Reports related to this article:
Plant(s): View 14 related plants in PECWeb
Released February 09, 2021 | SUGAR LAND
en
Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Later this month, the U.S. will officially rejoin the Paris Agreement to limit emissions of carbon dioxide (CO2) from power plants in an effort to stave off global warming. In the run-up to that date, and pursuant to President Joe Biden's goal of decarbonizing the power sector, coal power plant operators continue to announce plant retirements.
Between 2011 and 2020, about 106,000 megawatts (MW) of coal-fired capacity were retired in the U.S., according to Industrial Info. Over the next decade, 2021-2030, another 55,000 MW of coal-fired capacity is slated for retirement.
While environmentalists celebrate each new closure announcement, comments from power plant operators, lawmakers and affected communities indicate they are gradually coming to grips with the slow death of coal-fired power. Their grieving process follows the five stages of grief model outlined decades ago by Swiss psychiatrist Elisabeth Kübler-Ross: Denial, Anger, Bargaining, Depression and Acceptance.
Some lawmakers in coal-rich Wyoming recently engaged in Bargaining when they considered, but rejected, efforts to limit the ability of the state's public utilities commission to approve coal-fired power plant shutdowns. Unable to negotiate or legislate their way out of coal's decline, the Kübler-Ross model suggests the coal industry in the Cowboy State will be moving on to the Depression and Acceptance stages of grief.
In other states, lawmakers, regulators and power plant owners appear to be farther along in that five-stage process, approaching Acceptance. Financial institutions and analysts are already there. In a report issued February 1, Morgan Stanley (NYSE:MS) (New York, New York) predicted no more electricity will be generated from coal by 2033. In recent months, a host of other firms, including equipment suppliers, EPC firms and financial services firms, have exited the coal power market.
That's farther and faster than the U.S. Energy Information Administration was willing to go in its Annual Energy Review. But while the details may vary, the trend is clear.
No new coal-fired power plants have been announced for years, and over the next five years, Industrial Info does not expect any new-build domestic activity. Rather, most U.S. coal-related Power Industry project spending through 2025 will be directed to environmental remediation and plant dismantling and demolition. In the current market, in-plant capital upgrades to boost the output of coal-fired generators make less sense than they did before last November's election of Joe Biden as president.
One bright spot for coal-fired power plants: federal tax credits still exist to support carbon capture and sequestration (CCS), a technology to capture and store CO2 emissions from power plants and industrial facilities. The Consolidated Appropriations Act, passed last December by Congress and signed by then-President Donald Trump, extended for two years the construction start date for CCS projects to become eligible for tax credits. Eligibility was extended for projects that begin construction by yearend 2025. Tax credits can be claimed for up to 12 years after a project begins operating.
The Section 45Q tax credits for CCS amount to $35 per metric ton for enhanced oil recovery (EOR) and $50 per metric ton for geologic storage. The tax credit also is available for non-EOR CO2 utilization and direct air capture projects. Those credits are available until 2026.
Several CCS projects are being developed in North Dakota, Nebraska and New Mexico. Those tax credits will be helpful in offsetting the cost of constructing and operating a CCS project.
The nation's only operating CCS project at a coal-fired power plant, the Petra Nova project, installed at Unit 8 of the W.A. Parish Station near Houston, Texas, has been shut down. That project, constructed at a cost of about $1 billion, came online in 2016. It captured CO2 from a 240-MW unit at the Parish Station. Owner NRG Energy Incorporated (NYSE:NRG) (Princeton, New Jersey), said the plan always was to have the facility run for a three-year demonstration period.
Many analysts thought CCS could be a technological lifeline for the coal power industry, but the costs, complexities and parasitic loads of CCS continue to challenge the economics of a project.
"Coal was the dominant fuel for electric generation during the 20th century, but the shale revolution, which began around 2008, was the beginning of the end for the black rock," said Britt Burt, Industrial Info's vice president of research for the Global Power Industry. "I'm not quite ready to say coal will be gone from the electric fuel mix by 2033 -- there's simply too much time and too many uncertainties for me to sign on to that."
"A Black Swan event, like a prolonged freeze that cuts natural gas production, or a catastrophic accident at a nuclear power plant, could force the market to pivot in a hurry," Burt continued. "But coal's recent history is bleak, and the outlook doesn't improve that much for the next decade."
