About a year ago, many of us in energy news land were busy scribbling out coal's eulogy. Natural gas and renewable energy were slowly taking over the electricity fuel mix, putting coal -- our favorite cheap electricity generator for generations -- against the rope. It was only a matter of time before natural gas, its price plummeting thanks to the fracking/horizontal drilling revolution, dealt the knockout blow.
Here's what the natural gas vs. coal battle looked like at the end of 2012:
For greens, it looks pretty good. Dirty coal, in blue, is clearly getting displaced by natural gas, which, though there will be plenty of gnashing of teeth and letters to editors regarding this statement, burns far more cleanly than coal. Meanwhile, renewables, while still taking up a minuscule share of the mix, grew substantially over the decade. Given the 2008 to 2012 trend line, we can't be blamed for predicting coal's imminent demise.
But merely months later, and the picture has changed considerably. Now it looks like this (I put this one in a line graph so you can better see the changes over time):
What a difference a year makes, right? Back in April 2012, we used an equal amount of natural gas to generate electricity as we did coal for the first time ever. For a few months after that, coal struggled. But winter came, and it was cold, and people needed natural gas to heat their homes, so prices went up. And guess what? Those fickle utilities just started burning coal again, and haven't stopped. Here's essentially the same information with each fuel presented as a percentage of the energy mix rather than an absolute amount:
Clearly, coal is still struggling relative to the heyday of 2005-2007, when natural gas prices were through the roof and coal generated nearly half our electricity. But it has rebounded since last year. "Other renewables," (mostly wind and solar, but with some other stuff thrown in such as "black liquor" which sounds great in a martini) meanwhile, have steadily increased their share, though that share remains small. So what do these graphs tell us?
Price matters: The price of natural gas reached its lowest point -- $2.79 per thousand cubic feet -- of the last decade in April 2012. That's the same month that natural gas ran neck and neck with coal for the first time in the race to take a bigger share of the electricity generation mix. That turned out to be an anomaly: prices rebounded immediately after that and so did the use of coal for power generation. It demonstrated that markets, not some regulatory "War on Coal," are the driving force here, at least for now. Natural gas prices are likely to continue their upward trend, especially if liquid natural gas export terminals are built and domestic methane becomes a global commodity. That doesn't mean coal will ever return to its glory days: As Obama administration regulations kick in, and as older coal plants slated for retirement actually shut down, coal consumption will start dropping again (as perhaps foreshadowed by the fact that a recent Powder River Basin coal lease got no bidders).
Policy matters: The bright spot in the graphs is the steady long-term climb of the use of non-hydroelectric renewables -- mostly wind power -- in the energy mix. This is clearly driven by state renewable portfolio standards, which require states to get a set percentage of their electricity from renewables by a particular date. Federal production tax credits and other incentives, including net metering for rooftop solar, are also driving the development of renewables. Clearly, we can't leave energy to be dictated by the markets, alone.
Wind and solar vs. hydropower? A look at the monthly graph up above reveals something funny: Renewables don't seem to be displacing fossil fuels as we might like them to. Instead, they're displacing one another. Whenever other renewables kick up a notch, hydropower seems to drop. Or perhaps it's the other way around. This may be coincidence, but it could have to do with the fact that most of the nation's hydropower comes from the Northwest. And a lot of wind power also comes from the Northwest. During times of high runoff and therefore high hydropower production, Bonneville Power Administration will curtail wind power because there's simply not enough demand for all that power in their limited grid.
In other words, the market can do wonders for the energy mix, as long as natural gas prices remain low. But low prices are no substitute for strong energy policy, and we don't have a lot of that these days.
Jonathan Thompson is a senior editor at High Country News. Follow him on Twitter @jonnypeace.