How Much Longer Will the U.S. Electric Industry Need Coal ?

 Source:

 https://oilprice.com/Energy/Coal/How-Fast-Will-The-Electric-Industry-Exit-Coal.html

"What do Siemens, General Electric and Toshiba have in common— other than the obvious: they are global manufacturers of electrical equipment? 

 

The answer is that this year all three announced they would no longer construct coal-fired electric power generating projects. 

 

Regardless of how managements describe this action, we believe their reasoning is simple: they see little future in the coal business. 

 

... How long with these manufacturers wholeheartedly support their legacy products?

 

Electric companies around the world have not abandoned coal fired power generation en masse, especially in places such as Poland and Germany ...

 

... Although it’s a declining industry. coal miners still earn relatively high wages, especially in rural areas where other opportunities are scarce. 

 

... Peabody Energy, the world’s largest private coal miner, says it may have to file for bankruptcy, for the second time in five years, due to the weak market for coal.

 

Electric companies as businesses have a financial incentive to retain aging, polluting coal fired generating assets. because their existing investment in coal assets is not yet fully depreciated. 

... Regulators, especially at the state public utility commission level, have the means to allow power companies to recover all of their un-depreciated legacy coal investments costs from consumers. 

Regulators can, with relative ease, authorize utilities to amortize these assets over an extended period and at relatively low cost to consumers. 

 

... We also suspect that the unions working within the electric industry are less than thrilled about the trend toward renewables. Jobs in the renewables industry may be less unionized and pay lower wages.

 

... the transition that utilities desire, from coal to natural gas, is under fire on environmental grounds. 

More utility scale wind, solar and storage seems a likelier result. New gas plant construction will carry increased stranded asset risk going forward.

... The good news is that customers will we believe remain willing to pay for utility services. 

 

The bad news is that increased political and regulatory scrutiny may create financial uncertainty. 

 

In the extreme version this could result in a review of private utility monopolies and whether publicly owned utilities would be preferable. 

 

...  electric companies elsewhere have not been slow to act.  

 

Vattenfall, the Swedish-based European utility not only expects to exit coal fired power generation by 2030 but is also contemplating closure of its newest, most efficient coal station because it is no longer profitable. 

 

Similarly Rome-based ENEL, a truly international utility, has been closing coal stations and expects to exit coal on a worldwide basis by 2025. 

 

Iberdrola, the Spanish utility with holdings around the word, finished closing its coal stations in 2020. 

 

US utilities, however, are taking a more leisurely approach and acting as if the year 2050 is the deadline for some broad environmental compliance.

... It looks more and more as if the question is not whether but how fast the electric industry will exit fossil fuels."