2015 could be a “watershed year” for the US power sector according to a new white paper published by Bloomberg New Energy Finance, with records viable in annual renewable build, coal retirements, and gas burn. More importantly, Bloomberg suggest that “electricity-related emissions could fall to their lowest levels since 1994.”
The white paper, published Thursday and which synthesizes previous research published by Bloomberg New Energy Finance (BNEF), highlights three factors that are combining to make 2015 a year “for the record books.”
“More interesting than the single-year drop in emissions are the ‘structural’ impacts that will live on for decades,” says William Nelson, Head of North American Analysis. “Emissions can rise or fall year-to-year based on weather anomalies and volatile fuel prices – but in 2015, we’ll take a giant, permanent step towards de-carbonizing our entire fleet of power plants.”
According to BNEF, the United States is set to install more renewables than ever before in 2015, with 18 GW of new renewable energy projects being brought online. New solar installations alone are set to reach an all-time high of 9.1 GW in 2015, thanks primarily to California, which will install approximately half of that figure. Wind energy will reach 8.9 GW in 2015, with a third being located in Texas.
“Both technologies are in the midst of a temporary build rush, as developers racer to capture important federal tax incentives that are set to step down or expire by 2017,” the authors of the white paper write.
Several factors are behind the second factor BNEF highlight in their white paper, the predicted record year for coal retirements in 2015, with 23 GW worth of coal-fired plants being shut down, representing 7% of the country’s current coal capacity. BNEF highlight three separate catalysts for the record retirement figures, including:
- Old age: numerous units are today approaching 50+ years of operation.
- Cheap gas: sub-$4/MMBtu Henry Hub gas will hit coal units twice — first, by reducing wholesale power prices; and second, by bringing combine-cycle gas turbines (CCGTs) into the base-load power mix, encroaching on sales of coal-fired electricity.
- Environmental regulations: standards laid out by the US Environmental Protection Agency (EPA) will force generators to decide whether to invest in expensive environmental controls.
Finally, the US power sector is set to burn more natural gas in 2015 than ever before, as the industry sets to fill the space left by coal retirement, as well as the fact that “remarkably low gas prices have boosted burn totals by allowing efficient gas turbines to undercut the cost of coal-fired electricity.”
All these factors, therefore, will have a direct impact on America’s CO2 emissions, which are expected to fall to their lowest levels since 1994. Emissions will drop 15.4% below 2005 levels, going a long way to helping the US meet their pledge of cutting CO2 emissions by 28% by 2025. And while this 28% is inclusive of power, transport, agricultural, industrial, and residential sectors, the impact a 15.4% drop in power sector emissions will have on the country as a whole are huge.