For more on the outlook for project spending in the North American Power market, see January 22, 2021, article - North American Power Industry Outlook: Spending Takes Dip in 2020, but On the Rise Again.
Here is a roundup of recent coal-fired power plant closure announcements by state:
Wisconsin
Earlier this month, Alliant Energy Corporation (NASDAQ:LNT) (Madison, Wisconsin) said it would retire its Columbia Energy Center, its last coal-fired power plant in Wisconsin, by 2024. Closing the 1,100-MW facility will save Alliant about $250 million in operating costs at the plant, which has been operating for nearly half a century. Unit 1 will close by 2023, and Unit 2 will close by 2024.
"The closure of Columbia is truly a historic moment as we stop burning coal in our Wisconsin operations and fully turn our attention to generating cleaner energy using renewable resources, such as solar, battery storage and high-efficiency gas," said David de Leon, president of Wisconsin Power & Light Company (Madison, Wisconsin), Alliant's utility in Wisconsin.
"That's a cost avoidance that is very critical for our customers and our future rates," he added. "Closing the coal-generation facility is necessary as we transition toward more renewable resources, such as solar."
Last year, Alliant announced plans to construct 675 MW of solar energy generation. In the near future, the company said it will announce more details about the next phase of its solar plans.
Texas
The 680-MW Coleto Creek Power Station will close by 2027, its owner, Vistra Corporation (NYSE:VST) (Irving, Texas), said late last year. The decision to close the coal-fired plant was driven by federal regulations and the increasingly competitive Texas power market.
Also in Texas, a unit of American Electric Power (NYSE:AEP) (Columbus, Ohio) in late 2020 announced the closure of two coal-fired plants: the Henry W. Pirkey Power Station and the Welsh Power Station. Pirkey, a 660-MW lignite-fired station operating since 1985, will power down for the last time by yearend 2023. Welsh, a 1,116-MW, coal-fired facility, began generating electricity in 1977. It will close by yearend 2028.
Mississippi
In a mid-December order, the Mississippi Public Service Commission (Jackson, Mississippi) told Mississippi Power Company (Gulfport, Mississippi), a unit of the Southern Company (NYSE:SO) (Atlanta, Georgia), to study the closure of about 950 MW of fossil-fueled generation in its next integrated resource plan, which is due to be filed in the coming months.
Closing some combination of Mississippi Power's Jack Watson units 4 and 5, Green County units 1 and 2, and/or Victor J. Daniel Jr. units 1 and 2, represent the best opportunity for the utility to shrink its excess reserve margin, the commission said. The commissioners want the utility to close unneeded coal-fired power plants by the end of 2027.
"To be clear," the commission wrote in its December 17 order, "while there may be real and important operational constraints that could convince this commission to alter its findings in this order, the economic evidence available to the commission to date makes a compelling case for early retirement of some portion of (Mississippi Power's) aging fossil steam generating fleet."
Maryland
GenOn Holdings Incorporated (Houston), a large independent power producer, in mid-December committed to retire all of its coal-fired generation in Maryland by 2027 and support state legislation that would accelerate the state's transition away from coal. The company agreed to close its 1,205-MW, coal-fired Morgantown Generating Station by 2027. That facility began operating in 1970. The power producer already committed to closing its 667-MW Chalk Point station by mid-2021. That plant began generating electricity in 1964.
Colorado
Last month, Xcel Energy Incorporated (NASDAQ:XEL) (Minneapolis, Minnesota) moved up the closure date for the two-unit Hayden Power Station it operates in the Centennial State. Originally slated to close Unit 1 in 2030 and Unit 2 in 2036, Xcel Energy said Unit 2 would be retired in 2027 and Unit 1 would close in 2028.
Unit 1, with generating capacity of 190 MW, began operating in 1965. Unit 2, with generating capacity of 275 MW, began generating electricity in 1976.
Kentucky
Louisville Gas and Electric Company (Louisville, Kentucky) and Kentucky Utilities Company (Lexington, Kentucky), subsidiaries of PPL Corporation (NYSE:PPL) (Allentown, Pennsylvania), last month issued a request for proposals (RFP) for generation to replace three coal-fired units that the utilities plan to retire by 2028.
