Planned Fossil-Fuel Power Plant Retirements to Slow in 2024

Written by Paul Wiseman for Industrial Info Resources (Sugar Land, Texas)--Power plant operators are planning to retire about 9.6 gigawatts (GW) of coal or natural gas-fired generation facilities in 2024, most of them right before summer, says Britt Burt, Industrial Info's vice president of research for the Global Power Industry. More than 6.5 GW of that will be natural gas-fired plants, and just over 3.1 GW will be powered by coal.

The biggest of all is the 1,176-megawatt (MW), natural-gas-fired Mystic Generating Station in Everett, Massachusetts, planned for the end of May. Burt says that New England's total gas-fired retirements will total 1.4 GW, an amount that could negatively affect the grid right before air conditioning demand ramps up in summer. Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Plant Database can learn more in a detailed plant profile.

How much it will hurt remains to be seen, says Burt. "It is difficult to predict at the moment, but I believe, depending on the type of summer we have, this could have a severe impact on power supply and prices." That's because the replacements in place are not reliable sources of power, he notes.

"They have built a lot of renewable energy there but, as we know, these are intermittent power sources dependent on ample wind and solar resources. They are not replacing these units with reliable dispatchable generators, and we have yet to see renewables compete unsubsidized in the power market."

Adding battery storage to renewables can at least somewhat extend their baseload capabilities, but Burt reports that, "battery storage has not been built to a sufficient stage from a capacity or duration standpoint."

Plus, many of the offshore wind projects contracted for in New England were canceled in 2023, having become uneconomic due to "soaring inflation, interest rates and supply chain problems," according to Reuters. In light of those issues, the Massachusetts Department of Energy Resources (DOER) has extended its solicitation period for new offshore wind projects because there is a chance that the IRS could clarify some guidance on tax credits for such projects, possibly making them economic again, said DOER spokesperson Lauren Diggen. Connecticut and Rhode Island also have extended their bid deadlines.

Most of the natural gas plant retirements involve decades-old units (parts of Mystic were constructed in the 1940s) that have become too expensive to maintain. Mystic was originally scheduled to be shut down in 2022, but the operator was convinced to extend the closing date because it could leave the grid subject to brownouts. Some upgrades to nearby switching stations by National Grid plc (NYSE:NGG) (London, England) and Eversource Energy (NYSE:ES) (Hartford, Connecticut), completed in June, have apparently convinced regulators that it is now safe to close the Mystic plant.

Beyond New England, Burt notes, "the Southeast is set to retire 1.8 GW of natural gas-fired capacity, and 1.6 GW is scheduled for retirement in the Southwest (much of this is in ERCOT, which operates the grid across most of Texas). So all eyes will be on ERCOT again this year as we close more and more reliable natural gas-fired capacity and replace it primarily with renewable energy sources."

In spite of these closings, IIR's Natural Gas Products and Senior Energy Analyst Maria T. Sanchez points out that "U.S. power burn has been increasing, especially in the last three years." (See chart below.) Power burn is the amount of natural gas used specifically in power plants. In the chart, the blue line shows data from the U.S. Energy Information Administration (EIA), while the orange line is the sample of power plant demand in Industrial Info's pipeline nominations data, which represents about 70% actuals and highly correlated (87%).

Click on the image at right for a graph showing information on U.S. power burn in the last three years.

"Natural gas continues to be the most reliable and cost competitive source for power generation," Sanchez adds. "Particularly during peak demand days, natural gas will be the preferred source."

On the coal side, the two largest plant closures are Seminole 1 in Florida, at 714 MW, and Barry 04 in Alabama at 403 MW, says Burt. Like natural gas, coal plant closings are largely because of rising maintenance costs, but unlike natural gas, there are no new coal facilities being built in the U.S. Subscribers can read detailed plant profiles on Seminole 1 and Barry 04.

Many across the nation are concerned that the rate of retirement is much higher than that of replacement, especially when much of the replacement is in intermittent sources like wind and solar, without very little battery storage to mitigate it.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).