Since the advent of renewable energy, observers have kept a close watch on coal. Of course, replacing coal as the primary fuel source for generating electricity in the United States has always been one of the primary objectives of renewable power. However, the low cost of coal and its huge market share have seemed like insurmountable obstacles.
One way to measure the ascent of renewables has been the so-called “coal cost crossover.” Essentially, it’s the proverbial tipping point, at which the cost of renewables has reached parity with, and maybe even descended below, the low cost of coal. According to a recent study, renewables have finally reached that point.
“The Coal Cost Crossover: Economic Viability of Existing Coal Compared to New Local Wind and Solar Resources,” published on March 24 by Energy Innovation and Vibrant Clean Energy, asserts that America has officially entered the coal cost crossover. It argues that coal plants have become uncompetitive on a wide scale compared with renewable generation. Specifically, it states local wind and solar could now replace approximately 74 percent of the U.S. coal fleet at an immediate savings to customers.
In the future, that trend will only increase. According to the report, the number will grow to 86 percent of the coal fleet by the year 2025.
To reach their conclusions, the researches compiled a dataset of coal, wind and solar costs. Their modeling compared each coal plant’s marginal energy cost to the lowest levelized cost of energy for wind or solar resource localized around that coal plant. By comparing coal plants to renewable resources within 35 miles of each other, researchers were able to control for additional transmission costs in their equations.
According to the study’s results, the greatest concentration of coal facilities that are threatened by lower cost renewables is in the Southern region.
Of course, the study's authors did not overlook its policy implications, suggesting the need for more coal plant retirements. According to the authors "the cost crossover raises substantial questions for regulators and utilities as to why these coal plants should keep running instead of new renewable power plants.”