Addition by Subtraction: Recent Trends Reinforce Longer-Term Shift to Clean Energy

Key Points

• Government intervention, key behavioral shifts, and the related economic fallout suggest that response to COVID-19 could have a lingering effect on energy demand.
• From a U.S. power perspective, the contraction in weather-normalized electricity demand has been dramatic. The load erosion actually began in 2019, meaning the industry has lost the equivalent of a decade of growth since 2018.
• Even under the most aggressive recovery scenario, electricity demand would only return to pre-pandemic levels by 2024. A more conservative pace obviously means a longer recovery.
• The longer the road to recovery, the more likely the industry will confront outsized structural accommodation. Specifically, in order to rebalance the market, we expect 100,000 megawatts (MWs) or more of low-utilization coal and high-operating cost nuclear capacity will shutter by mid-decade.
• Counterbalancing these retirements will be the accelerated development of renewable generation. Indeed, planned clean energy projects currently outnumber coal capacity retirements by nearly 2-to-1.

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