Renewable Energy Sources Replace Coal Ahead of Predictions
Over the past two centuries, Americans have been through many energy transitions. And we’re in another one right now.
Up until 300 years ago, waterwheels and windmills powered what little industry there was. In 1712, English inventor Thomas Newcomen created the first steam engine. It was used to pump water out of a tin mine in England.
From there, about 2,200 steam engines were produced in the 18th century.
During most of the 19th century, Americans burned whale oil for light. And they primarily burned wood to heat their homes and cook.
Industries used wood to fire steam boilers. Those boilers powered steam engines that ran machinery.
By 1900, coal was providing 70% of energy in the U.S.
And by 1960, 70% of our energy was coming from oil and natural gas.
New energy technologies drove these changes. And now we are in the midst of another transition. We are moving from fossil fuels to clean, renewable energy.
And coal is the biggest loser.
Out With the Old
2020 is going to be a record year for renewable energy. Both solar and wind are being installed at record rates.
And now we are reaping the rewards. As of this past week, renewable energy hit some exciting and important milestones.
For the rest of this year, we’ll see renewable energy continue to make strides against coal.
Part of the energy demand that the coronavirus has destroyed won’t ever return. Under the new normal, many Americans will work from home. That will reduce commercial energy demand.
By the end of 2025, they expect to close another 26,947 MW. Most are speeding up retirement plans because of pressure from customers and shareholders.
A Coronavirus Kicker
Americans have been sheltering at home during the COVID-19 pandemic. As a result, electric demand has been in a slump.
According to the International Energy Agency, global energy demand will decline by 6% in 2020.
That doesn’t sound like much, but in absolute terms, it’s the largest drop ever seen. Percentagewise, we haven’t seen a drop like this in 70 years.
Oil, natural gas and coal have all seen a plunge in demand. In the power sector, coal generation is getting hit the hardest.
It’s the first power source cut by utilities when demand drops off.
Last December, Morgan Stanley analyzed America’s remaining coal-fired generators. It found that anywhere from 70,000 MW to 190,000 MW of coal-fired plants were “economically at risk.”
Coal plants are expensive to operate, but renewables are cheap to install and run. And at least 30 states have clean energy mandates in place.
Coal plants are dirty to operate and produce more greenhouse gases than any other form of power generation. “Clean coal” isn’t any closer to reality than it was when it was first touted almost a decade ago by Mitt Romney.
And utilities are finally getting the message with regard to climate change. Pressure from large institutional shareholders is starting to make a difference. It is forcing utilities to put climate change front and center in their long-term planning models.
As a result, U.S. coal consumption is expected to drop another 5% this year, according to U.S. research firm Wood Mackenzie.
We’re in the midst of a massive energy transition. Make sure your portfolio is positioned to capitalize on it.