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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Despite President Donald Trump's efforts to support the coal industry, coal use among U.S. utilities is projected to fall to a 39-year low this year, and then drop again in 2019, according to a December 4 report from the U.S. Energy Information Administration (EIA) (Washington, D.C.). For more on that report, see December 5, 2018, article - EIA: U.S. Coal Consumption Drops to Lowest Level Since 1979, an Industrial Info Market Brief.
Click on the image at right for a chart showing overall U.S. coal consumption, and consumption by U.S. electric generators, from 1950 to 2018.
The EIA forecast U.S. coal use to drop 4% this year, to 691 million short tons, and a further decline of 8% is projected for 2019, to about 636 million short tons. Coal consumption this year is expected to fall about 44%, or 437 million short tons, less than its peak of slightly over 1 billion short tons in 2007. Over 90% of the thermal coal mined in the U.S. is used by Electric Power generators, the EIA said.
King Coal's bleak future stems from several factors, including abundant supplies of inexpensive natural gas, improved economics for renewable energy production, state and federal environmental regulation and shifting consumer preferences. Utilities recently announced plans to close coal-fired generators in Texas, Indiana and Arkansas, joining a parade of other generators that have closed or announced closure plans for coal-fired generation. For more on that, see April 5, 2018, article - Closures of Coal-Fired Power Plants Accelerate. About 11,000 megawatts (MW) of coal-fired generation have been retired this year, and asset owners plan to retire an additional 3,500 MW this year, the EIA said.
Click on the image at right to see a bar chart of actual coal-fired power plant retirements and planned coal power retirements.
And there appears to be no letup in sight, judging from a recent analysis by PacifiCorp (Portland, Oregon), that over half of its 22 coal-fired generators are uneconomic.
On the same day that the EIA released its coal-use forecast, Xcel Energy Incorporated (NYSE:XEL) (Minneapolis, Minnesota) said it would be closing the Harrington and Polk plants in Texas, which have a combined generating capacity of about 2,150 MW. Those plants were built in the late 1970s and early 1980s. The company said it intends to reduce carbon dioxide (CO2) emissions across its eight-state system by 80% by 2030. By 2050, Xcel said it plans to generate 100% of its electricity from carbon-free resources. Xcel has been greening its generation portfolio for several years. For more on that, see July 3, 2018, article - Xcel Energy Eyes $2.5 Billion in Colorado Power Projects and February 8, 2018, article - Xcel Energy to Retire Coal Plants Early as Wind Buildout Continues.
In late November, Entergy Corporation (NYSE:ETR) (New Orleans, Louisiana) said its Arkansas unit would be closing two coal-fired generators, White Bluff and Independence, no later than 2028 and 2030, respectively. Those units, which were built in the late 1970s and early 1980s, will switch to low-sulfur coal by mid-2021 before ceasing the use of coal at those plants. The two plants have combined generating capacity of 3,400 MW.
Several weeks before Entergy's announcement, another large coal-reliant utility, Northern Indiana Public Service Company LLC (NIPSCO) (Merrillville, Indiana) said it would close five coal-fired units at two plants. The five units have combined generating capacity of about 1,800 MW. By 2023, NIPSCO said, it would cease operations at units 14,15, 17 and 18 at its Rollin M Schahfer Power Station, located in Wheatfield, Indiana. The utility, a unit of NiSource Incorporated (NYSE:NI) (Merrillville, Indiana), also plans to close Unit 12 of its Michigan City Generating Station by 2028.
In a September 19 statement, NIPSCO said its analysis showed "the most viable option for customers would include moving up the retirement of a majority of its remaining coal-fired generation in the next five years and (retiring) all coal within the next 10 years."
In announcing the closure decisions, NIPSCO President Violet Sistovaris said, "This creates a vision for the future that is better for our customers and it's consistent with our goal to transition to the best cost, cleanest electric supply mix available while maintaining reliability, diversity and flexibility for technology and market changes."
Although the Indiana utility did not conclusively identify what resources would replace the coal generation slated to be retired, it said the likely replacement options point toward lower-cost renewable energy resources such as wind, solar and battery storage technology.
"Technology and market changes continue to transform the energy industry, opening more competitive options and it's the primary driver of the changes being considered for our system," continued Sistovaris. "Retiring our aging coal fleet sooner will cost substantially less compared to our original plans for extending retirements over a longer duration." News reports said NIPSCO would save as much as $4 billion by switching from coal-fired generation to cleaner alternatives.
Across the country, in Oregon, PacifiCorp, a unit of Berkshire Hathaway Incorporated (NYSE:BRK-A) (Omaha, Nebraska), released a study December 3 that said about 60% of its coal-fired units were uneconomic. This study, part of the Portland-based utility's long-term integrated resource plan (IRP), identified coal-fired power plants in Wyoming and Colorado as vulnerable to closure.
In one scenario, PacifiCorp said it could save consumers money by retiring 16 of its 22 coal units early. A scenario that assessed planning and risk concluded that retiring 13 coal units early would be a benefit to consumers, according to a news report in E&E News.
In an email to that news organization, PacifiCorp spokesperson Bob Gravely wrote: "The study looked at the cost of continuing to operate these units versus other alternatives (renewables, natural gas, market purchases, etc.) and it reflects the continued cost pressure on coal generation driven by market forces and regulatory requirements."
The PacifiCorp units said to be under particular cost pressures were one unit at the Jim Bridger Plant, two units at the Naughton plant, one unit of the Hayden plant and one unit at the Craig station.
