the bigger the base, the more difficult it becomes. Wind power is a good example: it managed to rise 19% last year from a much larger base, to 168 million MWh. But remember: Both wind and solar power have to overcome the hurdle of geography: Developers build systems in the windiest and sunniest areas first. The worse the location, the more panels or windmills you will need to get the same amount of electricity. That’s why it’s less important how many megawatts of solar capacity you build and more important how much actual electricity those solar panels produce.
For all the talk of “grid parity,” the simple truth is that even combined with much more power generation from natural gas, renewable sources will take many decades to completely replace coal. And the irony will be that as demand for coal declines, it will become less and less expensive, making it even more attractive for coal-fired power installations that weather the coming storm. The direct cost of producing electricity from coal is 2.5 cents per kWh.
It is encouraging to see that even some prominent veteran environmentalists have proven to be realists when it comes to coal. Armond Cohen, executive director of the Clean Air Task Force, has focused for three decades on minimizing the environmental impact of the global energy system. However, in an article published late last year, he stated that “coal is not going away.”
Coal will be crucial for economic modernization in the developing world, where most of the energy supply will be installed in the next three decades. Coal will also play an important residual role in much of the OECD. The coal does not go away. We need to start using it without emitting significant amounts of carbon dioxide and quickly. If we don’t, the risk to the global climate is great and possibly irreversible. It’s that easy. People who think otherwise, and simply wait for coal to die, are not admitting the facts.
Let me be direct and clear: except for environmental challenges, this expansion of the coal-fired power boom is a desirable development; dependent energy is a correlate of economic growth and human development. But let me be equally clear: the carbon produced by this expansion is unacceptable and puts us on a terrible collision course with our global climate.
Coal has gotten enormously cleaner over the last generation. And new and better ways will be discovered to get power from coal without producing dangerous by-products and harming the environment. It is scalable and dependent in ways that renewable energy sources simply are not. So unless we’re willing to put up with blackouts that freeze grandma in the winter and melt her in the summer, coal will remain a reliable source of power generation in the United States for many years to come.