Mill Creek Power Station Unit 1, a 355-MW unit that came online in 1972, is scheduled to be retired in 2024. Mill Creek Unit 2, another 355-MW unit, began operating in 1974. That unit is scheduled to be retired in 2028. Unit 3 of the E.W. Brown Power Station, with 446 MW of generating capacity, began generating electricity in 1971. That unit also will be retired by 2028.
Florida
Lakeland Electric (Lakeland, Florida), a publicly owned electric utility, in January decided to close Unit 3 of its C.D. McIntosh Station next month, several years ahead of schedule. The 364-MW unit, which began operating in 1982, has experienced operational problems that sapped its reliability in recent years.
Minnesota
Xcel Energy last month issued an RFP for up to 500 MW of new-build solar power to replace some of the generating capacity it will lose when it shuts down its three-unit Sherburne County Power Station over the next decade.
Unit 1 of that facility, with 660 MW of generating capacity, came online in 1976. That unit is scheduled to close in 2023. Unit 2, with 721 MW of generating capacity, began operating in 1977; it will close by 2026. Sherburne Unit 3, an 809-MW generator, will close by 2030, Xcel said.
Another large Minnesota electric utility, Minnesota Power Company (Duluth, Minnesota), a unit of ALLETE Incorporated (NYSE:ALE) (Duluth), last month said it would close one of its two remaining coal-fired generators in the state and convert the other.
In a mid-January statement, the utility said, it planned to close the 335-MW Unit 3 at its Clay Boswell Energy Center by 2030, and replace its generation with a combination of about 400 MW of solar and wind power. That unit started generating electricity in 1973.
By 2035, Duluth Power plans to transition Unit 4 at Boswell, a 585-MW generator, off coal and to another fuel that it did not specify. That unit came online in 1980.
"Between 2011 and 2020, we saw about 106,000 MW of coal-fired generation retired in the U.S.," Burt said on a January 21 North American Industrial Market Outlook webinar. "In 2021, I expect we'll see about 2,000 MW of coal generation retired. In 2022, that number jumps to about 10,000 MW. Over the 2023-2030 period, we're expecting about 43,000 MW of coal-fired capacity will be retired, and I think that number will probably increase as we move forward."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
Between 2011 and 2020, about 106,000 megawatts (MW) of coal-fired capacity were retired in the U.S., according to Industrial Info. Over the next decade, 2021-2030, another 55,000 MW of coal-fired capacity is slated for retirement.
While environmentalists celebrate each new closure announcement, comments from power plant operators, lawmakers and affected communities indicate they are gradually coming to grips with the slow death of coal-fired power. Their grieving process follows the five stages of grief model outlined decades ago by Swiss psychiatrist Elisabeth Kübler-Ross: Denial, Anger, Bargaining, Depression and Acceptance.
Some lawmakers in coal-rich Wyoming recently engaged in Bargaining when they considered, but rejected, efforts to limit the ability of the state's public utilities commission to approve coal-fired power plant shutdowns. Unable to negotiate or legislate their way out of coal's decline, the Kübler-Ross model suggests the coal industry in the Cowboy State will be moving on to the Depression and Acceptance stages of grief.
In other states, lawmakers, regulators and power plant owners appear to be farther along in that five-stage process, approaching Acceptance. Financial institutions and analysts are already there. In a report issued February 1, Morgan Stanley (NYSE:MS) (New York, New York) predicted no more electricity will be generated from coal by 2033. In recent months, a host of other firms, including equipment suppliers, EPC firms and financial services firms, have exited the coal power market.
That's farther and faster than the U.S. Energy Information Administration was willing to go in its Annual Energy Review. But while the details may vary, the trend is clear.
No new coal-fired power plants have been announced for years, and over the next five years, Industrial Info does not expect any new-build domestic activity. Rather, most U.S. coal-related Power Industry project spending through 2025 will be directed to environmental remediation and plant dismantling and demolition. In the current market, in-plant capital upgrades to boost the output of coal-fired generators make less sense than they did before last November's election of Joe Biden as president.