"This is a difficult time to be in the coal-mining industry or the coal-fired Power business," said Britt Burt, Industrial Info's vice president of research for the Global Electric Power industry. "Coal was the foundation of the U.S. electricity business during most of the 20th century, but as the 21st century unfolds, it appears its role will continue to decline."
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.
The EIA forecast U.S. coal use to drop 4% this year, to 691 million short tons, and a further decline of 8% is projected for 2019, to about 636 million short tons. Coal consumption this year is expected to fall about 44%, or 437 million short tons, less than its peak of slightly over 1 billion short tons in 2007. Over 90% of the thermal coal mined in the U.S. is used by Electric Power generators, the EIA said.
King Coal's bleak future stems from several factors, including abundant supplies of inexpensive natural gas, improved economics for renewable energy production, state and federal environmental regulation and shifting consumer preferences. Utilities recently announced plans to close coal-fired generators in Texas, Indiana and Arkansas, joining a parade of other generators that have closed or announced closure plans for coal-fired generation. For more on that, see April 5, 2018, article - Closures of Coal-Fired Power Plants Accelerate. About 11,000 megawatts (MW) of coal-fired generation have been retired this year, and asset owners plan to retire an additional 3,500 MW this year, the EIA said.
And there appears to be no letup in sight, judging from a recent analysis by PacifiCorp (Portland, Oregon), that over half of its 22 coal-fired generators are uneconomic.
On the same day that the EIA released its coal-use forecast, Xcel Energy Incorporated (NYSE:XEL) (Minneapolis, Minnesota) said it would be closing the Harrington and Polk plants in Texas, which have a combined generating capacity of about 2,150 MW. Those plants were built in the late 1970s and early 1980s. The company said it intends to reduce carbon dioxide (CO2) emissions across its eight-state system by 80% by 2030. By 2050, Xcel said it plans to generate 100% of its electricity from carbon-free resources. Xcel has been greening its generation portfolio for several years. For more on that, see July 3, 2018, article - Xcel Energy Eyes $2.5 Billion in Colorado Power Projects and February 8, 2018, article - Xcel Energy to Retire Coal Plants Early as Wind Buildout Continues.
In late November, Entergy Corporation (NYSE:ETR) (New Orleans, Louisiana) said its Arkansas unit would be closing two coal-fired generators, White Bluff and Independence, no later than 2028 and 2030, respectively. Those units, which were built in the late 1970s and early 1980s, will switch to low-sulfur coal by mid-2021 before ceasing the use of coal at those plants. The two plants have combined generating capacity of 3,400 MW.
Several weeks before Entergy's announcement, another large coal-reliant utility, Northern Indiana Public Service Company LLC (NIPSCO) (Merrillville, Indiana) said it would close five coal-fired units at two plants. The five units have combined generating capacity of about 1,800 MW. By 2023, NIPSCO said, it would cease operations at units 14,15, 17 and 18 at its Rollin M Schahfer Power Station, located in Wheatfield, Indiana. The utility, a unit of NiSource Incorporated (NYSE:NI) (Merrillville, Indiana), also plans to close Unit 12 of its Michigan City Generating Station by 2028.
In a September 19 statement, NIPSCO said its analysis showed "the most viable option for customers would include moving up the retirement of a majority of its remaining coal-fired generation in the next five years and (retiring) all coal within the next 10 years."
In announcing the closure decisions, NIPSCO President Violet Sistovaris said, "This creates a vision for the future that is better for our customers and it's consistent with our goal to transition to the best cost, cleanest electric supply mix available while maintaining reliability, diversity and flexibility for technology and market changes."
Although the Indiana utility did not conclusively identify what resources would replace the coal generation slated to be retired, it said the likely replacement options point toward lower-cost renewable energy resources such as wind, solar and battery storage technology.
"Technology and market changes continue to transform the energy industry, opening more competitive options and it's the primary driver of the changes being considered for our system," continued Sistovaris. "Retiring our aging coal fleet sooner will cost substantially less compared to our original plans for extending retirements over a longer duration." News reports said NIPSCO would save as much as $4 billion by switching from coal-fired generation to cleaner alternatives.
Across the country, in Oregon, PacifiCorp, a unit of Berkshire Hathaway Incorporated (NYSE:BRK-A) (Omaha, Nebraska), released a study December 3 that said about 60% of its coal-fired units were uneconomic. This study, part of the Portland-based utility's long-term integrated resource plan (IRP), identified coal-fired power plants in Wyoming and Colorado as vulnerable to closure.
In one scenario, PacifiCorp said it could save consumers money by retiring 16 of its 22 coal units early. A scenario that assessed planning and risk concluded that retiring 13 coal units early would be a benefit to consumers, according to a news report in E&E News.
In an email to that news organization, PacifiCorp spokesperson Bob Gravely wrote: "The study looked at the cost of continuing to operate these units versus other alternatives (renewables, natural gas, market purchases, etc.) and it reflects the continued cost pressure on coal generation driven by market forces and regulatory requirements."
The PacifiCorp units said to be under particular cost pressures were one unit at the Jim Bridger Plant, two units at the Naughton plant, one unit of the Hayden plant and one unit at the Craig station.
"This is a difficult time to be in the coal-mining industry or the coal-fired Power business," said Britt Burt, Industrial Info's vice president of research for the Global Electric Power industry. "Coal was the foundation of the U.S. electricity business during most of the 20th century, but as the 21st century unfolds, it appears its role will continue to decline."
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.
