As “Cheap” Coal Dies, Electricity Costs Flat or Down..

May 15, 2015

coalCoal companies continue to bite the dust. Yet, while “cheap” coal is crashing, electric bills are level or falling…

Washington Post:

Coal companies are fighting through the sector’s worst downturn in decades. The thermal coal used by power plants is facing pressure from low-cost natural gas and tougher emissions standards. The metallurgical coal used in steelmaking is at a seven-year low amid slowing Chinese demand.

“The space has been broadsided here for a number of years, especially in the east,” said Lucas Pipes, a New York-based analyst for Brean Capital LLC. “A company like Patriot really gets the full shock of the structural changes” as well as the weaker export opportunities, he said.

Among the coal-related energy producers to file for protection since 2012 are Longview Power LLC, Dynegy Inc. and Edison Mission Energy. They and other filings — including those of James River Coal Co., America West Resources Inc., Trinity Coal Corp., Americas Energy Co., Clearwater Resources LP and Consolidated Energy — point to the deteriorating market for U.S. coal.

Daily Finance:

Coal is dying as a source of energy in the U.S. as increased regulation and competing energy sources push it out of the market. The headlines might make you think that coal’s decline will lead to higher energy bills or less energy security, but that’s simply not the case.

As coal plants and coal mines are shut down around the country, the cost of electricity hasn’t been as impacted as you might think. In fact, energy costs are now growing more slowly than they were when coal was the leading source of energy in the U.S. To understand why, you have to look at how quickly competing sources of energy are lowering their own costs.

There’s a lot of debate about what’s actually driving the decline of coal in the electricity industry, but there’s no denying that coal’s best days are in the past. Over 150 coal power plants have been closed this century, and the trend shows no sign of slowing.

According to the U.S. Energy Information Administration, the use of coal in electricity generation is down more than 20 percent just since the beginning of 2008.

That’s partly due to the falling cost of natural gas and partly because wind and solar energy are now lower-cost than coal or natural gas. Investment bank Lazard issues ban annual report called Lazard’s Levelized Cost of Energy Analysis that analyzes the cost to build new power plants, and coal at 6.6-15.1 cents per kWh is now more expensive than wind at 1.4-6.7 cents per kWh and even utility solar at 5.6-8.6 cents per kWh.

Regulations that make pollution from coal more expensive might be putting coal at a disadvantage, but alternatives to coal are winning on more than the pollution front. According to Lazard, wind and solar are actually lower-cost than coal was in 2009 (5.7 to 14.4 cents per kWh), before many current EPA regulations were put in place. So, cost is driving the drop in coal and growth in wind and solar energy.Between 2009 and 2014, wind and solar cut their own levelized costs of energy 52 and 55 percent, respectively, according to Lazard’s analysis, and in 2014, 55 percent of new power generation in the U.S. was wind or solar. If the cost trend continues, even at a slower rate, electricity prices could begin to fall as more renewable generation is built.

What is surprising is that the rate at which electricity prices have increased has actually slowed at the same time as coal plants are being shut down. Between 2001 and 2008, when coal usage was still growing, the price of electricity increased 4.2 percent a year in the U.S. In the six years since, electricity prices have increased just 1.2 percent a year.

 New York Times:

For the solar and wind industries in the United States, it has been a long-held dream: to produce energy at a cost equal to conventional sources like coal and natural gas.

That day appears to be dawning.

The cost of providing electricity from wind and solar power plants has plummeted over the last five years, so much so that in some markets renewable generation is now cheaper than coal or natural gas.

Utility executives say the trend has accelerated this year, with several companies signing contracts, known as power purchase agreements, for solar or wind at prices below that of natural gas, especially in the Great Plains and Southwest, where wind and sunlight are abundant.

Those prices were made possible by generous subsidies that could soon diminish or expire, but recent analyses show that even without those subsidies, alternative energies can often compete with traditional sources.


One Response to “As “Cheap” Coal Dies, Electricity Costs Flat or Down..”

  1. John Says:

    Reblogged this on jpratt27.

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