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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Power emergencies last week in Texas, and a summer of closure announcements for coal mines and coal-fired power plants, have some wondering if the Power Industry's abandonment of coal may have gone too far, too fast.
"I realize there are compelling legal and environmental reasons for closing coal-fired power plants, and economic benefits to boot, but the industry should not lose sight of fuel diversity as a bedrock principle," said Industrial Info's Britt Burt, vice president of research for the Global Power Industry.
"Putting too many of your eggs into one basket--whether that basket is marked "gas," "coal," or "renewables"--is risky," he continued. "Every once in a while, natural gas prices spike. Extreme cold temporarily idles some wind generation. Solar doesn't produce electricity when it's cloudy, or at night. More than a century of operational experience has taught the industry that it needs to spread risk by keeping a diverse set of fuel sources. I worry that we have lost sight of that."
Last week, as Texas roasted in a brutal heat wave, the Electric Reliability Council of Texas (ERCOT) (Austin, Texas), the state's grid operator, called power emergencies and asked residential and commercial customers to practice electricity conservation, mainly by adjusting air conditioning. A large number of coal-fired power plant retirements, coupled with strong economic growth and delays in completing some power projects, caused the agency to alert the public several times earlier this year about the potential for power emergencies. For more on that, see May 14, 2019, article - Texans May Experience Electric Emergencies This Summer.
Last month, Vistra Energy Corporation (NYSE:VST) (Irving, Texas), a large merchant power generator, announced it would close four Illinois coal-fired power plants totaling 2,069 megawatts (MW). South Carolina utility Santee Cooper (Moncks Corner, South Carolina) in August said it would close a four-unit coal-fired power plant with about 1,100 MW of aggregate generating capacity over the next few years. Two of those units will close by 2023, and the other two will be shut down by 2027, the utility said. And in Arizona, the last trainload of coal arrived last month at the Navajo Generating Station (NGS), a 2,250-MW coal-fired power plant in northern Arizona that will be closed by the end of this year.
The Vistra announcement was driven by state environmental regulations. Santee Cooper's decision was based on economics and fuel diversity: it wanted to cut costs and reduce its reliance on coal, which generated about 46% of its electricity in 2018. The NGS closure was an economic decision driven by low-priced gas-fired generation.
Earlier this summer, utilities in Florida and Utah announced closure decisions for coal-fired power plants they owned. Large coal-burning power plants in Kentucky and Pennsylvania are scheduled to burn their last load of coal this year. Two coal-fired generators in Colorado are scheduled to be retired in the next few years, nearly a decade ahead of schedule.
Power plant owners across the country have for years been in a defensive mode on coal. For more on that , see May 20, 2019, article - Western Coal Power Round-Up: Close, Sell or Protect.
WEC Energy Group Incorporated (NYSE:WEC) (Milwaukee, Wisconsin) recently shut down three of its less-efficient coal-fired power plants in Illinois, Wisconsin and Michigan. On a recent earnings call, WEC Executive Chairman Gale Klappa reportedly said those closures would cut the company's operating and maintenance costs by about $100 million per year.
The Pennsylvania Public Utilities Commission forecast that coal's share of the electric fuel mix would fall to about 24% by yearend 2022, down from roughly 28% right now.
Industrial Info's Burt said, "We tracked the closure of about 17,000 MW of coal-fired power plants in 2018, significantly more than in any single year since 2013. We expect that number to fall to about 9,000 MW in 2019, then rise to about 13,000 MW in 2020." For more on that, see April 2, 2019, article - Closure of Coal-Fired Generators Surged in 2018, Expected to Slow in 2019.
U.S. power companies closed nearly 102,000 MW of coal-fired generating capacity between 2010 and the first quarter of 2019, nearly one-third of the nation's coal-fired generating fleet, according to the U.S. Energy Information Administration (EIA). The agency predicted another 17,000 MW of coal-fired capacity is expected to close by 2025.
Those "close or convert" decisions have cut deeply into coal use by U.S. power generators and coal-mining employment. According to the EIA, coal burn in the U.S. is scheduled to fall to about 526 million short tons by 2020, down nearly 50% from its peak in 2005.
Click on the image at right for a graphic with historical and projected coal use by U.S. power generators.
Coal generated about 48% of the nation's electricity in 2008, but the black rock's share of the electricity fuel mix fell to 28% in 2018. The EIA's Short-Term Energy Outlook expects coal's share of power generation to be approximately 24% in both 2019 and 2020.
The St. Louis Federal Reserve Bank, which tracks coal-mining employment, earlier this year said coal-mining employment ticked up by about 4,000. But that glimmer of hope likely got wiped out by coal-mining closure announcements made over the summer.
Click on the image at right to see a graphic on coal-miner employment.
Coal mines across the nation have announced plans to close in recent weeks. The dissolution of Blackjewel LLC (Milton, West Virginia) cost about 1,700 coal miners in Wyoming, Virginia, Virginia and Kentucky their jobs this summer. Smaller mining concerns in Indiana, Illinois and Kentucky also announced closure decisions this summer. The closure of the giant NGS plant likely will close a northern Arizona coal mine. The potential closure of the San Juan Generating Station in New Mexico could threaten other coal mining jobs in the southwest.
The Trump administration has fought for coal and coal-miners' jobs by repealing the Obama administration's Clean Power Plan and replacing it with a more industry-friendly Affordable Clean Energy rule, which has been challenged in the courts. For more on that see August 20, 2019, article - Blue States Sue to Block ACE, but Eyes Are on Earlier Decisions.
"Economic, regulatory and political forces continue to take their toll on coal miners and owners of coal-fired power plants," Burt noted. "Coal mining is a difficult line of work under the best of circumstances, and the last few years have been anything but the best of circumstances."
