Renewables are cheaper than coal in all but one US location
Thanks in large part to the Inflation Reduction Act, the dirty fuel has even fewer things going for it now
If it wasn't clear before that the coal age is over, there is now just a single, solitary coal-fired power plant in the US that would be more economical to not replace with renewables, say analysts.
In its third Coal Crossover Report, researchers at Energy Innovation and UC Berkeley said there were 210 coal plants in the US, and except the Dry Fork facility in Wyoming, all of them would cost more to continue operating than if they were shut down today and replaced with new wind or solar power plants – and not by just a little bit either.
In large part thanks to renewable energy credits included in the Inflation Reduction Act (IRA), the study said that solar economics in coal communities have been reshaped. "The median cost of new solar in these communities is about $24/MWh with low variance, while the median marginal cost of coal is $36/MWh," the study said. That latter figure is "high variance" too, meaning it could fluctuate down, or up, but a lot.
Keep in mind also that the study said "new" solar – so that includes the cost to turn decommissioned coal plants into renewable energy facilities and taking advantage of existing grid connections to speed projects along.
If coal generation was replaced with local solar at those costs, communities could see up to $589 billion in clean energy investments on top of reduced costs for operation. That, in turn, can help eliminate energy stability concerns, the study said.
"Replacing coal generation with local renewable resources could save enough to finance installation of 137 GW of four-hour battery storage — 62 percent of the coal fleet's nameplate capacity," the researchers wrote in the study.
"Coal is unequivocally more expensive than wind and solar resources, it's just no longer cost competitive with renewables. This report certainly challenges the narrative that coal is here to stay," Michelle Solomon, a policy analyst at Energy Innovation, told The Guardian.
The use of coal peaked in 2007, and since then has been on a sharp decline as use of renewables and alternative fossil fuels like natural gas have risen.
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Since then (with a few exceptions) coal use has continued to shrink to the point where, in early 2020, the amount of US electricity generated by renewables surpassed coal. That same year, coal production in the US fell to its lowest level since 1965.
Last year, the International Energy Agency revised its predictions for the growth of the renewable energy sector upward by 30 percent and said it believed wind and solar would overtake coal as the world's dominant energy source by 2025. Last year was also the first time wind and solar fulfilled 10 percent of the world's electricity demand, so those predictions aren't for nothing.
In its first Coal Crossover Report, issued in 2019, Energy Innovation said it found 62 percent of existing coal capacity was uneconomic. The second study, in 2021, found that 72 percent of coal capacity was in the same position, and that 80 percent of existing plants were already more expensive to operate due to existing tax credits.
The jump to "everyone but Dry Fork is wasting money" in one year was surprising, Solomon said, noting: "It shows that not only have renewables dropped in cost, the Inflation Reduction Act is accelerating this trend."
Of course, a sudden one-to-one replacement of coal with renewable energy isn't going to actually happen, and the study admits that readily. "While the economic case is clear and virtually universal, barriers remain to replacing coal with clean energy, and policymakers must act," the study concludes.
To speed things along, the researchers say regulators should work to improve electrical grids to prepare for renewables, take full advantage of available IRA funds, and that coal communities should use clean energy development as an anchor for larger economic transitions. ®