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Released July 15, 2024 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--What started as a trickle may turn into a torrent. Operators of coal-fired electric generators have delayed a number of planned coal-fired generator closures in recent years, citing everything from skyrocketing electric demand growth from data centers to delays in bringing replacement resources online. Last year was the hottest on record, shattering hundreds of U.S. temperature records. Scorching temperatures at the start of the summer of 2024 adds new urgency to the debate: do you want your power reliable, or clean?
Since 2021, electric utilities in Missouri, Oregon, Nebraska, Wisconsin and South Carolina have postponed planned closure of coal-fired power plants. Some of these postponements were announced before the power industry realized how fast electric demand was rising, driven largely by data centers, particularly those equipped with artificial intelligence (AI), which can drive up data center electric demand by a factor of between 10 and 30 over non-AI-equipped data centers, according to Pablo Vegas, president and chief executive at Texas grid manager ERCOT.
But the proliferation of data centers has upended utilities' plans, including delaying the closure of some coal-fired power plants. For more on data centers and electric demand, see: June 27, 2024, article - IIR Webinar: Rapid Growth in Data Center & Semiconductor Sectors Brings Strong Spending, New Challenges; June 7, 2024, article - EPRI Report Sees Dramatic U.S Electric Demand Growth from Data Centers; and April 16, 2024, article - Data Center Construction Propels Electric Load Growth and Utility Capex.
At the start of this year, Industrial Info Resources was projecting just under 5 gigawatts (GW) of U.S. coal-fired generating capacity would be retired this year. But, in a mid-year update, that number fell to about 3 GW as utilities delayed retirement dates for some coal-fired generators.
Britt Burt, IIR's senior vice president of research for the global Power Industry, thinks that number will continue to trend downward.
"A foundational, non-negotiable element of electric utilities' mission is to provide reliable power," he commented. "It's their reason they exist. Everything else -- safety, affordability and, more recently, sustainability -- comes after reliability. To meet soaring electric demand, they will use any and all resources at their disposal, starting with the most economical ones first."
"In recent years," he continued, "that meant increased reliance on intermittent renewable electric generation like solar and wind, as their costs fell and the costs to operate coal-fired plants rose."
"But this summer, it is every megawatt on deck," observed Burt, who has analyzed the electric power industry for 32 years. "I've never seen anything like it. This summer, I expect to see more asset owners push back the retirement dates of coal-fired units. That could also mean reactivating coal-fired generators that have not yet been mothballed. Heck, it could even mean reactivating oil-fired generators that have not been mothballed yet."
"Keeping the lights on and the air conditioners humming this summer will require every megawatt of supply- and demand-side resources short of taking a power plant out of mothballs. Once a power plant is mothballed, it's not typically economic to bring it back online."
"After the fact, environmental organizations and regulators might ask some hard questions about utilities' choice of resources," he continued. "In essence, I expect utilities' answer will be, in effect, 'increased carbon dioxide (CO2) emissions were preferrable to rolling blackouts'."
At any rate, the IIR SVP commented, those alarmed by the rise in global carbon emissions from power plants need to recognize that China, India and other Asian nations bear far more responsibility for the growth of those emissions than the U.S. as documented by recent reports from the International Energy Agency (IEA) (Paris, France) and the Energy Institute (London, England). For more on that, see June 21, 2024, article -- Global Coal Use Hit New Record in 2023, Contributing to Record CO2 Emissions and January 25, 2024, article - IEA Cheers Expected Surge in Non-Emitting Electric Generation.
Burt said IIR is expecting the number of gigawatts of coal-fired generating capacity slated for retirement in 2025 and beyond will be pushed up by deferred retirements in 2024.
"Over the 2024-2033 period, we are tracking the planned retirement of about 71.5 GW of coal-fired generation in the U.S.," he said. "In the near term, that works out to closing about 13 GW of U.S. coal-fired generation in 2025, slightly over 4 GW in 2026, 11 GW in 2027 and 16 GW in 2028. We expect those numbers to rise. We're keeping a close eye on them."
Several grid managers and reliability organizations have warned about a potential shortfall of electric generation in the near future, as surging demand from data centers, particularly those utilizing AI, test the ability of utilities to keep electricity flowing. For more on that, see June 18, 2024 article - Was $10 Billion Enough? Texans Face Another White-Knuckled Summer and May 17, 2024, article - NERC Warns of Tests for U.S. Grid During Hot, Hot Summer.
In the spring of 2021, Evergy Incorporated (NASDAQ:EVRG) (Kansas City, Missouri) told state utility regulators in Missouri and Kansas that it planned to close its Lawrence Energy Center units 4 and 5, totaling 487 MW, by yearend 2023. Those coal-fired units began operating in 1960 and 1971, respectively. For more on that, see July 22, 2021, article - Evergy Boosts Capital Spending as it Pursues Net-Zero Carbon by 2045 Goal. But a few months later, it said it would instead partly run one of the plant's units with natural gas, in a concession to reliability concerns. Then, last summer, citing stronger-than-predicted demand growth and new requirements by its grid manager, the Southwest Power Pool (Little Rock, Arkansas), Evergy said it would retire the Lawrence coal generators by 2028.
