New Wind and Solar Power Is Cheaper Than Existing Coal in Much of the U.S., Analysis Finds

Coal-fired power plants in the Southeast and Ohio Valley stand out. In all, 74% of coal plants cost more to run than building new wind or solar, analysts found.

Maintenance workers on a solar farm. Credit: Robert Nickelsberg/Getty Images
Nearly three-fourths of the country’s coal-fired power plants already cost more to operate than if wind and solar capacity were built in the same areas to replace them, a new analysis says. Credit: Robert Nickelsberg/Getty Images

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Not a single coal-fired power plant along the Ohio River will be able to compete on price with new wind and solar power by 2025, according to a new report by energy analysts.

The same is true for every coal plant in a swath of the South that includes the Carolinas, Georgia, Alabama and Mississippi. They’re part of the 86 percent of coal plants nationwide that are projected to be on the losing end of this cost comparison, the analysis found.

The findings are part of a report issued Monday by Energy Innovation and Vibrant Clean Energy that shows where the shifting economics of electricity generation may force utilities and regulators to ask difficult questions about what to do with assets that are losing their value.

The report takes a point that has been well-established by other studies—that coal power, in addition to contributing to air pollution and climate change, is often a money-loser—and shows how it applies at the state level and plant level when compared with local wind and solar power capacity.


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“My big takeaway is the breadth and universality of this trend across the continental U.S. and the speed with which things are changing,” said Mike O’Boyle, a co-author of the report and director of energy policy for Energy Innovation, a research firm focused on clean energy.

The report is not saying that all of those coal plants could or should be immediately replaced by renewable sources. That kind of transition requires careful planning to make sure that the electricity system has the resources it needs. It also doesn’t consider the role of competition from natural gas.

The key point is a simpler one: Building new wind and solar power capacity locally, defined as within 35 miles for the report, is often less expensive than people in those markets realize, and this is indicative of a price trend that is making coal less competitive.

This shift shows how market forces are helping the country move away from fossil fuels. At the same time, coal interests have been trying to obscure or cast doubt on this trend, while seeking more government subsidies to slow their industry’s decline.

Coal Concerns in the Solar-Rich Southeast

Nearly three-fourths of the country’s coal-fired power plants already cost more to operate than if wind and solar power were built in the same areas to replace them, the report says.

By 2025, with the costs of building wind and solar power expected to continue to decline, the analysts project that 86 percent of coal-fired power plants will be more expensive than local renewable energy. Notably, the 2025 wind and solar estimates assume that expiring federal tax credits will not be extended, so any price advantage is without federal credits.

In parts of the country where power plants compete on open markets, such as most of Texas, companies may be more quick to shut down money-losing plants because plant owners are the ones bearing the losses.

It’s different in places where plants are fully regulated, as plant owners can pass extra costs on to consumers.

Map: Which Is Cheaper? Existing Coal Power vs. Building New Wind and Solar

The Southeast, which is almost entirely regulated markets, has some of the costliest coal plants and is rich with solar resources.

“Consumer advocates and regulators there should be asking harder questions about integrating renewables,” said Eric Gimon, an energy analyst and co-author of the report.

In North Carolina, for example, a state second only to Indiana in total coal plant capacity, every one of those coal-fired power plants is “substantially at risk,” meaning the existing plants have operational costs that are at least 25 percent more than what it would cost to build wind or solar capacity, the report says.

The state’s largest utility, Duke Energy, has invested in solar. The report shows that there is room for more of this development, and that the state remains heavily dependent on coal power that is not cost-competitive.

Political Opposition in the Ohio Valley

In the Ohio Valley, some of the sunniest parts of Ohio are near the river in the southern and southwest parts of the state, areas that now have almost no solar power development. American Electric Power, a Columbus-based utility, has proposed solar arrays there, but the plans are running into fierce opposition before state regulators and it is far from clear that the projects will get approved.

The Ohio Valley is a hub for coal-fired power, with plants that were built because of proximity to coal mines and the ability to deliver coal on river barges. And yet, the report shows that most of those plants cost more to operate than building new wind and solar capacity.

One of the exceptions is the Gavin Power Plant, the largest in Ohio and one of the largest in the country at 2,600 megawatts, which is operating at a large enough scale to remain competitive. But by 2025, even Gavin won’t be able to keep up with the declining costs of wind and solar, according to the report. This doesn’t mean the plant will be unprofitable, but it signals a shift in the market that will put increasing pressure on the plant.

Some Utilities Are Factoring in Climate Impact

Colorado and the St. Louis metro area are two of the few places were coal plants would retain a cost advantage over new renewable energy in 2025, according to the analysis. The authors say that is because of a lack of available land to build cost-effective wind or solar within 35 miles and because the plants are close to coal mines, which reduces fuel costs.

But a purely cost-based analysis leaves out other reasons to shut down coal plants and build wind and solar, as shown by the largest utility in Colorado, Xcel Energy, which is doing just that.

The company’s executives said they were responding to reports about the acceleration of climate change. They have found that they can build new wind and solar capacity for little or no extra cost, which is a less precise comparison than in the new report.

And, they are preparing for the possibility that Colorado will pass a law requiring utilities to shift to 100 percent renewable energy, which is a priority of new Democratic Gov. Jared Polis.

Distance can also make a difference in cost calculations. If new resources are built far from the ones they are replacing, grid operators and utilities need to make sure they have enough power line capacity to transport the electricity. Also, there are local economic considerations. Utilities sometimes put new projects in the same metro areas as ones that are closing to help the local community. This has been part of Excel’s planning process in Pueblo, Colorado, where it is closing a coal plant and developing new solar.

Natural Gas Competition Also Plays a Role

The report’s findings about the declining viability of coal plants are in line with previous studies, including one from March 2018 from BloombergNEF with the headline “Half of U.S. Coal Fleet on Shaky Economic Footing.”

But there is a key difference. The BloombergNEF report looked at the finances of coal plants in the context of competition from all fuels, including natural gas.

William Nelson, a co-author of the BloombergNEF report, says he is leery of comparing the costs of building new wind and solar to the costs of operating existing coal plants because a coal plant is capable of running around the clock, which makes it a different type of resource than wind and solar unless there is large-scale battery storage.

And, he thinks that natural gas prices are an essential part of the conversation in places such as the Ohio Valley, where gas is plentiful and inexpensive.

Gimon of Energy Innovation says he agrees that the role of natural gas in the market is an important element, but he says the report intentionally narrowed the focus to look at the deteriorating finances of coal and the improving competitiveness of wind and solar, rather than at the electricity market as a whole.

Daniel Cohan, a Rice University engineering professor who is not involved in the new report, says “gas is more of a gamble” for power plant owners than wind or solar because of uncertainty about future gas prices.

He thinks there is more certainty that wind and solar will continue to get less expensive and that their prices can serve as a useful comparison for coal.

The decreasing costs of wind and solar will lead to a growing gap compared to the costs of operating coal plants, one that coal plant owners and regulators would be wise to prepare for, Gimon said.

“You really can’t hang tight,” he said. “It’s just going to get worse.”