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EIA Is Damaging Its Analytical Reputation With Coal Forecasts

The pro-coal sentiments of the Trump administration are well known; unfortunately, that boosterism clearly is beginning to seep into the analytical work of the Energy Information Administration.

In a late March Today in Energy piece on the EIA website, the organization reprinted three logic-defying graphics on coal’s future role in the U.S. electric generation sector (the three were originally published in EIA’s 2018 Annual Energy Outlook released in February).

The first, as EIA wrote, shows that there will be “virtually no [coal plant] retirements from 2030 through 2050.” Given the 50 gigawatts of capacity that have been shuttered just since 2011, and the 65 GW of additional capacity the administration expects will shut down through 2030, projections of zero further closures beyond that strain the bounds of believability. There is increasing support throughout the business community for a low-carbon future,  and growing numbers of utilities are coming forward with coal phase-out plans (see my earlier stories here and here). The trend is not to maintain that generation capacity, but to close it.

That flat-line projection also overlooks a key point about the age of the U.S. coal-fired generating fleet—a point that EIA itself made last year. The coal generation units in the United States are aging: According to EIA data, 88 percent of the nation’s coal capacity was built before 1990, meaning that in 2050 even the youngest plants would be 60 years old. More telling, EIA said, the coal generation fleet’s capacity-weighted age in 2017 was 39 years. Given that, projecting that there will be no retirements after 2030 simply borders on the ridiculous.

Compounding matters, EIA also projected in a leap of counter-intuititve logic, that as the coal fleet ages, its average capacity factor will climb back roughly to 70 percent—a level not seen since the mid-2000s when the plants were much younger (see the graphic below)—and then maintain that performance all the way through the end of the of its 2050 forecast period. There are two major problems with this projection. First, it ignores age-related deterioration that affects all older plants.

Second, it doesn’t take into account the operational changes that have taken place in the utility sector in the past 10 years, notably the surge of new renewable generation resources that have no fuel costs and the shale boom that has pushed natural gas prices down and promises to keep them low for the foreseeable future.

The next graphic (which was taken from an April 2016 Today in Energy article) illustrates the operational changes that EIA’s current projection fails to incorporate. In 2005, coal plants by and large were operated as baseload facilities, running essentially 24/7 all year. Reflecting this, roughly 270 plants that year posted capacity factors of 70 percent or higher. By 2015, this had all changed and fewer than 100 plants recorded capacity factors that high.

The system simply doesn’t operate in the same fashion as it did 10 years. Here, the surge of wind generation in the Midwest is a great example. The region’s wind resource tends to blow hardest in the overnight hours and since it has no fuel cost it is dispatched first, ahead of the coal plants that formerly would have provided that electricity.

It is also important to note that in 2005 when the coal fleet’s capacity factor was 67 percent (There is a discrepancy between the data in the two EIA graphics, but it doesn’t impact this analysis.), there were only approximately 100 units operating at less than a 40 percent level. By 2015, the number of plants at that level had climbed to almost 200.  Overcoming that drag on the overall fleet’s performance would be difficult, at best.

In short,  getting the system as a whole up to a 70 percent capacity factor is nothing more than a pipe dream. Conveniently, however, these truth-stretching assumptions allow EIA to, you guessed it, project that U.S. coal production will remain essentially flat, at roughly 750 million tons annually, all the way out to 2050 (see graphic below).

Unfortunately, wishing something so doesn’t make it so. Anyone looking for real analysis of what is going on in the coal industry is going to have to start looking elsewhere.

Original Post

Content Discussion

Bob Meinetz's picture
Bob Meinetz on April 11, 2018

Dennis, of this you may be unaware, but EIA’s forecasts are prepared independently of policy considerations by law. The Department of Energy Organization Act, Section 205(d):

The Administrator shall not be required to obtain the approval of any other officer or employee of the Department in connection with the collection or analysis of any information; nor shall the Administrator be required, prior to publication, to obtain the approval of any other officer or employee of the United States with respect to the substance of any statistical or forecasting technical reports which he has prepared in accordance with law.

Either EIA analysts are willing to risk prison time to promote coal on behalf of the President, or maybe they have good reason to believe the sun will continue to set, the wind will only occasionally blow, and “renewables” will continue to be incapable of replacing baseload electricity. What are the chances?

Joe Deely's picture
Joe Deely on April 11, 2018

At the start of 2018 there was about 260GW of Coal capacity in the US. 16.5GW of that capacity will be shut down in 2018 – about 6.4% or 1/16 of the total capacity shut down in a single year.

