WASHINGTON — In general, changes to our energy system come slowly. It’s a marathon, not a sprint.
Nonetheless, 2015 is shaping up to be a pretty special year and a pretty significant 365-day shift in how we get our power, says a 2015 power market outlook released this week by Bloomberg New Energy Finance (BNEF).
“This Research Note is more sensationalist than we typically write,” it confesses.
The reason is a combination of three separate factors all moving in the same direction — an expected record for renewable energy installations, another forecast record for coal plant retirements and booming natural gas. The consequence, if these forecasts are realized, would be considerably cleaner energy and an impressive one-year drop in U.S. emissions.
“There’s basically these three big shifts underway, and they result in a drop in emissions, but more important, a structural shift towards a more decarbonized power fleet,” said William Nelson, BNEF’s head of North America analysis.
First, there’s the growth of renewables. Bloomberg is expecting a record of 18.5 gigawatts worth of renewable power sources to be built this year. That would exceed the prior record of 17.1 gigawatts in 2012.
Breaking that down, Bloomberg expects solar energy to set records in three separate areas — utility scale installations, rooftop installations and nonresidential rooftop builds.
That itself is noteworthy — wind currently accounts for a significantly bigger proportion of overall U.S. electricity generation than solar. But solar has seen exploding growth recently.
But that’s just the start. The spike in renewables will be accompanied, the report forecasts, by “the largest wave of coal retirements in US history.” Fully 7 percent of U.S. coal energy generation is expected to shut down, spurred in part by the onset of a key mercury emissions rule but also by a tougher overall economic picture. The upshot will be “a fundamental reduction in coal’s share of the US power mix,” the report says.
“This could be the year that goes down in history as the year when we retire the most coal ever,” Nelson said.
And then, there’s natural gas. The prior record for natural gas burn was 25 billion cubic feet per day in 2012, notes Bloomberg, but 2015 stands to tie or eclipse that, driven by low prices and much “switching” from coal to gas burning.
“When gas prices drop, gas generators are able to undercut the price of coal-fired electricity,” Nelson said. “So even for the coal plants that stick around, they’re being challenged on an hourly basis by cheap gas.”
The overall upshot of these changes, the report forecasts, should be a 2 percent drop in U.S. greenhouse gas emissions from 2014 to 2015 — and an overall emissions level from the electric power sector that is 16 percent below where the sector’s emissions were in 2005.