Wood Mackenzie sees extended ‘sunset' for costly coal power
Dive Brief:
Rising electricity demand and a slowdown in the buildout of alternative sources of power generation could extend the use of coal globally and displace 2,100 GW of gas and renewables by 2050, Wood Mackenzie said in a report earlier this month.
Under a high demand scenario, coal-fired power generation could peak in 2030, four years later than the analysis' 'base case' forecast.
The economics and politics of coal are strongest in Asia. In the United States, coal is more expensive than gas or solar and storage, but the cost of building new gas power plants has nearly doubled and long-duration energy storage technology is not yet mature enough to convert solar and wind into true 'baseload' resources, the report said.
Dive Insight:
In Asia, national security concerns and economics favor coal for now, said Anthony Knutson, global head of thermal coal markets at Wood Mackenzie, although when it comes to just levelized cost, hybrid solar and storage remain cheaper than coal or gas.
'While the long-term trajectory towards renewables remains intact, the path is proving far more complex than many anticipated as countries grapple with energy security and affordability concerns,' Knutson said in a statement.
Wood Mackenzie expects the levelized cost of unabated coal-fired power in the Asia and Pacific region to remain below $100/MWh in 2030, lower than the expected levelized cost of gas-fired power there.
Coal-fueled power in the United States will cost about $230/MWh in the United States and about $270/MWh in Europe in 2030, according to the report. By then, gas-fired power will cost about $100/MWh in the United States and about $150/MWh in Europe, it said.
Hybrid solar and storage will undercut coal and gas in all three regions, coming in around $60/MWh in Asia, $70/MWh in Europe and $80/MWh in the United States.
Though the economics of gas-fired generation are more favorable in the U.S. than in Asian and European countries that rely on liquefied natural gas imports, its ability to match surging AI load growth forecasts is limited, the report said. While long-duration energy storage technology has advanced significantly in recent years, it cannot provide baseload power yet, it said.
It's also becoming more expensive to replace aging coal plants with gas and renewables, causing 'sticker shock' for power producers looking to make the switch, the report said. It blamed tariffs, reshoring of production and infrastructure delays for pushing up the cost of new solar while noting a near-doubling of U.S. costs for new gas power plant builds.
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