The US energy landscape is undergoing a dramatic transformation. According to the latest report from the US Energy Information Administration (EIA), renewable energy sources such as wind, solar, hydro and biomass are expected to generate more electricity than coal for the first time in 2023. This is a remarkable milestone for the country that has long relied on coal as its dominant source of power.
The EIA projects that renewable energy will account for 24% of the US electricity generation in 2021, up from 20% in 2020. Coal, on the other hand, will see its share drop from 19% in 2020 to 16% in 2021. This means that renewables will surpass coal by 8 percentage points, a significant gap that reflects the changing economics and policies of the power sector.
One of the main drivers is the declining cost of renewable energy technologies, especially wind and solar. The EIA estimates that the levelized cost of electricity (LCOE) for wind and solar photovoltaic (PV) plants entering service in 2025 will be $31 and $36 per megawatt-hour (MWh), respectively, compared to $41 for coal.
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The LCOE is a measure of the average cost of producing electricity over the lifetime of a plant, taking into account capital, fuel, operation and maintenance costs.
Another factor is the growing demand for clean energy from consumers, businesses and governments. Many states have set ambitious renewable portfolio standards (RPS) that require utilities to procure a certain percentage of their electricity from renewable sources. For example, California has a target of 60% by 2030 and 100% by 2045.
Similarly, many corporations have pledged to source 100% of their electricity from renewables by a certain date, such as Google, Apple and Walmart. These commitments create a strong market signal for renewable energy development.
A third factor is the regulatory and policy environment at the federal level. The Biden administration has made climate change a top priority and has announced several initiatives to support renewable energy deployment.
For instance, the American Jobs Plan proposes to invest $100 billion in grid modernization and transmission expansion, which are essential for integrating more variable renewables into the system. The plan also proposes to extend and expand tax credits for wind and solar projects, which are set to expire or phase out in the coming years.
The EIA’s projections are based on current laws and regulations, but they could change depending on future policy decisions. For example, if Congress passes a national clean electricity standard (CES) that mandates utilities to achieve a certain percentage of carbon-free electricity by a certain date, such as 80% by 2030 and 100% by 2035, as proposed by President Biden, then renewables could grow even faster than expected.
The transition from coal to renewables is not only beneficial for the environment, but also for the economy and public health. According to a study by Harvard University, replacing coal with renewables could save $1.7 trillion in health and environmental costs by 2050, as well as prevent 3.6 million premature deaths.
Moreover, renewable energy creates more jobs than coal per unit of electricity generated. According to a report by Environmental Entrepreneurs (E2), clean energy jobs outnumbered fossil fuel jobs by nearly three to one in 2019.
The US is not alone in this transition. Many other countries are also moving away from coal and towards renewables, such as China, India and Germany. The global share of renewable energy in electricity generation reached 29% in 2020, according to the International Renewable Energy Agency (IRENA) and is expected to reach 45% by 2030 and 65% by 2050.
Renewable energy is no longer a niche or alternative source of power. It is becoming the mainstream and dominant source of power in many markets around the world. The US is on track to join this trend and surpass coal power with renewables in 2023. This is a historic moment for the country and a positive sign for the future of clean energy.