Energize Weekly, February 21, 2018
The restructuring of the U.S. electricity generation portfolio continued in 2017 with renewable sources coming close to nuclear, while reductions in natural gas and coal made the total kilowatt-hours consumed by Americans cleaner, according to Bloomberg New Energy Finance.
Renewable generation was up 14 percent to 717 terawatt-hours (TWhs) in 2017 compared to 2016. Renewables accounted for 18 percent of the total generation, more than double its share a decade ago. Nuclear power plants provided about 20 percent of the generation.
The assessment is part of the “Sustainable Energy in America Factbook 2018” prepared by Bloomberg for the Business Council for Sustainable Energy, a trade group.
“The massive and historic transformation of the U.S. energy sector clicked into a higher gear in 2017, despite some new headwinds including policy uncertainties. Renewable deployment grew at a near record pace,” the Factbook said.
Among the key factors in the renewable surge was 23 gigawatts (GW) of wind and solar projects, which were part of a 2016 building boom, coming online in 2017. There was a rush by developers to start projects when there was uncertainty about the extension of federal tax credits, which were ultimately renewed.
As a result, there was a 15 percent increase year-over-year in renewable generation to 413 TWhs, excluding hydro power, in 2017.
Another factor boosting renewable generation was the end of drought in the West that enabled reservoir levels to recover, which resulted in a 13 percent year-over-year increase in hydro power generation to 36 TWhs.
While 2016 was a record-setting year for new renewable installations with 22.7 GW, 2017 was close behind with 18.4 GW of additional new renewable generating capacity. Over the past 10 years, renewables accounted for 55 percent of all new generation.
To be sure, the largest share of electricity production in 2017—62 percent—continued to come from fossil-fuel plants.
Still, natural gas generation was down about 8.1 percent to 113 TWhs, and coal generation declined 3 percent for the year.
Coal is under pressure from cheaper natural gas, as well as the falling price of renewables.
“As gas becomes consistently cheaper than coal, it creates a strong impetus for coal-to-gas switching,” the Factbook said. “The U.S. observed this switching in 2012 and 2016. In 2017, gas again undercut coal in terms of marginal cost for power generation.”
Coal’s share of generation has dropped to 30 percent in 2017 from 48 percent in 2008, while natural gas’ share rose to 32 percent from 20 percent.
Natural gas will continue to be a core source of generation, the Factbook said. “Continued changes to the structural makeup of the U.S. fleet will likely cement its role here for some years: natural gas build boasted its best year since 2005, as new installations reached 10.7 GW in 2017,” the report said.
“Further, by end-2017, owners of coal plants—which directly compete with gas in many areas of the country—had announced 12.5 GW of planned retirements for 2018, foreshadowing the largest year for coal decommissioning since the 15 GW of retirements in 2015,” the report said.
All these forces added up to cleaner generation in 2017. U.S. greenhouse gas emissions fell to their lowest level since 1991, an estimated 6.4 gigatons carbon dioxide equivalent.
“The power sector continues to drive the economy’s decarbonization—emissions from this sector ebbed 4.2 percent in 2017, this time on the back of declining load and greater renewable generation (rather than coal-to-gas switching, a primary driver of 2016’s 5.8 percent downturn),” the report said.
Power sector emissions were 28 percent below their 2005 peak, putting the U.S. only 4 percentage points away from achieving the target of 32 percent below 2005 levels by 2030 set in the Obama administration’s Clean Power Plan. In December, the Trump administration put the rule on hold and said it was seeking to repeal it.
