Full Title: White Paper: Medium-term outlook for US power: 2015 = deepest de-carbonization ever
Author(s): Meredith Annex
Publisher(s): Bloomberg New Energy Finance
Publication Date: 04/2015


Description (excerpt):

In 2015, the US could set new national records: for annual renewable build; for coal retirements; and for gas burn from the power sector. Meanwhile, electricity-related emissions could fall to their lowest levels since 1994. This Research Note examines our short-term forecasts for US power.

• Renewable build will total 18.3GW in 2015 – 9.1GW from solar (an all-time high); 8.9GW from wind (third-most ever). Both technologies are in the midst of a temporary build rush, as developers race to capture important federal tax incentives that are set to step down or expire by 2017. California will account for over half of the solar build in 2015; ERCOT will absorb over one third of the new wind.

• The Mercury and Air Toxics Standard (MATS) take effect on 16 April 2015, hastening a wave of coal retirements among generators whose economics are otherwise challenged by the effects of old age and cheap gas. In all, expect 23GW to stop burning coal this year, with another 30GW falling offline before decade-end. PJM and the Southeast will be hardest hit.

• Natural gas-fired generators are poised to back-fill lost generation from retiring coal; and even more importantly, plummeting gas prices have enabled efficient, combined-cycle gas turbines to undercut marginal costs of coal in many parts of the country. Coal-to-gas switch calculus is complex, but we believe these two factors (lost coal capacity and a relative improvement in gas-fired economics) will lead to the most gas burn from the power sector ever – more even than witnessed in 2012 (‘the year of no winter’, when Henry Hub sank below $3/MMBtu).