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.
"I realize there are compelling legal and environmental reasons for closing coal-fired power plants, and economic benefits to boot, but the industry should not lose sight of fuel diversity as a bedrock principle," said Industrial Info's Britt Burt, vice president of research for the Global Power Industry.
"Putting too many of your eggs into one basket--whether that basket is marked "gas," "coal," or "renewables"--is risky," he continued. "Every once in a while, natural gas prices spike. Extreme cold temporarily idles some wind generation. Solar doesn't produce electricity when it's cloudy, or at night. More than a century of operational experience has taught the industry that it needs to spread risk by keeping a diverse set of fuel sources. I worry that we have lost sight of that."
Last week, as Texas roasted in a brutal heat wave, the Electric Reliability Council of Texas (ERCOT) (Austin, Texas), the state's grid operator, called power emergencies and asked residential and commercial customers to practice electricity conservation, mainly by adjusting air conditioning. A large number of coal-fired power plant retirements, coupled with strong economic growth and delays in completing some power projects, caused the agency to alert the public several times earlier this year about the potential for power emergencies. For more on that, see May 14, 2019, article - Texans May Experience Electric Emergencies This Summer.
Last month, Vistra Energy Corporation (NYSE:VST) (Irving, Texas), a large merchant power generator, announced it would close four Illinois coal-fired power plants totaling 2,069 megawatts (MW). South Carolina utility Santee Cooper (Moncks Corner, South Carolina) in August said it would close a four-unit coal-fired power plant with about 1,100 MW of aggregate generating capacity over the next few years. Two of those units will close by 2023, and the other two will be shut down by 2027, the utility said. And in Arizona, the last trainload of coal arrived last month at the Navajo Generating Station (NGS), a 2,250-MW coal-fired power plant in northern Arizona that will be closed by the end of this year.
The Vistra announcement was driven by state environmental regulations. Santee Cooper's decision was based on economics and fuel diversity: it wanted to cut costs and reduce its reliance on coal, which generated about 46% of its electricity in 2018. The NGS closure was an economic decision driven by low-priced gas-fired generation.
Earlier this summer, utilities in Florida and Utah announced closure decisions for coal-fired power plants they owned. Large coal-burning power plants in Kentucky and Pennsylvania are scheduled to burn their last load of coal this year. Two coal-fired generators in Colorado are scheduled to be retired in the next few years, nearly a decade ahead of schedule.
Power plant owners across the country have for years been in a defensive mode on coal. For more on that , see May 20, 2019, article - Western Coal Power Round-Up: Close, Sell or Protect.
WEC Energy Group Incorporated (NYSE:WEC) (Milwaukee, Wisconsin) recently shut down three of its less-efficient coal-fired power plants in Illinois, Wisconsin and Michigan. On a recent earnings call, WEC Executive Chairman Gale Klappa reportedly said those closures would cut the company's operating and maintenance costs by about $100 million per year.
The Pennsylvania Public Utilities Commission forecast that coal's share of the electric fuel mix would fall to about 24% by yearend 2022, down from roughly 28% right now.
Industrial Info's Burt said, "We tracked the closure of about 17,000 MW of coal-fired power plants in 2018, significantly more than in any single year since 2013. We expect that number to fall to about 9,000 MW in 2019, then rise to about 13,000 MW in 2020." For more on that, see April 2, 2019, article - Closure of Coal-Fired Generators Surged in 2018, Expected to Slow in 2019.
U.S. power companies closed nearly 102,000 MW of coal-fired generating capacity between 2010 and the first quarter of 2019, nearly one-third of the nation's coal-fired generating fleet, according to the U.S. Energy Information Administration (EIA). The agency predicted another 17,000 MW of coal-fired capacity is expected to close by 2025.
Those "close or convert" decisions have cut deeply into coal use by U.S. power generators and coal-mining employment. According to the EIA, coal burn in the U.S. is scheduled to fall to about 526 million short tons by 2020, down nearly 50% from its peak in 2005.
Click on the image at right for a graphic with historical and projected coal use by U.S. power generators.Coal generated about 48% of the nation's electricity in 2008, but the black rock's share of the electricity fuel mix fell to 28% in 2018. The EIA's Short-Term Energy Outlook expects coal's share of power generation to be approximately 24% in both 2019 and 2020.
The St. Louis Federal Reserve Bank, which tracks coal-mining employment, earlier this year said coal-mining employment ticked up by about 4,000. But that glimmer of hope likely got wiped out by coal-mining closure announcements made over the summer.
Click on the image at right to see a graphic on coal-miner employment.Coal mines across the nation have announced plans to close in recent weeks. The dissolution of Blackjewel LLC (Milton, West Virginia) cost about 1,700 coal miners in Wyoming, Virginia, Virginia and Kentucky their jobs this summer. Smaller mining concerns in Indiana, Illinois and Kentucky also announced closure decisions this summer. The closure of the giant NGS plant likely will close a northern Arizona coal mine. The potential closure of the San Juan Generating Station in New Mexico could threaten other coal mining jobs in the southwest.
The Trump administration has fought for coal and coal-miners' jobs by repealing the Obama administration's Clean Power Plan and replacing it with a more industry-friendly Affordable Clean Energy rule, which has been challenged in the courts. For more on that see August 20, 2019, article - Blue States Sue to Block ACE, but Eyes Are on Earlier Decisions.
"Economic, regulatory and political forces continue to take their toll on coal miners and owners of coal-fired power plants," Burt noted. "Coal mining is a difficult line of work under the best of circumstances, and the last few years have been anything but the best of circumstances."
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.
