The tipping point in the U.S. for renewables vs. fossil fuels is happening much faster than I anticipated. The Guardian reports:
Coal in the US is now being economically outmatched by renewables to such an extent that it’s more expensive for 99% of the country’s coal-fired power plants to keep running than it is to build an entirely new solar or wind energy operation nearby, a new analysis has found.
The new analysis, conducted in the wake of the $370bn in tax credits and other support for clean energy passed by Democrats in last summers’ Inflation Reduction Act, compared the fuel, running and maintenance cost of America’s coal fleet with the building of new solar or wind from scratch in the same utility region.
On average, the marginal cost for the coal plants is $36 each megawatt hour, while new solar is about $24 each megawatt hour, or about a quarter cheaper. Only one coal plant – Dry Fork in Wyoming – is cost competitive with the new renewables. “It was a bit surprising to find this,” said Solomon. “It shows that not only have renewables dropped in cost, the Inflation Reduction Act is accelerating this trend.”
To be clear - coal isn't going anywhere soon - but, looking strictly at the economics of operating costs, as renewables continue to widen the gap in per mWh production costs, market forces will drive the shift away from dirty production to clean energy sources. After all, it's hard to argue to shareholders that $12+ per mWh in lost profits is a sound business strategy. Pure greed - with a generous assist from The Invisble Hand - will ultimately drive energy producers to diversify their energy production portfolios or risk shareholder revolt.
