Annual records for renewable build, coal retirements and gas burn all expected to be broken in 2015
New York, 9 April 2015 – This should prove to be a watershed year for the “de-carbonization” of the US power sector, with record volumes of coal-fired capacity to be shuttered, renewables capacity to be built, and natural gas to be consumed. The result, according to research firm Bloomberg New Energy Finance (BNEF): CO2 emissions from the power sector should drop to their lowest level since 1994.
Three factors will combine to make 2015 one for the record books according to new BNEF research and forecasts:
• This year, the US will install more renewables than ever before, with 18 new gigawatts (GW) coming online. BNEF forecasts new solar installations to reach an all-time annual high of 9.1GW in 2015 – with half of that built in California. Wind build should total 8.9GW (third-most all-time) with a third of that coming in Texas.
• This is expected to be a record year for coal retirements in the US with 23GW forecast to come offline. That represents no less than 7% of all current US coal capacity. A confluence of factors is driving the change, including lower priced natural gas, new standards on mercury emissions, and the old age of many coal-fired units.
• The power sector will burn more natural gas in 2015 than ever before – more even than in 2012, “the year of no winter”, when Henry Hub prices fell consistently below $3/MMBtu. Gas burn will rise to back-fill lost generation from retiring coal; but also, remarkably low gas prices have boosted burn totals by allowing efficient gas turbines to undercut the cost of coal-fired electricity.
The result of this churn is that CO2 emissions from the power sector should fall to their lowest levels since 1994, BNEF has found. This would put power sector emissions 15.4% below 2005 levels. Overall, the US has pledged to cut all CO2 emissions (inclusive of the power, transport, agricultural, industrial, and residential sectors) by 28% by 2025 from a baseline of 2005.
“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.”
The study synthesizes previous Bloomberg New Energy Finance analyses, providing a medium-term outlook for the US power sector, out to 2020. It notes how 2015 truly will be an exceptional year, epitomizing a number of recent trends rolled into one.
“De-carbonization will continue post-2015,” according to Nelson. “But at a slower pace. We may never again see 23GW of coal capacity retire in a single year; and renewable build could drop significantly in 2017, when important federal tax incentives step down or expire”.
Stark regional differences frame the national trends. Southern California’s solar build boom is backed by progressive climate policies; meanwhile Texas wind installations owe thanks to new transmission lines that have recently unlocked strong resources in the Panhandle. Coal retirements are concentrated in the Southeast and Mid-Atlantic; and much of the incremental gas burn comes from the Appalachian Basin, where overwhelming production from the Utica and Marcellus Shales has sent gas prices spiraling downward, to the lowest levels in the country.
The white paper is available for download here. The findings will be discussed in-depth at BNEF’s Future of Energy Summit, April 13-15 in NYC. For more information please visit: http://about.bnef.com/summit/
ABOUT BLOOMBERG NEW ENERGY FINANCE
Bloomberg New Energy Finance (BNEF) provides unique analysis, tools and data for decision makers driving change in the energy system. With unrivalled depth and breadth, we help clients stay on top of developments across the energy spectrum from our comprehensive web-based platform. BNEF has 200 staff based in London, New York, Beijing, Cape Town, Hong Kong, Munich, New Delhi, San Francisco, São Paulo, Singapore, Sydney, Tokyo, Washington D.C., and Zurich.
BNEF products fit your daily workflow, streamline your research, sharpen your strategy and keep you informed. BNEF’s sectoral products provide financial, economic and policy analysis, as well as news and the world’s most comprehensive database of assets, investments, companies and equipment in the clean energy space. BNEF’s regional products provide a comprehensive view on the transformation of the energy system by region.
New Energy Finance Limited was acquired by Bloomberg L.P. in December 2009, and its services and products are now owned and distributed by Bloomberg Finance L.P., except that Bloomberg L.P. and its subsidiaries (BLP) distribute these products in Argentina, Bermuda, China, India, Japan, and Korea. For more information on Bloomberg New Energy Finance: http://about.bnef.com, or contact us at sales.bnef@bloomberg.net for more information on our services.
ABOUT BLOOMBERG
Bloomberg, the global business and financial information and news leader, gives influential decision makers a critical edge by connecting them to a dynamic network of information, people and ideas. The company’s strength – delivering data, news and analytics through innovative technology, quickly and accurately – is at the core of the Bloomberg Professional service, which provides real time financial information to more than 319,000 subscribers globally. Bloomberg’s enterprise solutions build on the company’s core strength, leveraging technology to allow customers to access, integrate, distribute and manage data and information across organizations more efficiently and effectively. Through Bloomberg Government, Bloomberg New Energy Finance and Bloomberg BNA, the company provides data, news and analytics to decision makers in industries beyond finance. And Bloomberg News, delivered through the Bloomberg Professional service, television, radio, mobile, the Internet and three magazines, Bloomberg Businessweek, Bloomberg Markets and Bloomberg Pursuits, covers the world with more than 2,400 news and multimedia professionals at more than 150 bureaus in 73 countries. Headquartered in New York, Bloomberg employs more than 15,500 people in 192 locations around the world. For more information visit www.Bloomberg.com/now/