Coal Cost Crossover — An Unreliable Story

The nation’s coal fleet promotes electric reliability and resilience; provides fuel security; offers optionality when other electricity sources are unable to generate electricity (e.g., wind and solar) or fuel prices are too high (e.g., natural gas); produces affordable electricity; contributes to fuel diversity; and promotes domestic energy security.  Because of these attributes, coal is an essential part of an all-the-above energy strategy.

Despite these attributes, a recent report (Coal Cost Crossover 3.0) by San Francisco-based Energy Innovation Policy & Technology concludes that coal plants should be replaced by renewables because building and operating new wind farms and solar installations would be less expensive than continuing to operate existing coal plants.  The report compares the marginal cost of energy (MCOE) for existing coal plants with the levelized costs of energy (LCOE) for new solar and wind facilities — after taking into account new tax credits established by the Inflation Reduction Act — and concludes that the levelized costs of new wind and solar are less than the marginal cost for 209 out of 210 coal power plants in the U.S.  However, the report fails to seriously address many of the practical obstacles to replacing the U.S. coal fleet with massive wind farms and solar installations. We take a look at some of the report’s shortcomings here