The WSJ writes, coal is the electricity sector’s largest source of emissions, Our Take, With Doug Sheridan
As of 2023, the US was expected to take offline 133 GW of coal power by 2035, or about 70% of current capacity. Today, the projection for retirement is 105 GW.
The WSJ writes, coal is the electricity sector’s largest source of emissions. As of 2023, the US was expected to take offline 133 GW of coal power by 2035, or about 70% of current capacity. Today, the projection for retirement is 105 GW.
So, what gives?
After 15 years of relatively flat power demand, projections of electricity use are surging. So companies are extending aging fossil-fuel plants to accommodate the expected hike in demand.
Energy companies have long been expecting a rise in demand from the electrification of the US economy, but they have been caught off guard by the demand surge from the sudden rise of AI, said Michelle Solomon, a senior policy analyst at Energy Innovation. “Utilities around the country are kind of going into panic mode,” she said.
The climbing demand is granting coal a temporary new lease on life. Patrick Finn, analyst at energy-consulting firm Wood Mackenzie, said data centers are putting added stress on the grid because demand is present 24 hours a day, which green energy alone can’t meet. “The existing fleet [of fossil-fuel generators] needs to stick around longer and run harder,” he said.
Since the beginning of 2022, 547 fossil-fuel-powered generators were scheduled to retire. Of those, 36% had their retirement dates pushed back. Many of the recent extensions have been driven by concerns about grid reliability. While most extended generators were natural-gas-powered, extended coal-powered generators accounted for more total capacity.
Analysts say there's a limit to extending coal and gas power. Companies are rearranging plans around rising power demand but “may not be taking into account real-world limitations,” said Solomon. Extending fossil fuel plants is expensive, which risks pushing additional costs onto customers.
Our Take 1: When renewables blend into grids with large amounts of incumbent fossil-fuel generation, all seems fine. With each passing year, however, a portion of the fossil-fuel capacity is ready to retire. So the market must bid up prices to cover the higher marginal costs of aging fossil-fuel units so they don't retire immediately. But eventually, the units do retire. That's when prices must rise to entice and cover the cost of *new-build* fossil-fuel capacity. That's when the jig will be up, the true cost of renewables exposed.
Out Take 2: It’s a risky (and untransparent to the public) approach that grid administrators are taking. Maybe they get away with it in the short run. In the long-tun, they won’t be able to hide the fact that substantially more capital must be employed to keep the system running reliably. The power (and maybe tax) bill increases the public will see as a result will be big. No getting around it.