Solar, wind, batteries threaten natural gas
King Coal is a dead man walking, battery storage is on the move, and natural gas’s future in the electricity business could be meteoric.
The latest data portends a radical revolution in how the U.S. generates power. In even the most optimistic case for fossil fuels, new technologies can and will slash demand.
Despite President Donald Trump’s promises to save the coal industry, the proportion of U.S. electricity generated from coal has fallen from 50 percent in 2000 to 25 percent this year. Next year, coal’s market share will drop to 22 percent, according to the U.S. Energy Department.
Five coal mining companies have filed for bankruptcy this year, and more will likely default on their bonds before year’s end, according to S&P Global, the credit rating agency. The latest victim is Murray Energy, the third-largest coal producer owned by Robert Murray, a close Trump ally.
Existing coal-fired power plants cannot compete with natural gas, primarily due to low-cost production from fracking. New coal-fired plants cannot compete with wind projects or solar facilities, which produce cheaper electricity in most places, even without federal tax credits.
In the Texas electricity market, managed by ERCOT, no new coal or nuclear plants are planned. Almost all new generation under construction is either wind or solar, according to data presented at the GTM Power and Renewable Conference in Austin recently.
Many of the new solar facilities will eventually include batteries capable of keeping the lights on for up to four hours, according to electric power developers at the conference. If successful, the batteries could reduce electricity prices and lead to dramatic drops in greenhouse gas emissions.
Electricity consumption patterns help explain how this might happen. Daily demand rises in the morning when people wake up and prepare for work, plateaus at a high level during the afternoon, and then drops again when people go to bed.
There are seasonal differences, too. Generators operate at maximum capacity for only a few hours a year in the summer and winter, which is when prices spike and they make money. Most of the time, the grid has far more capacity than it needs, and prices are low.
For the last 30 years, generators have met peak demand with expensive-to-operate natural gas plants capable of spinning up quickly and shutting down when no longer needed.
The challenge for renewables, in addition to intermittency, is
meeting demand in the morning and evening hours. Solar power is strongest during the day, and the wind is strongest at night, but they cannot be ordered to ramp up when needed. Fourhour batteries can cover the high-demand early-morning and after-sunset periods.
Texas developers plan to add at least 1 gigawatt of solar power — enough to power 300,000 homes — every year for the next five years, adding as much as 10 gigawatts of new generation by 2024. Many of these facilities will make room for energy storage since co-location allows the batteries to claim the investment tax credit.
“As we get to 2024, the majority
of these systems will be solar-paired,” said Daniel FinnFoley, head of energy storage for Wood Mackenzie, the data analysis firm behind the conference.
New battery technologies are also expected to hit the market over the next five years and bring storage costs down even further, analysts predict. Energy storage will eventually compete with natural gas plants to supply peak power when renewables cannot meet demand.
For now, natural gas plants have an advantage because they can run as long as they have fuel, unlike the most affordable batteries, which are only good for four hours. Natural gas,
though, is a greenhouse gas that releases carbon dioxide when burned, and many states and politicians want to cut carbon emissions from electricity generation to zero by 2040.
Consumers will have a big say in whether energy storage or natural gas wins this competition. To meet the 2040 deadline, the U.S. will need 1,600 gigawatts of new wind and solar projects, 900 gigawatts of battery storage, and double the amount of high-voltage transmission lines to deliver wind and solar energy, said Dan Shreve, head of global wind research at Wood Mackenzie.
Shreve estimates reaching zero emissions by 2040 will cost
$4.5 trillion, or about $225 billion a year. American consumers and taxpayers will have to decide whether they are willing to pay that much to fight climate change, or be content to let their grandchildren suffer the consequences.
Which path they choose will decide how long natural gas will be the bridge fuel to a clean energy future, or how quickly the U.S. adopts battery storage and put natural gas plants out of business.