Will 2018 Be The Year Of Solar Or Coal?
Since taking office, President Trump has gone out of his way to help the coal industry. He’s reversed ground on the Clean Power Plan and other Obama-era air pollution regulations; he’s removed regulatory barriers on mining operations; and he’s even made it easier to mine coal on federal lands.
Yet even with all of these actions, the coal industry is still relatively stagnant and coal-fired power plants are retiring at a breakneck speed. The market has been keeping coal from truly making a resurgence. Coal’s losing market share in the power industry, notwithstanding these eased regulatory burdens, because natural gas prices have stayed low and utility-scale solar costs have declined to the point where solar is, in many places, the cheapest way for a utility to add new capacity.
This latter development has been a game changer. What seemed impossible just five years ago is starting to happen now with some regularity: utilities are retiring their coal plants and announcing plans to replace them with large solar arrays.
In most parts of the country, solar still isn’t even close to being the cheapest way to provide energy to homes and businesses. That honor goes to wind turbines and large combined-cycle natural gas power plants. These are the cheapest sources of energy right now, and that isn’t likely to change in 2018.
But utilities in certain areas of the country don’t just have to provide energy; they’re also required to ensure that there is enough power plant capacity on the grid at times of peak usage. This is where solar becomes economic. When energy demand is high, typically during the afternoon hours of a hot summer day, solar is at its best. This makes it a valuable asset to utilities for capacity purposes.
And as coal plants retire, utilities need to replace that lost capacity. Coal plants are usually large in size but, at least for the last few years, they haven’t been operating much because wind and natural gas plants have been cheaper to dispatch. So when a large coal plant retires, replacing the lost energy is often not as significant a concern as replacing the lost capacity. In other words, older coal plants are running less than they were five or ten years ago, but we still need them (or something else) to keep the lights on when demand is at its highest.
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