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Capacity factor of conventional coal, gas, nuclear, and hydro power plants will not remain high or constant, but will instead decline dramatically over the next 10 to 15 years as they are outcompeted and disrupted by the combination of solar photovoltaics, onshore wind, and lithium-ion batteries (SWB). In fact, capacity factor in conventional energy has been dropping since at least 2010. For instance, the average capacity factor of coal in the United States has fallen from 67% in 2010 to just 40% in 2020 – first because of competition with cheap gas from fracking, and now because of SWB.
For instance, the United States Energy Information Administration (U.S. EIA) assumes that coal power plants entering service both today and in 2035 will enjoy a capacity factor of 85% for their entire operational lifetime, despite the fact that the real figure is already less than half of that, and thus inaccurately report their LCOE as about 7.5 cents per kilowatt-hour. Our analysis indicates that even if such facilities could somehow retain a capacity factor of 10% after 2035, rather than collapsing altogether like they already have in the UK, the cost of their electricity would be more than 10 times higher than the U.S. EIA’s published estimate.
We show projections for LCOE from 2020 forward, assuming an initial capacity factor of 40% (the actual 2020 value) that declines to 10% by 2035 as a result of the SWB disruption. Over the course of the 2020s, the corrected LCOE of new builds rises as average capacity factor continues to decline. By 2030, the LCOE of a new coal power plant is nearly 9 times greater than the U.S. EIA Reference Case assumption, at 65.3 cents per kilowatt-hour.