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Released December 26, 2023 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Coal-fired power generation had another difficult year in 2023 in North America, and the outlook for the next few years isn't looking particularly bright.
The Tennessee Valley Authority (TVA) (Knoxville, Tennessee) closed its Bull Run Fossil Plant earlier this month, one of several coal-fired power plants that either were retired or had their retirement dates moved forward this year. The Homer Station in Pennsylvania also closed this summer. In Indiana, CenterPoint Energy Incorporated (NYSE:CNP) (Minneapolis, Minnesota) closed the two-unit A.B. Brown Power Station this year.
This month, Colorado-based Tri-State Generation and Transmission (Westminster, Colorado) said it would retire coal-fired stations in Colorado and Arizona earlier than planned. On a quarterly earnings call last month, the chief executive of WEC Energy Group Incorporated (NYSE:WEC) (Milwaukee, Wisconsin) said the company would accelerate the closure dates for several coal units. For more on that, see November 20, 2023, article - WEC Planned Investments in Generation Will Make it Coal-Free by 2032. This past summer DTE Energy Company (NYSE:DTE) (Detroit, Michigan) said it plans to close its massive Monroe Station in 2032, three years earlier than planned. In Maryland, AES Corporation (NYSE:AES) (Arlington, Virginia) announced plans to retire its Warrior Run Station in 2024.
"Altogether, 2023 wasn't a pleasant one for coal-fired power across North America," said Britt Burt, Industrial Info's vice president of research for the Global Power Industry. "We estimate that about nine gigawatts (GW) of coal-fired capacity were retired this year, well under what was retired in 2022 and about what was retired in 2021."
Click on the image at right to see a chart of North American power plant retirements, by fuel, from 2012-2023, with an estimate out to 2033
. "Across North America, we expect the level of coal power plant retirements to dip in 2024, but then shoot up in 2025, 2027 and 2028," Burt said.
In the U.S. and Canada, about 133 gigawatts (GW) of coal-fired generation was retired between 2012 and 2023. That's more than double the amount of gas-fired capacity that was retired over that period, Burt said. He said he expects that trend to continue over the next decade, where an estimated 72 GW of coal-fired generators across the U.S. and Canada are slated to be closed. That's about three times the amount of gas-fired capacity projected to close over that period.
Click on the images at right for pie charts of North American power plant retirements by fuel, from 2012-2023 and projections for 2024-2033.
Burt commented: "Environmental regulations are tightening. In the U.S., developers have an opportunity to capture an additional 10% tax credit--beyond the 30% already available--if they build renewable generation in communities that are being hit hard by the energy transition. Each year, it's getting harder and harder justifying keeping coal plants online."
The Inflation Reduction Act of 2022 (IRA) extended for 10 years the 30% tax credit available to tax-paying entities that construct renewable energy generation. That law provided an additional 10% incentive tax credit for companies that build renewable generation in areas that are negatively affected by the transition away from fossil fuels.
In addition, that law has a program, the Energy Infrastructure Reinvestment Program, to provide low-interest loans to "projects that retool, repower, repurpose, or replace energy infrastructure that has ceased operations or upgrade operating energy infrastructure to avoid, reduce, utilize, or sequester air pollutants or greenhouse gas emissions."
Although the future of coal-fired generation in North America appears bleak, Burt said reliability concerns and severe weather have a way of changing the conversation about coal power and renewable energy. Last month, the North American Electric Reliability Corporation (NERC) (Atlanta, Georgia) warned that most regions of the U.S. face the threat of rolling blackouts, a combination of severe weather, rising electric demand and retirement of dispatchable power plants. For more on that, see November 9, 2023, article - U.S. Power Use, Winter Power Challenges: Your Daily Energy News.
In Texas, the state's grid operator, ERCOT, asked owners of about 3,000 megawatts of retired coal-fired generation to bring those plants back into service to provide an additional reserve margin for the winter, but none of the owners complied. For more on that, see November 22, 2023, article - ERCOT Pulls RFP for Emergency Winter Generation, Blackouts Possible in Texas.
Meanwhile, regional transmission organizations continue to report years-long queues in connecting new generation to the electric grid.
"It seems that every couple of years I say this, but we're one severe storm away from forcing a national intervention on the speed and direction of the energy transition," Burt said.
In the U.S., companies that own coal-fired generators plan to replace some or all of the shuttered capacity with renewable energy. WEC, Tri-State and Puget Sound Energy (PSE) (Bellevue, Washington) are some of the asset owners who plan to construct renewable generation to offset the loss of coal-fired capacity.
This year's coal-fired power retirements and retirement announcements continue a years-long trend of coal-fired generation being closed in favor of some combination of new natural gas generation, renewables, batteries and customer efficiency programs. New-build nuclear power, in the form of small modular reactors (SMR), has attracted some interest, but the recent decision to terminate a plan to build several SMRs in Idaho may cool those interests. For more on that, see November 14, 2023, article - U.S. Small Modular Reactor Movement Suffers Setback with Project Cancellation.