One bright spot for coal-fired power plants: federal tax credits still exist to support carbon capture and sequestration (CCS), a technology to capture and store CO2 emissions from power plants and industrial facilities. The Consolidated Appropriations Act, passed last December by Congress and signed by then-President Donald Trump, extended for two years the construction start date for CCS projects to become eligible for tax credits. Eligibility was extended for projects that begin construction by yearend 2025. Tax credits can be claimed for up to 12 years after a project begins operating.
The Section 45Q tax credits for CCS amount to $35 per metric ton for enhanced oil recovery (EOR) and $50 per metric ton for geologic storage. The tax credit also is available for non-EOR CO2 utilization and direct air capture projects. Those credits are available until 2026.
Several CCS projects are being developed in North Dakota, Nebraska and New Mexico. Those tax credits will be helpful in offsetting the cost of constructing and operating a CCS project.
The nation's only operating CCS project at a coal-fired power plant, the Petra Nova project, installed at Unit 8 of the W.A. Parish Station near Houston, Texas, has been shut down. That project, constructed at a cost of about $1 billion, came online in 2016. It captured CO2 from a 240-MW unit at the Parish Station. Owner NRG Energy Incorporated (NYSE:NRG) (Princeton, New Jersey), said the plan always was to have the facility run for a three-year demonstration period.
Many analysts thought CCS could be a technological lifeline for the coal power industry, but the costs, complexities and parasitic loads of CCS continue to challenge the economics of a project.
"Coal was the dominant fuel for electric generation during the 20th century, but the shale revolution, which began around 2008, was the beginning of the end for the black rock," said Britt Burt, Industrial Info's vice president of research for the Global Power Industry. "I'm not quite ready to say coal will be gone from the electric fuel mix by 2033 -- there's simply too much time and too many uncertainties for me to sign on to that."
"A Black Swan event, like a prolonged freeze that cuts natural gas production, or a catastrophic accident at a nuclear power plant, could force the market to pivot in a hurry," Burt continued. "But coal's recent history is bleak, and the outlook doesn't improve that much for the next decade."
For more on the outlook for project spending in the North American Power market, see January 22, 2021, article - North American Power Industry Outlook: Spending Takes Dip in 2020, but On the Rise Again.
Here is a roundup of recent coal-fired power plant closure announcements by state:
Wisconsin
Earlier this month, Alliant Energy Corporation (NASDAQ:LNT) (Madison, Wisconsin) said it would retire its Columbia Energy Center, its last coal-fired power plant in Wisconsin, by 2024. Closing the 1,100-MW facility will save Alliant about $250 million in operating costs at the plant, which has been operating for nearly half a century. Unit 1 will close by 2023, and Unit 2 will close by 2024.
"The closure of Columbia is truly a historic moment as we stop burning coal in our Wisconsin operations and fully turn our attention to generating cleaner energy using renewable resources, such as solar, battery storage and high-efficiency gas," said David de Leon, president of Wisconsin Power & Light Company (Madison, Wisconsin), Alliant's utility in Wisconsin.
"That's a cost avoidance that is very critical for our customers and our future rates," he added. "Closing the coal-generation facility is necessary as we transition toward more renewable resources, such as solar."
Last year, Alliant announced plans to construct 675 MW of solar energy generation. In the near future, the company said it will announce more details about the next phase of its solar plans.
Texas
The 680-MW Coleto Creek Power Station will close by 2027, its owner, Vistra Corporation (NYSE:VST) (Irving, Texas), said late last year. The decision to close the coal-fired plant was driven by federal regulations and the increasingly competitive Texas power market.
Also in Texas, a unit of American Electric Power (NYSE:AEP) (Columbus, Ohio) in late 2020 announced the closure of two coal-fired plants: the Henry W. Pirkey Power Station and the Welsh Power Station. Pirkey, a 660-MW lignite-fired station operating since 1985, will power down for the last time by yearend 2023. Welsh, a 1,116-MW, coal-fired facility, began generating electricity in 1977. It will close by yearend 2028.
Mississippi
In a mid-December order, the Mississippi Public Service Commission (Jackson, Mississippi) told Mississippi Power Company (Gulfport, Mississippi), a unit of the Southern Company (NYSE:SO) (Atlanta, Georgia), to study the closure of about 950 MW of fossil-fueled generation in its next integrated resource plan, which is due to be filed in the coming months.
