The energy demand impact of the coronavirus shutdown is hitting the already distressed coal-fired sector particularly hard, statistics show.
A new report by Moody’s Investor Service highlights the negative weight on coal with lower electricity demand brought on by the COVID-19 pandemic. A recent U.S. Energy Information Administration update on April electricity generation showed that coal-fired power dropped to less than 15 percent of the nation’s net generation total, despite being more than 20 percent of capacity. Natural gas, solar and nuclear gained ground in that monthly net generation snapshot, according to the EIA.
Moody’s predicted that consumption of coal by the electric power sector will fall by more than 30 percent this year. The forecast, utilizing EIA numbers, shows electric utility coal consumption at about 377 million short tons for 2020, a drop from 539 million during the previous year.
This pandemic downturn comes amidst an already bleak graph chart for electricity coal consumption in the U.S. The EIA data shows that it has fallen from 850 million short tons only six years ago. The actual GW generated by coal-fired plants has dropped from 317 in 2010 to 234 GW last year, while utilities plan to retire another 17 GW by 2025, according to the Institute for Energy Research.
Suppliers are certainly feeling the pinch. Moody’s downgraded its long-term ratings for Peabody Energy, CONSOL Energy, Contura and Foresight while revising outlooks to negative for Alliance Resource Operating Partners and Natural Resource Partners.
Only low-cost metallurgical industry producers such as Arch Resources and Warrior Met Coal avoided downgrades by the rating agency.
The coal-fired power industry and U.S. Department of Energy under President Trump are working on numerous initiatives to keep the fuel resource in the electricity mix. Those efforts include carbon capture, utilization and sequestration to decrease emissions from power plants, while drilling production firms can use carbon dioxide in enhanced oil recovery operations.