Nearly three-quarters of existing U.S. coal plants are more expensive to run than building new solar and wind generation, according to a report from Energy Innovation, an organization with a mission to accelerate progress in clean energy.
Local wind and solar could take the place of 211 GW, or 74%, of existing coal-fired generation with immediate savings to customers, concluded the report, released March 25. That figure climbs to 246 GW, or 86%, by 2025 as the coal fleet continues to age and renewable energy undercuts the fuel on costs.
"Coal's remaining rationale was that it was cheap if externalities weren't included, but even that rationale is vanishing," the report said.
Renewable energy generation doubled between 2008 and 2018, the U.S. Energy Information Administration recently noted. Nearly 90% of the increase in U.S. renewable electricity generation has come from wind and solar. Meanwhile, U.S. coal-fired power plants have continued to retire as utilities avoid building any new coal-fired capacity.
The group's research identified 94 GW of existing U.S. coal capacity deemed "substantially" at risk in places where new local wind and solar generation would cut costs by at least 25% compared to existing coal generation. Almost half of the fleet becomes "substantially" at risk from new wind and solar by 2025 even as federal renewable energy tax credits phase out, according to the model.
Coal plant owners across the U.S. have been announcing plans to retire significant coal capacity.
"We began repositioning our Indiana electric business with the submission of a long-term plan to transition our generating fleet away from coal to lower-cost renewable energy resources beginning in 2023 and becoming coal-free by 2028, saving customers an estimated $4 billion over the long term," NiSource Inc. President and CEO Joseph Hamrock said on a Feb. 20 earnings call.
Energy Innovation partnered with Vibrant Clean Energy to compile data on coal, wind and solar costs from federal energy data and public financial filings. The model compares individual coal plants' marginal cost of energy to the lowest levelized cost of energy for a wind or solar resource localized around that plant. Because it limits replacement to only local resources, the analysis is conservative, the report's authors said.
Eric Gimon, a senior fellow with Energy Innovation, likened the concept of retiring existing uneconomic coal plants to buying a new car. While there is a capital cost involved with new construction, the price of lower fuel economy, repairs and other costs of an older piece of machinery can quickly mount to a higher cost than the initial capital costs of something equipped with newer and more efficient technology.
"Even though I have an older car and it works, I don't really need it anymore," Gimon said. "I'd rather buy a new car."
The analysis does not account for the idea of lost capital owed to those who invested in coal-fired power plants or the costs of shutting down those plants, but other reports from Energy Innovation have laid out policies and tools for shutting down uneconomic coal plants in a way that is more financially palatable to ratepayers and power generators. The authors also acknowledged that the report does not include an analysis of grid impacts and alternative sources of reliability services that would be necessary to shut the plants down in practice.
"We hope that by looking at the local resources available, other stakeholders can start thinking about ways of creating transition plans for the whole community at the same time that they're considering these options," said Mike O'Boyle, director of electricity policy for Energy Innovation.
It could take several years to go through the regulatory process needed to analyze and retire these plants, he added.
"Other resources will be required to complement wind and solar and provide essential reliability services, but the increasingly attractive relative value proposition for the raw energy available from wind and solar versus more expensive coal generation can generate more and more money to directly address grid challenges," the report concluded.
Coal supporters, including the Trump administration, say coal and nuclear power are essential to a functioning electric grid.
"As grid operators wrestle with how to increase resilience and ensure continued reliability, the future balance between the legacy baseload and newer generators like natural gas and renewables will be struck, and this balance may differ regionally," the White House said in a March 19 report suggesting preferential treatment for coal and nuclear power plants in a possible electricity generation reserve.