For a variety of reasons, utilities are finding it harder to kick the coal habit. For more on that, see June 12, 2023, article - Nations, States, Utilities Find It Hard to Stop Using Coal. State regulators have been pushing electric utilities to exit coal-fired generation, and some have also discouraged utilities from building new gas-fired generation, citing global warming concerns.
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) 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).
The Tennessee Valley Authority (TVA) (Knoxville, Tennessee) closed its Bull Run Fossil Plant earlier this month, one of several coal-fired power plants that either were retired or had their retirement dates moved forward this year. The Homer Station in Pennsylvania also closed this summer. In Indiana, CenterPoint Energy Incorporated (NYSE:CNP) (Minneapolis, Minnesota) closed the two-unit A.B. Brown Power Station this year.
This month, Colorado-based Tri-State Generation and Transmission (Westminster, Colorado) said it would retire coal-fired stations in Colorado and Arizona earlier than planned. On a quarterly earnings call last month, the chief executive of WEC Energy Group Incorporated (NYSE:WEC) (Milwaukee, Wisconsin) said the company would accelerate the closure dates for several coal units. For more on that, see November 20, 2023, article - WEC Planned Investments in Generation Will Make it Coal-Free by 2032. This past summer DTE Energy Company (NYSE:DTE) (Detroit, Michigan) said it plans to close its massive Monroe Station in 2032, three years earlier than planned. In Maryland, AES Corporation (NYSE:AES) (Arlington, Virginia) announced plans to retire its Warrior Run Station in 2024.
"Altogether, 2023 wasn't a pleasant one for coal-fired power across North America," said Britt Burt, Industrial Info's vice president of research for the Global Power Industry. "We estimate that about nine gigawatts (GW) of coal-fired capacity were retired this year, well under what was retired in 2022 and about what was retired in 2021."
. "Across North America, we expect the level of coal power plant retirements to dip in 2024, but then shoot up in 2025, 2027 and 2028," Burt said.
In the U.S. and Canada, about 133 gigawatts (GW) of coal-fired generation was retired between 2012 and 2023. That's more than double the amount of gas-fired capacity that was retired over that period, Burt said. He said he expects that trend to continue over the next decade, where an estimated 72 GW of coal-fired generators across the U.S. and Canada are slated to be closed. That's about three times the amount of gas-fired capacity projected to close over that period.
Burt commented: "Environmental regulations are tightening. In the U.S., developers have an opportunity to capture an additional 10% tax credit--beyond the 30% already available--if they build renewable generation in communities that are being hit hard by the energy transition. Each year, it's getting harder and harder justifying keeping coal plants online."
The Inflation Reduction Act of 2022 (IRA) extended for 10 years the 30% tax credit available to tax-paying entities that construct renewable energy generation. That law provided an additional 10% incentive tax credit for companies that build renewable generation in areas that are negatively affected by the transition away from fossil fuels.
In addition, that law has a program, the Energy Infrastructure Reinvestment Program, to provide low-interest loans to "projects that retool, repower, repurpose, or replace energy infrastructure that has ceased operations or upgrade operating energy infrastructure to avoid, reduce, utilize, or sequester air pollutants or greenhouse gas emissions."
Although the future of coal-fired generation in North America appears bleak, Burt said reliability concerns and severe weather have a way of changing the conversation about coal power and renewable energy. Last month, the North American Electric Reliability Corporation (NERC) (Atlanta, Georgia) warned that most regions of the U.S. face the threat of rolling blackouts, a combination of severe weather, rising electric demand and retirement of dispatchable power plants. For more on that, see November 9, 2023, article - U.S. Power Use, Winter Power Challenges: Your Daily Energy News.
In Texas, the state's grid operator, ERCOT, asked owners of about 3,000 megawatts of retired coal-fired generation to bring those plants back into service to provide an additional reserve margin for the winter, but none of the owners complied. For more on that, see November 22, 2023, article - ERCOT Pulls RFP for Emergency Winter Generation, Blackouts Possible in Texas.
Meanwhile, regional transmission organizations continue to report years-long queues in connecting new generation to the electric grid.
"It seems that every couple of years I say this, but we're one severe storm away from forcing a national intervention on the speed and direction of the energy transition," Burt said.
In the U.S., companies that own coal-fired generators plan to replace some or all of the shuttered capacity with renewable energy. WEC, Tri-State and Puget Sound Energy (PSE) (Bellevue, Washington) are some of the asset owners who plan to construct renewable generation to offset the loss of coal-fired capacity.
This year's coal-fired power retirements and retirement announcements continue a years-long trend of coal-fired generation being closed in favor of some combination of new natural gas generation, renewables, batteries and customer efficiency programs. New-build nuclear power, in the form of small modular reactors (SMR), has attracted some interest, but the recent decision to terminate a plan to build several SMRs in Idaho may cool those interests. For more on that, see November 14, 2023, article - U.S. Small Modular Reactor Movement Suffers Setback with Project Cancellation.
For a variety of reasons, utilities are finding it harder to kick the coal habit. For more on that, see June 12, 2023, article - Nations, States, Utilities Find It Hard to Stop Using Coal. State regulators have been pushing electric utilities to exit coal-fired generation, and some have also discouraged utilities from building new gas-fired generation, citing global warming concerns.
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) 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).