In its late-2019 integrated resource plan (IRP), PacifiCorp (Portland, Oregon), a unit of Berkshire Hathaway Incorporated (NYSE:BRK.A) (Omaha, Nebraska), said it planned to close about 2,800 MW of coal-fired power plants by 2030 and nearly 4,500 MW by 2038 to make way for renewable energy and battery storage capacity.
At that time, PacifiCorp moved the planned retirement dates of several coal-burning generators forward. But some of those plans have changed. For more on that, see April 10, 2024, article - PacifiCorp's New Plan: Use Coal Longer, Cut Renewables and Storage. Specifically:
PacifiCorp and Evergy are not alone in delaying the retirement of coal-fired generators:
FirstEnergy operates 10 electric distribution companies that provides electricity to six million customers in five states in the Midwest and Mid-Atlantic regions. It operates two coal-fired power stations in West Virginia with about 3,082 MW of combined generating capacity.
FirstEnergy's operating utilities operate in the PJM Interconnection, a power market that includes northern Virginia, the world's largest data center hub. Electricity demand in the PJM region is one of the fastest-growing in the country, the Financial Times reported, with the operator this year more than tripling its growth forecast for the next decade.
"When we were looking at emissions reduction, it was based on running our coal-fired power plants less at the end of the decade," said Brian Tierney, FirstEnergy's Chief Executive Officer. "We don't see a pathway for that now."
"The things that are bumping up against each other are people's growing demand and desire for reliability, what's affordable for most customers, and then what's sustainable. It's easier to make two of those three things congruent with one another. It's harder to get all three solved at the same time," Tierney told the Financial Times.
"That's why we had to withdraw our interim goal. Some people think we were bad people for doing that. I think . . . we're just honest," he added.
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 over 200,000 current and future projects worth $17.8 Trillion (USD).
Since 2021, electric utilities in Missouri, Oregon, Nebraska, Wisconsin and South Carolina have postponed planned closure of coal-fired power plants. Some of these postponements were announced before the power industry realized how fast electric demand was rising, driven largely by data centers, particularly those equipped with artificial intelligence (AI), which can drive up data center electric demand by a factor of between 10 and 30 over non-AI-equipped data centers, according to Pablo Vegas, president and chief executive at Texas grid manager ERCOT.
But the proliferation of data centers has upended utilities' plans, including delaying the closure of some coal-fired power plants. For more on data centers and electric demand, see: June 27, 2024, article - IIR Webinar: Rapid Growth in Data Center & Semiconductor Sectors Brings Strong Spending, New Challenges; June 7, 2024, article - EPRI Report Sees Dramatic U.S Electric Demand Growth from Data Centers; and April 16, 2024, article - Data Center Construction Propels Electric Load Growth and Utility Capex.
At the start of this year, Industrial Info Resources was projecting just under 5 gigawatts (GW) of U.S. coal-fired generating capacity would be retired this year. But, in a mid-year update, that number fell to about 3 GW as utilities delayed retirement dates for some coal-fired generators.
Britt Burt, IIR's senior vice president of research for the global Power Industry, thinks that number will continue to trend downward.
"A foundational, non-negotiable element of electric utilities' mission is to provide reliable power," he commented. "It's their reason they exist. Everything else -- safety, affordability and, more recently, sustainability -- comes after reliability. To meet soaring electric demand, they will use any and all resources at their disposal, starting with the most economical ones first."
"In recent years," he continued, "that meant increased reliance on intermittent renewable electric generation like solar and wind, as their costs fell and the costs to operate coal-fired plants rose."
"But this summer, it is every megawatt on deck," observed Burt, who has analyzed the electric power industry for 32 years. "I've never seen anything like it. This summer, I expect to see more asset owners push back the retirement dates of coal-fired units. That could also mean reactivating coal-fired generators that have not yet been mothballed. Heck, it could even mean reactivating oil-fired generators that have not been mothballed yet."
"Keeping the lights on and the air conditioners humming this summer will require every megawatt of supply- and demand-side resources short of taking a power plant out of mothballs. Once a power plant is mothballed, it's not typically economic to bring it back online."
"After the fact, environmental organizations and regulators might ask some hard questions about utilities' choice of resources," he continued. "In essence, I expect utilities' answer will be, in effect, 'increased carbon dioxide (CO2) emissions were preferrable to rolling blackouts'."
At any rate, the IIR SVP commented, those alarmed by the rise in global carbon emissions from power plants need to recognize that China, India and other Asian nations bear far more responsibility for the growth of those emissions than the U.S. as documented by recent reports from the International Energy Agency (IEA) (Paris, France) and the Energy Institute (London, England). For more on that, see June 21, 2024, article -- Global Coal Use Hit New Record in 2023, Contributing to Record CO2 Emissions and January 25, 2024, article - IEA Cheers Expected Surge in Non-Emitting Electric Generation.
Burt said IIR is expecting the number of gigawatts of coal-fired generating capacity slated for retirement in 2025 and beyond will be pushed up by deferred retirements in 2024.