Why is this coal shutting down? A variety of reasons.
– many of these coal plants cannot compete economically with the forms of generation
– many of these plants are old – average age at shutdown will be 46
– in many places users(including corporations) are demanding cleaner energy

Will any of these reasons be going away over the next 35 years?

  • No, in fact as many of these plants get older they will become more expensive.
    The competition especially wind and solar continue to get cheaper.
  • Pick almost any state/region and you can see a variety of pressures to close more coal over the next 10-15 years.

  • The Western US has 29G of coal – how much of this will be left in 2030?
    PA has 13GW and OH has 15GW? how much of that will be left in 2030?
  • Forget about 2050 – coal will be gone in the US by 2040 – in fact by 2030 – there will less than 100 GW of coal left.

    This is not rocket science and the EIA fails with these “projections”.

    Here are coal units closing in 2018.

    Sébastien Yaouanc's picture
    Sébastien Yaouanc on April 12, 2018

    Bob,
    Today, the US electricity mix is this :
    – 62.7 % fossil fuels (roughly 50 % gas, 50% coal)
    – 20 % nuclear
    – 7.5 % of hydro
    – 1.6 % biomass
    – 0.4 % geothermal
    – 7.6 % of “sun and Wind”

    US electricity consumption is flat.
    Most network experts assume that 30 % of sun and wind is easy to achieve, 50 % quite easy. The price of those RE is falling, and is becoming cheaper than fossil fuelled electricity.
    Gas is cheap in America, and will probably stay cheap for long.

    How can you imagine the coal demand will remain flat until 2050 ?

    And what about climate change, do you think Trump will be your president for the next 30 years ?

    Bob Meinetz's picture
    Bob Meinetz on April 12, 2018

    Yes Joe, there have been quite a few coal retirements in past years. The low-hanging fruit – old, inefficient ones – are being retired. To the consternation of renewables enthusiasts, EIA recognizes that translating that to a linear trend which continues indefinitely would be simplistic; that because renewable sources are incapable of supplying baseload electricity, their market penetration will max out (according to a remarkable 2015 hypothesis by Alex Trembath and Jesse Jenkins, at a percentage corresponding to their respective capacity factors).
    You say it won’t. I’m placing my money on the work of hundreds of analysts, working with the most sophisticated energy forecasting model in history. Can you blame me?

    Joe Deely's picture
    Joe Deely on April 12, 2018

    I’ve often seen comments on this forum about using capacity for renewables …

    Here is an interesting example from Kansas in 2017

    Coal Capacity
    4,700MW
    Coal Gen
    19,400 GWh
    Coal CF
    47%

    Wind Capacity
    4,900 MW
    WInd Gen
    18,501 GWh
    Wind CF
    43%

    No reason why wind capacity can’t grow to 10,000 MW in KS. Plus, throw in a few GW of solar. What happens to that 4,700 MW of coal? Is the EIA using this in their future coal “projections”?

    Joe Deely's picture
    Joe Deely on April 12, 2018

    Yes Joe, there have been quite a few coal retirements in past years.

    Actually Bob, the list I provided is for 2018… so most of these retirements are still in the future.

    The low-hanging fruit – old, inefficient ones – are being retired

    Average age of existing coal units – 44 years.
    Average of units being retired in 2018 – 46 years
    Note how many of the plants in my list are 46 year old – then we will only have 50GW of coal left in 2030 and 25GW in 2040. The EIA would have you believe that we will have 75+ year old plants operating at high CF in 2050. Ridiculous.

    EIA recognizes that translating that to a linear trend which continues indefinitely would be simplistic

    It would be simplistic if the reasons for coal closing were going away. They are not. Instead the EIA takes a strong coal closure trend over the next 5-7 years and see it as basically stopping. If they actually examined the reasons and looked at plants at a state/individual level they might see that the trend should accelerate after 2025.

    their market penetration will max out (according to a remarkable 2015 hypothesis by Alex Trembath and Jesse Jenkins, at a percentage corresponding to their respective capacity factors).

    Jesse is a smart guy. Let’s look at the numbers.

    2017 CF for Wind = 36.7%
    2017 CF for Solar= 27.0%

    Should be able to squeeze another few points out of each of these so that would men about 70% share for Wind/Solar.

    Throw in Hydro/Nuclear and a little NG and how much share is left for coal. Zero.

    I’m placing my money on the work of hundreds of analysts, working with the most sophisticated energy forecasting model in history.

    I hope you’re not betting too much Bob. EIA record and therefore your bets have been abysmal over the last few years.

    Bas Gresnigt's picture
    Bas Gresnigt on April 13, 2018

    Bob,
    When you check the two articles of Jenkins & Trembath and know the European situation, than you easily see that they bend reality in order to keep the idea up that their capacity factor would be the max market penetration of wind & solar.

