Energy markets have an interesting year ahead

The start of a new year brings with it a raft of data on the world’s energy systems. So far, electricity sector figures show a transition well underway — some sources increasing, others collapsing. Each market is different, but the trends in markets as diverse as the UK, Spain, Australia and Texas all show profound changes in what is a very short period of time.
Coal has nearly vanished in the UK: Figures from National Grid Plc show that coal-fired power made up just 2.1% of the power mix last year — down from 75% in 1990. Coal was the single-biggest generation type just six years ago; now, it is smaller than what analysis group Carbon Brief classifies as “other.” Gas is now by far the largest source of power generation in the UK, followed by wind power, which surpassed nuclear last year.
Coal collapsed in Spain, too: Coal-fired electricity in Spain dropped to its lowest levels since the country’s grid operator began keeping records in 1990. At less than 5% of total generation in 2019, Spain’s coal sector isn’t quite as shrunken as it is in the UK, but it’s also 85.6% less than it was in 2002, when coal was at its peak, according to an El País analysis of the grid operator’s data. BloombergNEF analysis from October anticipated this change; as analysts said, Spanish coal hit an economic wall and utilities are now phasing out coal at a far faster rate than climate and energy policies dictate.
US coal power is now back to 1970s levels: According to Rhodium Group analysis, the US power sector’s coal consumption fell 18% in 2019, bringing it back to the same level as in 1975. The resulting drop in power sector emissions was good enough for a 2% drop in economy-wide emissions, even with emissions from transportation, industry and agriculture all
increasing.
Wind almost — but not quite — blows away coal in Texas: As my colleagues pointed out in research earlier this week, Texas wind power came within a few gigawatt-hours of exceeding the Lone Star State’s coal-fired power generation last year. It’s worth seeing Texas’s wind, coal and gas-fired power charted together. Wind is structural, with steady growth since 2011; coal is cyclical, and it is essentially the inverse of gas-fired power at any given moment. The state is expected to add another 11 gigawatts of wind capacity by 2025.
Solar crosses gas in Australia: Wind also surpassed coal in Australia last year — well, one kind of coal, at least. Wind generation exceeded brown coal generation in 2019. Brown coal, also called lignite, is not the main coal fuel in the country, however. Wind remains quite a ways behind black-coal-fired power generation.
Perhaps more significant is another crossover point: Customer-owned rooftop solar now generates more power in Australia than all the country’s natural-gas-fired plants. Rooftop solar generation is also quite close to equaling wind generation as well.
The next month will bring more global energy data, and more significant market activity, with BlackRock Inc. joining Climate Action 100+, the $41 trillion investor climate campaign. More market transitions are coming, from electrons and molecules to the capital that enables both.

—Bloomberg