Closing some combination of Mississippi Power's Jack Watson units 4 and 5, Green County units 1 and 2, and/or Victor J. Daniel Jr. units 1 and 2, represent the best opportunity for the utility to shrink its excess reserve margin, the commission said. The commissioners want the utility to close unneeded coal-fired power plants by the end of 2027.
"To be clear," the commission wrote in its December 17 order, "while there may be real and important operational constraints that could convince this commission to alter its findings in this order, the economic evidence available to the commission to date makes a compelling case for early retirement of some portion of (Mississippi Power's) aging fossil steam generating fleet."
Maryland
GenOn Holdings Incorporated (Houston), a large independent power producer, in mid-December committed to retire all of its coal-fired generation in Maryland by 2027 and support state legislation that would accelerate the state's transition away from coal. The company agreed to close its 1,205-MW, coal-fired Morgantown Generating Station by 2027. That facility began operating in 1970. The power producer already committed to closing its 667-MW Chalk Point station by mid-2021. That plant began generating electricity in 1964.
Colorado
Last month, Xcel Energy Incorporated (NASDAQ:XEL) (Minneapolis, Minnesota) moved up the closure date for the two-unit Hayden Power Station it operates in the Centennial State. Originally slated to close Unit 1 in 2030 and Unit 2 in 2036, Xcel Energy said Unit 2 would be retired in 2027 and Unit 1 would close in 2028.
Unit 1, with generating capacity of 190 MW, began operating in 1965. Unit 2, with generating capacity of 275 MW, began generating electricity in 1976.
Kentucky
Louisville Gas and Electric Company (Louisville, Kentucky) and Kentucky Utilities Company (Lexington, Kentucky), subsidiaries of PPL Corporation (NYSE:PPL) (Allentown, Pennsylvania), last month issued a request for proposals (RFP) for generation to replace three coal-fired units that the utilities plan to retire by 2028.
Mill Creek Power Station Unit 1, a 355-MW unit that came online in 1972, is scheduled to be retired in 2024. Mill Creek Unit 2, another 355-MW unit, began operating in 1974. That unit is scheduled to be retired in 2028. Unit 3 of the E.W. Brown Power Station, with 446 MW of generating capacity, began generating electricity in 1971. That unit also will be retired by 2028.
Florida
Lakeland Electric (Lakeland, Florida), a publicly owned electric utility, in January decided to close Unit 3 of its C.D. McIntosh Station next month, several years ahead of schedule. The 364-MW unit, which began operating in 1982, has experienced operational problems that sapped its reliability in recent years.
Minnesota
Xcel Energy last month issued an RFP for up to 500 MW of new-build solar power to replace some of the generating capacity it will lose when it shuts down its three-unit Sherburne County Power Station over the next decade.
Unit 1 of that facility, with 660 MW of generating capacity, came online in 1976. That unit is scheduled to close in 2023. Unit 2, with 721 MW of generating capacity, began operating in 1977; it will close by 2026. Sherburne Unit 3, an 809-MW generator, will close by 2030, Xcel said.
Another large Minnesota electric utility, Minnesota Power Company (Duluth, Minnesota), a unit of ALLETE Incorporated (NYSE:ALE) (Duluth), last month said it would close one of its two remaining coal-fired generators in the state and convert the other.
In a mid-January statement, the utility said, it planned to close the 335-MW Unit 3 at its Clay Boswell Energy Center by 2030, and replace its generation with a combination of about 400 MW of solar and wind power. That unit started generating electricity in 1973.
By 2035, Duluth Power plans to transition Unit 4 at Boswell, a 585-MW generator, off coal and to another fuel that it did not specify. That unit came online in 1980.
"Between 2011 and 2020, we saw about 106,000 MW of coal-fired generation retired in the U.S.," Burt said on a January 21 North American Industrial Market Outlook webinar. "In 2021, I expect we'll see about 2,000 MW of coal generation retired. In 2022, that number jumps to about 10,000 MW. Over the 2023-2030 period, we're expecting about 43,000 MW of coal-fired capacity will be retired, and I think that number will probably increase as we move forward."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