    That idea was earlier published by the German Lionel Hirth in Berlin, then employee of Vattenfall (one of the big four incumbent utilities in Germany) which tried to slow the Energiewende.
    He performed serious simulation studies to support it, and concluded that it would be true under conditions. Conditions which Trembath & Jenkins forgot to publish.

    So he was invited by Agora (the German Energiewende think tank also in Berlin) to participate in a.o. integration study activities, which resulted in a.o. this nice english report.

    The idea of a penetration limit of wind & solar being their CF had hardly any impact in the market, as shown by a.o. the increase of unsubsidized offshore wind in the North Sea, etc. etc.
    Probably because it fails at several points:

    – wind & solar cost prices not only reach breakeven with market price, but they continue their cost decrease path so much that their cost price becomes 70%….

    Btw.
    Classic base load power plants will loose major money in those markets. So those are closed/sold except CHP (=many coal & lignite plants).

    This spring there were moments that renewable produced 100% of all power Germany needed. Those moments will increase towards months as shown by Denmark where wind produces 45% now (they target 50% in 2020).

    Bob Meinetz's picture
    Bob Meinetz on April 13, 2018

    No reason why wind capacity can’t grow to 10,000 MW in KS.

    There are plenty of reasons why it can’t, Joe, but the most obvious is that wind is intermittent. What makes you think Kansans only need electricity when the wind blows?

    In Texas, wind oftens generate electricity when ratepayers don’t need it, so ratepayers have to pay someone to take it off their hands. Maybe EIA is figuring Texans might get tired of paying hard money for nothing in return, and fire up some of those coal plants again. Kinda looking that way, isn’t it?

    Texas’ Summer Electricity Rates Expected to Jump

    Wholesale electricity prices in Texas are expected to jump this summer following the recent shutdowns of three of the state’s largest coal-fired generating plants, which have driven the state’s power reserves to their lowest level in more than a decade.

    Retail customers in Texas would eventually feel the impact of rising wholesale prices in the form of higher electricity bills, but it is too soon to know when those bills might climb or by how much, analysts said. But anyone without a fixed-rate electricity contract could ride a roller-coaster of spiking power prices should there be a long stretch of extremely hot weather that sends demand soaring and stretches power supplies.

    “We are going into a summer where people are going to be paying a lot, potentially paying a lot more,” said Commissioner Brandy Marty Marquez at the state Public Utility Commission last week. “We are not really sure what we are going to see.”

    What does your Magic 8-Ball say?

    Joe Deely's picture
    Joe Deely on April 14, 2018

    Prices will definitely go up in TX. Take 4,300 MW of competition off the market in one shot and things tighten up. That said, plenty of more generation will come online over the next few years so this “shortage” will ease.

    Note: coal generation is down 17% so far this year in TX. Let’s see if the CF of remaining plants increases as EIA assumes. I doubt it.

    Solar is just starting to getting going in TX. More solar and wind over the next few years means a bunch more coal will close in TX.

    Back to Kansas. Here is a fun fact from EIA data:

    Generation in 2010
    Coal = 32,505 GWh
    Wind = 3,405 GWh

    Generation in 2017
    Coal = 19,400 GWh
    Wind = 18,501 GWh

    Joe: No reason why wind capacity can’t grow to 10,000 MW in KS.
    Bob: There are plenty of reasons why it can’t, Joe, but the most obvious is that wind is intermittent.

    Let’s see how these statements play out over the next few years.

    Once current wind projects under construction are completed – KS wind will increase from current 5GW to 6GW. There are plenty more projects in the development stage. As you can see above – there is still plenty of coal generation = 19K GWh – for wind to replace in KS.

    Throw in some help from solar and maybe a little more NG and coal will be gone in KS by 2030.

    Joe Deely's picture
    Joe Deely on April 14, 2018

    One more thing about KS. Here is a list of the coal plants currently operating in KS. EIA thinks all of these will still be operating in 2050.

    I say- retirements at these plants will start happening over the next few years. By 2030, the only remaining coal operating will be two units at Jeffrey.

    So in 2030, 3,300MW will have retired and only 1,400 MW will still be operating. Coal generation will be less than 5,000 GWh. A few years after 2030 the remaining two units at Jeffrey will retire.

    Bob Meinetz's picture
    Bob Meinetz on April 15, 2018

    Jesse is a smart guy. Let’s look at the numbers.

    2017 CF for Wind = 36.7%
    2017 CF for Solar= 27.0%

    Should be able to squeeze another few points out of each of these so that would men about 70% share for Wind/Solar.

