From the decline of coal power to the rise of energy storage, big changes are taking hold in the industry
By now, it’s become cliché to suggest that the utility industry is on the brink of a massive transformation.
Analysts told us this would happen — the traditional electric utility model would be upended, and utilities would need to adjust their business models to operate in a new energy future. Now, with plummeting prices for renewables and energy storage, the finalization of the nation’s first carbon regulations, and the proliferation of distributed energy resources, changes are taking hold faster than many expected. The electric sector is no longer simply anticipating a revolution — depending on where you are, it is embroiled in one today.
To help guide you through the uncertain waters of the industry, we have identified ten trendlines that are shaping the future of the power sector. The selection isn’t meant to be exhaustive, nor are we trying to rank one trend over another, but we hope the following list shows where we see the industry going.
10. Coal power in decline
For many power companies and politicians, the single most noticeable trend in the utility industry is the steady retirement of coal-fired power plants.
About 25,000 MW of coal capacity has been retired since 2009, according to SNL Energy, and there are already formal plans to retire about the same amount of coal capacity by 2022. Of those retired plants, most were nudged into unprofitability by historically low natural gas prices and the EPA’s Mercury and Air Toxics Standards (MATS), which put strict limits on emissions of mercury, lead, and other coal plant pollutants. Environmental activism has also played a significant role, with lawyers from the Sierra Club and other green groups teaming up with business interests across the nation to push for renewables and other clean resources instead of new coal.
All that means the U.S. coal burn is now lower than it has been since the early 1980s, and the situation for fossil generators isn’t improving. The EPA’s Clean Power Plan, finalized in August, is expected to further downsize the nation’s coal power fleet in the coming decades. In an analysis of the draft plan earlier this year, the EIA predicted the federal carbon regulations would contribute to 90 GW of coal retirements by 2030, along with other factors such as renewables proliferation, gas prices, and other EPA rules.
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