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Renewable Energy & Cleantech

5 Energy Sources, 5 Trends (pt. I)

America’s generation mix is changing. Coal-fired electricity is fading, renewable energy is growing exponentially and natural gas has quietly become the nation’s leading source of power. At the same time, the way the country consumes electricity is undergoing a transformational shift due to the focus on energy efficiency, a.k.a., the fifth fuel.

The net result? Five energy sources — okay, four and a half, rounded up — combine to form five trends that are redefining the energy grid in America and across the globe.

Here’s a look at the more traditional supplies: coal, natural gas and energy efficiency.

Coal – A Black Future

Coal prices in the United States have been relatively stable since the Great Recession, with Illinois Basin coal, a key benchmark for prices, trading around $2 per million British thermal units (MMBtu) for the past six years, which is roughly in line with current natural gas prices.

The combination of inexpensive natural gas and increased regulation caused more than 19 gigawatts (GW) of coal-fired power plants to retire since the beginning of 2015. And the Environmental Protection Agency’s Clean Power Plan (CPP), which seeks to regulate carbon dioxide emissions from existing plants, is expected spur the retirement of additional plants, removing 50 GW of capacity — one quarter of the U.S. total — by 2030.

Plus, it is expected to up compliance costs for the revamped grid.

Beyond the U.S. landscape, there looms an even larger trendsetter in the global coal market. Enter China. Its unprecedented growth and industrialization has put the country at the number one spot for both coal production and consumption. It follows then, that the decreased demand for coal in China over the last couple years (downward movement that is expected to continue with the increasing focus on climate change) has helped bring prices to a decades-long low.

In other words, the reduction in coal use is not only a stateside phenomenon: it is a global trend.

Natural Gas – Shale Yeah!

In the natural gas market, the effects of the shale boom in the U.S. have resulted in prices not seen since the days when Enron’s profits seemed as certain as a Y2K meltdown. As a result of the current environment, utilities and power providers have built natural gas-fired plants with more than 40 GW of capacity since 2011.

Over the last year, there’s been only one month in which natural gas was not the largest fuel source in the U.S. generation mix. But how long will this last? According to the Department of Energy’s Wind Vision, wind has the potential to generate 35 percent of the nation’s electricity by 2050.  Despite this, natural gas will keep the lead because it will be the commodity of choice to replace diminishing coal and nuclear fleets. It’s not until the current nuclear fleet fades away, decades from now, that wind is expected to hold the pole position.

Energy Efficiency – Fifth But Not Last

Pennies and GW have at least one thing in common — saving them is just as good making more. By increasing the efficiency of existing homes and businesses, total energy demand falls.

This often entails simple actions like replacing incandescent bulbs or sealing leaky duct systems. It’s the grassroots version of going green. One LED bulb won’t change the world, but a few hundred million can redefine the system. It’s also widely recognized that energy efficiency is one of the cheapest sources of ‘power’, with a recent study finding that the cost of efficiency projects in 2010 was 2 cents per kilowatt-hour saved. (Edison Foundation)

In addition, a meta-study by Eldridge, Elliott, Neubauer and the American Council for an Energy-Efficient Economy showed that the U.S. could trim the total call for electricity by 19 percent over 13 years — a 1.5 percent annual reduction — through efficiency and conservation. This could result in total demand shrinking, even though the population is expected to continue to grow.

Tune in next time for renewable-energy trends. Wind and solar to be specific.

Contributed by Daniel Holder, Commodity Analyst, Schneider Electric