    Joe, read the Jenkins/Trembath paper again. The value of two renewables technologies contributing to the same grid cannot simply be added together – sometimes they will be generating at the same time. And because both are loaded first (merit order) before any fossil fuels, both become unprofitable when their combined output exceeds demand, not when their independent contributions do. Thus both solar and wind together become unprofitable when the sum of their capacity factors surpasses the ratio of average demand to their combined maximum output.

    To extend Jesse’s inimitable metaphor, together they not only eat their own lunch, they eat each others’ lunches – they’re both eating the same piece of pie.

    Bob Meinetz's picture
    Bob Meinetz on April 15, 2018

    Bas, you’re missing the point of the paper. When renewables exceed 100% of demand, the marginal value of their generation is less than zero – generators must pay buyers to take their generation. As market saturation increases, and a growing percentage of their production becomes a liability, the value of their investment sinks like a rock,

    “Classic”, dispatchable power plants don’t have that problem – because they dispatch electricity when it’s needed, the marginal value of their electricity is never negative.

    Bob Meinetz's picture
    Bob Meinetz on April 15, 2018

    Most network experts assume that…50 % [of sun and wind] quite easy [to achieve].

    Source, please.

    Sébastien Yaouanc's picture
    Sébastien Yaouanc on April 16, 2018

    For exemple here :
    http://greeningthegrid.org/trainings-1/presentation-integrating-variable-renewable-energy-into-the-grid-key-issues-and-emerging-solutions

    Or here (70% before storage needed):

    https://reneweconomy.com.au/german-grid-operator-sees-70-wind-solar-storage-needed-35731/

    French grid operator RTE tells about the same…

    Sébastien Yaouanc's picture
    Sébastien Yaouanc on April 16, 2018

    Sorry ??
    If prices become negatives, it is very easy to stop Wind turbines and even easier to stop solar plant (just disconnect inverters)…
    Negative prices are the result of thermal power plant preferring to pay than to stop producing.

    Joe Deely's picture
    Joe Deely on April 16, 2018

    Bob,

    Let’s do deeper dive on the Jenkins study in 5 years or so – once wind and solar actually start coming closer to these levels.

    In the meantime, solar and wind will keep displacing coal in many states.

    Kansas is one great example. Oklahoma is another. See below. Wind in OK has caused coal’s share to drop from 48% to 23% over the past 10 years.

    There is currently 4,870 MW of coal capacity in Ok. This will drop to below 2,000 MW by 2025 and below 1,000 MW by 2030. What do the hundreds of analysts at EIA have to say about that?

    More wind and solar mean less coal and less CO2. We can keep closing coal or we can do as you wish and hope for a nuclear renaissance.

    What does Exelon – the largest nuclear operator in the US think of this strategy?

    Due to their high cost relative to other generating options, no new nuclear power units will be built in the US, an Exelon official said Thursday.

    “The fact is — and I don’t want my message to be misconstrued in this part — I don’t think we’re building any more nuclear plants in the United States. I don’t think it’s ever going to happen,” William Von Hoene, senior vice president and chief strategy officer at Exelon, told the US Energy Association’s annual meeting in Washington. With 23 operational reactors, Exelon is the US’ largest nuclear operator.

    If the existing nuclear units in the US can be kept operational despite the economic challenges they face, and technology can be developed to store energy generated by renewable technologies, which are currently intermittently available, “then we won’t need these [new nuclear units] at that point,” Von Hoene said. “And we won’t build them because they’ll be too expensive.”

    Bob Meinetz's picture
    Bob Meinetz on April 16, 2018

    Seb, please let CAISO know how easy it is to “stop solar plant”. The experts there are under the mistaken impression they have to pay Arizona and Nevada to take excess solar energy, and they might want to hire you as a consultant.

    On 14 days during March, Arizona utilities got a gift from California.

    Well, actually better than free. California produced so much solar power on those days that it paid Arizona to take excess electricity its residents weren’t using to avoid overloading its own power lines.

    California Invested Heavily in Solar Power. Now, There’s So Much that Other States Are Sometimes Paid to Take It.

    Sorry.

    Bob Meinetz's picture
    Bob Meinetz on April 16, 2018

    Seb, when you’re linking to a long PDF document, it would be helpful to provide a page number. I had to waste several minutes hunting through your first link (NREL) to learn how wrong you actually are.

    Actual operating experiences from around the world have shown up to 39% annual penetrations [of wind and solar] are possible.

    (page 21, if you’re curious).

    Joe Deely's picture
    Joe Deely on April 16, 2018

    All kinds of recent happenings on CAISO…

    1) On recent Sundays , CAISO has had net negative imports. In other words exports > imports. First time this has happened since online reports went live in 2011. See below for an example.

