Dive Brief:
- AES Corp. CEO Andres Gluski said his company has no plans to construct new coal-fired generation beyond two in-progress international projects, choosing instead to focus on battery storage, renewables and gas.
- Platts reports Gluski made his comments at the Barclays CEO Electric-Power Conference in New York this week. Coal still makes up almost 40% of AES' installed capacity.
- While AES is continuing to make investments in existing US-based plants, the announcement follows a trend of coal plants either being phased out or forced out, as cleaner sources find more success in markets.
Dive Insight:
AES announcement that its coal-construction days are nearly over reflects market forces and the declining cost of advanced energy solutions. While the company is currently constructing coal plants in India and Phillipines, those are likely to be the last, Platts reports.
In the United States, AES' announcement comes against a backdrop of declining coal use. This year, for the first time, gas-fired generation will outpace coal, and the cost of storage, and wind and solar energy have all been declining. According to the U.S. Energy Information Administration's most recent Short Term Energy Outlook, this year coal production is expected to decrease by 18%, which the agency said would be the largest annual decline since 1949.
However, because of a mild winter and declining market share, utilities still have "relatively high levels" of coal stockpiles and will continue to use the fuel. EIA said it expects the level of coal stocks will decrease over the summer, and power sector inventories will end 2016 at 158 million short tons.
The power sector accounts for 90% of the United States coal consumption, and is expected to decline almost 10% this year. But despite more-stringent rules like the U.S. Environmental Protection Agency's Mercury and Air Toxics Standards, the federal government said it anticipates coal consumption in the electric power sector will actually increase next year, by about 3%, "mostly because of rising natural gas prices and increasing electricity generation."
