On January 11, the second-largest coal miner in the United States announced that it had filed for Chapter 11 bankruptcy protection for the parent company and subsidiaries. Arch Coals bankruptcy is only the latest in a long series of losses for the American coal industry.
Solar currently represents only around 1% of electricity generation, in both the U.S. and globally, and wind only around 4% in the United States. As such, renewable energy did not kill Arch Coal, or the U.S. coal market. GTM Research Director of Solar Research MJ Shiao notes that U.S. Environmental Protection Agency (EPA) regulations on mercury and other toxins, as well as falling prices for natural gas driven by the fracking boom, are the largest factors in the ongoing fall of the nations coal industry.
However, there is a relationship between both solar and wind and the decline of fossil fuels. As there is no fuel cost for solar or wind, both can bid into competitive electricity systems with no marginal cost. It plays into the wider electricity market, when you have zero marginal cost energy like solar providing electricity and reducing load, that is definitely going to have an impact on everything else, Shiao told pv magazine.
This impact can be seen strongly in Germany, where solar and wind have been driving electricity prices down, occasionally into the negative, with severe impacts on the economics of conventional generation and the nations electric power industry.
If solar sustains its meteoric growth, researchers anticipate these effects in the United States as well. A 2015 study by the Massachusetts Institute of Technology found that while high penetrations of solar will drive other forms of generation off the U.S. grid, coal will be the most impacted and the first to go (p. 182).
Even if solar is not yet driving coal off the grid in the United States, coal plants shutting down represent an opportunity for solar and other forms of renewable energy. However, MJ Shiao notes that it is not a one for one replacement, and in the last few years natural gas generation has been the single largest source of new generation coming online in the nation, followed by wind and solar.
It is part of the same story, explains Shiao. One is not necessarily causing the other, but they are all intertwined. As coal continues its decline, that is an opportunity for solar and wind as well.
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