"Over the 2024-2033 period, we are tracking the planned retirement of about 71.5 GW of coal-fired generation in the U.S.," he said. "In the near term, that works out to closing about 13 GW of U.S. coal-fired generation in 2025, slightly over 4 GW in 2026, 11 GW in 2027 and 16 GW in 2028. We expect those numbers to rise. We're keeping a close eye on them."
Several grid managers and reliability organizations have warned about a potential shortfall of electric generation in the near future, as surging demand from data centers, particularly those utilizing AI, test the ability of utilities to keep electricity flowing. For more on that, see June 18, 2024 article - Was $10 Billion Enough? Texans Face Another White-Knuckled Summer and May 17, 2024, article - NERC Warns of Tests for U.S. Grid During Hot, Hot Summer.
In the spring of 2021, Evergy Incorporated (NASDAQ:EVRG) (Kansas City, Missouri) told state utility regulators in Missouri and Kansas that it planned to close its Lawrence Energy Center units 4 and 5, totaling 487 MW, by yearend 2023. Those coal-fired units began operating in 1960 and 1971, respectively. For more on that, see July 22, 2021, article - Evergy Boosts Capital Spending as it Pursues Net-Zero Carbon by 2045 Goal. But a few months later, it said it would instead partly run one of the plant's units with natural gas, in a concession to reliability concerns. Then, last summer, citing stronger-than-predicted demand growth and new requirements by its grid manager, the Southwest Power Pool (Little Rock, Arkansas), Evergy said it would retire the Lawrence coal generators by 2028.
In its late-2019 integrated resource plan (IRP), PacifiCorp (Portland, Oregon), a unit of Berkshire Hathaway Incorporated (NYSE:BRK.A) (Omaha, Nebraska), said it planned to close about 2,800 MW of coal-fired power plants by 2030 and nearly 4,500 MW by 2038 to make way for renewable energy and battery storage capacity.
At that time, PacifiCorp moved the planned retirement dates of several coal-burning generators forward. But some of those plans have changed. For more on that, see April 10, 2024, article - PacifiCorp's New Plan: Use Coal Longer, Cut Renewables and Storage. Specifically:
- Jim Bridger Power Station in Wyoming: Unit 1 was originally planned to close in 2028, but in 2019 PacifiCorp moved that date forward, to 2023. But then, it pushed it back to 2027. PacifiCorp is the 66.6% owner of this station. Unit 1 has 578 MW of generating capacity.
- Craig Power Station in Colorado: Unit 2 had an original closure date of 2034, but that was moved forward to 2026 before being moved back to 2028. PacifiCorp is the 19.3% owner of this plant. Unit 2 has generating capacity of 389 MW.
- Jim Bridger Power Station Unit 2 was originally scheduled to be retired in 2032, but in 2019 PacifiCorp moved it forward to 2028. Subsequently, that retirement date was pushed back to 2037. This unit has 578 MW of generating capacity.
PacifiCorp and Evergy are not alone in delaying the retirement of coal-fired generators:
- Two summers ago, citing concerns about electric reliability, the Omaha Public Power District (OPPD) (Omaha, Nebraska) pushed back the planned retirement date of its 645-MW North Omaha Power Station three years, to 2026.
- Also during the summer of 2022, Alliant Energy Corporation (NASDAQ:LNT) (Madison, Wisconsin) and We Energies (Milwaukee, Wisconsin), a unit of WEC Energy Group Incorporated (NYSE:WEC) (Milwaukee, Wisconsin), said they would delay planned retirement of coal-burning units they operated.
- In an IRP filed last year, Dominion Energy Incorporated (NYSE:D) (Richmond, Virginia) said it would again delay the retirement of its 660-MW A.M. Williams Power Station, to 2030, and declined to say when it planned to retire the 700-MW Wateree Power Station.
- Also in 2023, Santee Cooper (Moncks Corner, South Carolina) said it would delay the retirement of the 1,160-MW Winyah Power Station by three years, to yearend 2029, to align with the planned in-service date of a large gas-fired plant it co-owned with Dominion.
FirstEnergy operates 10 electric distribution companies that provides electricity to six million customers in five states in the Midwest and Mid-Atlantic regions. It operates two coal-fired power stations in West Virginia with about 3,082 MW of combined generating capacity.
FirstEnergy's operating utilities operate in the PJM Interconnection, a power market that includes northern Virginia, the world's largest data center hub. Electricity demand in the PJM region is one of the fastest-growing in the country, the Financial Times reported, with the operator this year more than tripling its growth forecast for the next decade.
"When we were looking at emissions reduction, it was based on running our coal-fired power plants less at the end of the decade," said Brian Tierney, FirstEnergy's Chief Executive Officer. "We don't see a pathway for that now."
"The things that are bumping up against each other are people's growing demand and desire for reliability, what's affordable for most customers, and then what's sustainable. It's easier to make two of those three things congruent with one another. It's harder to get all three solved at the same time," Tierney told the Financial Times.
"That's why we had to withdraw our interim goal. Some people think we were bad people for doing that. I think . . . we're just honest," he added.
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 over 200,000 current and future projects worth $17.8 Trillion (USD).
