For a few years now, U.S. natural gas producers have benefited from the electric-power sector’s shift from coal-fired plants toward gas-fired ones. The ongoing transition makes sense. Not only is gas-fired generation cleaner, it’s mostly been cheaper than the coal alternative. Better still, gas turbines and combined-cycle plants are very flexible companions to all those new wind farms and utility-scale solar facilities, whose variable output requires at-the-ready replacement power when the wind’s not blowing and the sun’s not shining. But with the continued push by many state regulators — and many utilities — for lower-carbon generation fleets, gas-fired plants are facing a growing challenge from energy storage, mostly in the form of very big lithium-ion batteries. Today, we look into the increasing use of large-scale batteries in utility settings and whether they might pose a serious threat to gas-fired power in the 2020s and beyond.
We’ve blogged every so often about the competition between coal- and gas-fired power generation, a steel cage match that’s been intensifying since the start of the Shale Era, with coal the consistent winner early on but gas victorious every year since 2015. As we said a couple of years ago in Slow Burn, coal plants (blue line in left graph in Figure 1) provided an impressive 45% of the electricity generated in the U.S. in 2010, when gas plants (orange line) accounted for only 24%. As shown in the left graph in Figure 1, by 2016, coal’s share had plummeted to 30% and gas’s had increased to 34%, according to the Energy Information Administration (EIA). The shift from coal to gas has continued apace since then; in the first four months of 2020, gas plants provided 40% of the U.S.’s electricity, while coal plants provided only 17% –– less than nuclear plants (with just over 21%; gray line) and renewables (hydroelectric, wind, solar, etc., with just under 21%; yellow line) for the first time ever.
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