Coals’ Pain No Longer Gas’ Gain

Original article - https://btuanalytics.com/coals-pain-no-longer-gas-gain/

Coal company bankruptcies have been a recurring theme in 2019. This was reinforced this week by the chapter 11 filing of Murray Energy, which is the US’s largest private coal mining company.  Over the last decade, low-cost shale gas in combination with environmental pressure targeting coal emissions has had a massive impact on US thermal coal demand.  During this time, natural gas power generation has consistently taken market share from coal-fired generation.  However, the major impact of low-cost natural gas on coal generation is likely largely over.  This Energy Market Commentary will look at the conditions that have lead to coal bankruptcies and look to the future as coal and gas now face a new formidable opponent in the form of wind and solar generation.

**BTU Analytics is releasing new analytic coverage with the forthcoming Gas-Renewables Outlook – to be put on an early release list of the report, email contact information to info@btuanalytics.comwith GRO in the subject line.**

As shown above, since 2002 there have been 89 GW of coal retirements with over 77 GW of retirements happening since 2012.  Although shale gas volumes began growing significantly in 2008, by 2012 the economics of multiple years of low-cost shale gas began to take a toll on coal-fired generation and resulted in coal retirements.  The Clean Power Plan starting in 2015 provided further tailwind to retirements.  Looking forward, there are another 25 GW of announced coal retirements through 2030.

Looking at electric capacity and generation by fuel type, as shown above, we can see generally gas and wind & solar capacity and generation are increasing while coal has been decreasing.  Coal generation is down 42% since 2008, while gas is up 67% and wind & solar are up 500%.  It is interesting to note that as a pair, coal and gas generation are down 9% since 2008. This highlights the key role that increasing wind & solar are playing in the generation markets.

For many years, coal-to-gas switching was a lever that balanced the gas and coal markets based on respective commodity price levels.  In periods of elevated gas prices and low coal prices, coal generation would climb, reducing gas-fired generation and vice versa.  This fuel switching used to account for (as measured at the $2.00-$2.50 per Bcfe/d level) 13.2 Bcf/d in 2015 of incremental gas demand that could come in or out of the market based on price.  However, as more coal retirements have occurred, in 2019 this number has declined to 6.4 Bcfe/d.  None of this is good news for coal producers.

Looking forward at what generation is under development at the seven ISOs, as shown above, solar and wind hold the top spots.  Solar and wind account for 329 GW of generation that are in the queues, considering all stages of development.  When looking at the advanced stage development, as measured by projects close to or having received their interconnection agreements, solar and wind represent 123 GW of development.  The next largest tranches of development by fuel type are natural gas plants (mostly in PJM) at 25 GW followed by battery storage at 14 GW (mostly in CA ISO).  Gas is no longer coals’ number one foe, as both coal and gas now face a competitive future with wind, solar and batteries.  BTU Analytics is releasing new analytic coverage with the forthcoming Gas-Renewables Outlook – to be put on an early release list of the report, email contact information to info@btuanalytics.comwith GRO in the subject line.

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Permalink Reply by farmgas on November 14, 2019 at 9:45am

As wind & solar energy develops, how will landowners participate?   Is this primarily going to be commercial solar fields or will landowners lease their property for solar panels like they do for windmills?   It would seem solar panel fields like windmills require constant maintenance.

28clr6acuhbmvPermalink Reply by 28clr6acuhbmv on November 14, 2019 at 1:00pm

On the bright side for Coal workers, Steel cannot be made without coal.

On the dark side, the Kenyan and his friend Hillary wanted to kill coal so that US Steel could not be produced. Saving the environment is a NWO fraud to control all World Citizens. As most of You may know, the Japanese and Chinese steel used to replace US steel contained flaws to weaken equipment including Military Equipment that we were making.

A Japanese ceo admitted that his steel had known flaws and was being sent to the US on purpose. Gina would never admit what they were doing.

The 16 Year Plan to destroy America was 50% complete when we elected Our President Trump instead of the certified witch.

Conspiracy Fact that will be revealed with the coming Truth. 

I don't read posts from those who are abusive, because I see their names and avoid reading what they write. For those who can't control their anger, consider not reading posts that have an eye with the Punisher reflected in it, then you can go on about your normal routine without an upset.

The Truth will come to You in one impossible to digest brick of knowledge. Live and Learn.

Permalink Reply by Joe Bezel on November 14, 2019 at 5:47pm

It's hard to see how solar or wind power grows out of being a niche industry anytime soon.  They require too much in the way of government subsidies and real estate.  Large-scale battery storage technology just isn't there yet.  A wind farm is about as pleasant to live next to as a strip mine.  Besides, you still have to have standby generating power available for when it is dark and calm.  Nobody is building new coal plants in the U.S. and nuclear is overregulated; gas is my bet for the foreseeable future.

Permalink Reply by Carl W. Bird on November 19, 2019 at 8:43am

The biggest pain we've all got is that Michael Bloomberg (Little Michael as the President calls him) has put together a non-profit corporation called Beyond Carbon, which is solely dedicated to putting down all fossil fuel generation by 2030, primarily by using a grass-roots approach to get policies in place everywhere that make operation of fossil fuel plants impossible. His is putting $500,000,000 of his own money in this project. By the way, all he says about replacement of this generating capacity is that it will be "clean energy". He has no specific plans.

In short, Bloomberg is no engineer, and has no understanding of electrical power. The idea of having a large percent of our electric power from solar and wind is bankrupt. Neither solar no wind are controllable, unlike coal, gas, oil, nuclear, or hydro power. These controllable sources are used to make up for the fall in power that is inherent with both wind and solar. But if Little Michael's plan is put in effect, there will be no more controllable power in the US. The net effect of this is that the coincidence of multiple power plants having reduced power is that there will be the cascade effect of power plants tripping offline and further loading the plants that are online. Major blackouts would certainly become common. Utility operators worked on the problems of system stability for a very long time and the mix of power plants that exists today with the excellent dispatching by grid operators has dramatically reduced the frequency of power outages in this country.

Little Michael's ideas, if implemented, will take us back to the Dark Ages. Really Dark.

He has filed as a presidential candidate in the Democrat primary in Arkansas this past week. It would be a great tragedy for this country if he was elected President, even if his only bad idea was Beyond Carbon. To paraphrase the opening line from The Shadow, an old time radio show, "What evil yet lurks in the heart of Little Michael?"

And don't forget, the other Democrat candidates for President have similarly bad ideas or worse (AOC, for example). None of the other candidates have billions to fund their evilness. But they can get it. George Soros, another billioinaire, has been and most assuredly will be willing to fund all sorts of Democrat foolishness.

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