trending Market Intelligence /marketintelligence/en/news-insights/trending/J2MAUv91RFVudD2O0z7U_w2 content esgSubNav
In This List

Report: Energy transition may zero out coal generation in Southeast states

Podcast

Next in Tech | Episode 49: Carbon reduction in cloud

Blog

Using ESG Analysis to Support a Sustainable Future

Research

US utility commissioners: Who they are and how they impact regulation

Blog

Q&A: Datacenters: Energy Hogs or Sustainability Helpers?


Report: Energy transition may zero out coal generation in Southeast states

SNL Image

Coal-fired Plant Scherer in Juliette, Ga., is one of the state's few remaining coal plants.
Source: AP Photo

Abundant and cheap natural gas coupled with significant growth in solar will likely lead to "zeroing out" coal-fired generation in states across the Southeast U.S., the Institute for Energy Economics and Financial Analysis, or IEEFA, said in a recent report.

"The future for coal in the region is one of continuing decline, if not complete obsolescence," IEEFA wrote in its Oct. 1 report, "Coal-Fired Power Generation in Freefall Across Southeast U.S."

"A time will come soon — certainly within the next decade — when coal power will disappear entirely from some of these states," Dennis Wamsted, an IEEFA analyst and lead author of the report, said in a news release.

IEEFA wrote that the drop in coal generation in the region over the past decade is outpacing the national decline. This is also occurring despite the fact that the Southeast is home to Duke Energy Corp., Southern Co. and Tennessee Valley Authority, "three of the traditionally most coal-reliant utilities in the country."

The global research firm highlighted a steep drop in coal generation from 2008 to 2018 in Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee and Virginia.

IEEFA noted that in 2008, these states generated 52% of their electricity from coal and 17% from natural gas. By 2018, coal accounted for 22% of the region's electricity as the national average fell to 28% from 48% in 2018. Meanwhile, natural gas's share of the generation in the region increased substantially to 44% in 2018.

"This is just the opening act in what is essentially a two-stage transition that will further erode coal's generation market share in the region over the next five years and beyond — a trend that in several of the states affected could lead to the zeroing out of coal generation," IEEFA wrote. "The second act will be driven by solar, which, while still a modest contributor to regional electric output, is poised to grow substantially through the 2020s."

Emissions reduction

The change in the generation mix also comes as utilities in the Southeast and throughout the nation adopt ambitious carbon reduction targets as customers and shareholders demand cleaner energy.

Duke Energy on Sept. 17 announced it aims to achieve net-zero carbon emissions by 2050 and to reduce emissions by 50% compared to 2005 baseline levels in 2030. To reach this goal, Duke Energy said it will at least double its renewable energy portfolio by 2025 and consider additional coal retirements.

The IEEFA report pointed out that coal generation "has fallen below 15% of total generation" in Florida, Mississippi and Virginia and represents "less than 30% of annual generation" in five other states. While 75% of Kentucky's generation in 2018 came from coal, the institute noted that this is a 36% drop over the past decade.

There are now 14 coal plants in the state, but some are out of service while others will stop burning coal and are set for retirement.

In Georgia, where coal accounted for 63% of the state's total generation in 2008, only three coal plants are still in operation.

Southern subsidiary Georgia Power Co. in July received regulatory approval to shut down the 840-MW Hammond and 142.5-MW McIntosh coal plants.

Southern Chairman, President and CEO Thomas Fanning said in April 2018 that the company's entire generation fleet should be low to no carbon by 2050.

Carbon-free Virginia

There are only five coal units operating in Virginia, where coal generation made up about 44% of the statewide total in 2008, IEEFA reports.

Coal's share fell to about 10% in 2018, while "gas surged" to approximately 53% of the state's total generation.

Virginia utility Dominion Energy Inc. is targeting a 55% reduction in carbon emissions by 2030 while shutting down fossil fuel units and ramping up renewable investments.

Dominion also has brought online three large combined-cycle natural gas plants over the past five years.

"The force that is likely to drive the remaining coal plants in Virginia into retirement is the rapidly growing corporate preference for renewable energy," IEEFA wrote.

Virginia also is among the states to set a target that calls for generating all of its electricity from carbon-free resources by 2050 driven by solar and offshore wind investments.

Days later, Dominion announced plans to build a 2,640-MW offshore wind project off the coast of Virginia Beach, Va.

"Taken together, these renewable investments are bad news for the state's remaining coal plants," IEEFA wrote.