Around 99% of US coal plants (209 out of 210) are now more expensive to run than replacing their generation capacity with new solar or wind farms, according to the US think tank Energy Innovation. The savings would be substantial: the cost of new wind or solar would be at least 30% cheaper than the cost of running more than three-quarters of existing US coal plants.
Energy Innovation’s Coal Cost Crossover 3.0 report analysed the 2021 costs for 210 coal plants across the country, with a combined 220GW of capacity, comparing them with the cost of wind and solar in 2021 as well as incorporating the new tax credits from the US Inflation Reduction Act (IRA).
The IRA extends and expands existing investment and production tax credits, vastly decreasing wind and solar costs. It also provides funding for loan guarantees to refinance fossil fuel power resources and reinvest in new clean energy infrastructure, creating an economic incentive to pay down coal debt and invest in new renewable resources.
The legislation also established a bonus “energy communities” tax credit for building projects in regions that have been economically dependent on the fossil fuel industry. To calculate the potential of the credit, Energy Innovation compared the cost of building new wind and solar resources within 30 miles of each coal plant with the cost of running the existing coal plant.
For 199 of the 210 coal plants, local solar replacement is less expensive than existing coal, and for 104 plants, local wind is less expensive. For 89 plants, both local wind and local solar were cheaper than coal, suggesting that a clean energy portfolio including local wind and solar is a suitable replacement option for those plants, while providing additional grid reliability value.
The report found that, between solar and wind, replacing 204 coal plants with new local clean energy would generate up to $589bn in new investment in energy communities across the US.