    Amounts are small now – 600 MW over a few hours. By early 20s CAISO will be exporting 5+ GW over multiple hours. Destroying Western US coal and NG.

    Does EIA have that in their model for 2050 coal generation?

    2) a few days ago CAISO had > 100,000 MWh of solar generation in a single day for first time. Throw in ~ 30,000 MWh of rooftop solar. Less and less room for NG generation on CAISO.

    Mark Heslep's picture
    Mark Heslep on April 18, 2018

    Oklahoma is not a grid.

    Mark Heslep's picture
    Mark Heslep on April 18, 2018

    The solar CF figure you cite from EIA is not universal for the US, and won’t scale as a constant across the US. 1. The EIA figure is utility scale only, i.e. ground trackers. 2. The current data is dominated by the sunbelt CA and AZ. Annual CF in PA is 16% utility scale only.

    See Euan Mearns for a detailed review.

    http://euanmearns.com/solar-pv-capacity-factors-in-the-us-the-eia-data/
    https://s21.postimg.cc/pcuawf42f/temp.png

    Mark Heslep's picture
    Mark Heslep on April 18, 2018

    See PV data below, suggesting solar is limited to minimum annual CF (winter).

    Joe Deely's picture
    Joe Deely on April 18, 2018

    Nice lines… suggests no such thing.

    Joe Deely's picture
    Joe Deely on April 18, 2018

    See Euan Mearns for a detailed review.

    Interesting – a blog from a Scottish guy as a source – with solar data from 2015. What could go wrong?

    Hard to know where to start. Let’s go with the most obvious first.
    1) Maine did not have 295MW of solar capacity in 2015. It had ZERO. Maybe he meant Massachusetts. They both begin with M. But then again, this is a blog from a guy who lives in Scotland.

    2) It appears that Euan believes that EIA had captured all of the solar data for 2015 when he wrote this article in 2016. Not a good assumption.

    He might want to look at a few examples of plant level data for solar in US. For instance take a look at the data for the Stateline solar project in CA. Plenty of generation in 2016 – none in 2017. So is the current EIA solar total for CA in 2017 correct? Doubt it.

    3) Speaking of CA. He has 4,395 MW of capacity in 2015. EIA has (Table 6.2B) 4,452 MW in Dec 2014 and 5,613 MW of capacity in Dec 2015 for CA.

    He has 10,826 GWh of generation in 2015. EIA has (Table 1.17B) 12,698 GWh.

    4) more examples of problems with chart data on the generation side.

    NM – 590 GWh vs EIA 646 GWh
    AZ – 2,550 GWh vs EIA 2,797 GWh
    NV – 557 GWh vs EIA 1,587 GWh – Wow… not even close. Capacity way off for NV as well. Maybe he meant some other state that begins with N.

    etc…. etc… etc…

    Finally you said:

    The current data is dominated by the sunbelt CA and AZ

    Not really – This was partially true in 2015, but not anymore.

    In Dec 2015 CA and AZ made up 61% of the US utility-scale solar installed capacity – which at the time was 11.6GW.

    Now, CA and AZ make up only 44% of the current US utility-scale capacity – which totals almost 25.7GW.

    In a few years CA/AZ will be less than 1/3 of US total.

    Joe Deely's picture
    Joe Deely on April 18, 2018

    OK is part of Southwest Power Pool(SPP) grid.

    Are you saying that a chart for SPP would tell a different story?

    Joe Deely's picture
    Joe Deely on April 19, 2018

    From 2017 AWEA Annual Report….

    Mark Heslep's picture
    Mark Heslep on April 19, 2018

    CA and AZ still dominate US solar generation due to favourable sun hours. The state data in that table comes of course from EIA, the same source for your reference of the US solar CF figure. Criticism should go to the EIA; smearing an engineer who happened to post a copy is a waste of time.

    Joe Deely's picture
    Joe Deely on April 19, 2018

    CA and AZ still dominate US solar generation due to favourable sun hours

    No… they do not “still dominate” US solar generation. The rest of country was responsible for 69% of the increase in solar generation from 2016-2017.

    The state data in that table comes of course from EIA, the same source for your reference of the US solar CF figure. Criticism should go to the EIA; smearing an engineer who happened to post a copy is a waste of time.

    Interesting word choice – smearing. Also, he did not “post a copy”.

    He took data from EIA website, manipulated it and tried to use it to prove a point on his blog with a chart he created.

    He made a lot of mistakes in his analysis because he does not understand US geography, the US electricity market or how the EIA works. Plus it looks like he made at least two transcribing errors. Sloppy work.

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