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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--U.S. coal-fired power plant closures surged in 2018, but are expected to decline this year before rising in 2020, Britt Burt, Industrial Info's vice president of research for the Global Power Industry, told about 1,000 attendees at Industrial Info's 2019 Industrial Market Outlook earlier this year.
"We tracked about 17,000 megawatts (MW) of coal-fired power plant closures in 2018, significantly more than in any single year since 2013," he said. "We expect that number to fall to about 9,000 MW in 2019, then rise to about 13,000 MW in 2020."
Click on the image at right to see a graphic on U.S. power plant retirements from 2013-2018, and with projections for 2019 and 2020.
"How dead is coal-fired generation?" Burt asked rhetorically at the briefing. "New-build coal generation is as dead as a doornail. We don't see construction beginning on any new coal plants for the next few years. And the economics of gas-fired generation, plus public-policy support for renewables and tighter regulation of coal plants, has been a powerful combination that has idled hundreds of existing coal-fired plants over the last several years."
"There are, of course, several billion dollars of in-plant capital projects, like environmental retrofits, that are scheduled to kick off at U.S. coal-fired power plants between 2019 and 2021," Burt continued. Most of this work is expected to take place in the Mid-Atlantic, Great Lakes and Southeast regions, he added.
There are several factors behind the surge in coal plant closures in 2018, Burt pointed out. "We've seen a sustained growth in supply of low-cost natural gas, coupled with the completion of construction for a number of gas-fired generators. The retirement of many coal units was tied to the completion of replacement gas-fired capacity."
"Add to that the continued declines in levelized cost of electricity (LCOE) from renewable generation: Wind generation costs have declined 15% over the last five years while solar costs have fallen 65%. Power producers are on a mission to move to lower-carbon options. It took some time to bring on new natural gas generation and renewable generation, which for now has to be backed up by natural gas generation."
Burt's comments largely tracked reports from other sources, including Standard & Poor's, about the bleak future of coal-fired generation in the U.S., despite President Donald Trump's efforts to support that fuel. While there is no agreement on the exact number of plants and megawatts that were closed in 2018, or how many units could be closed this year and 2020, there is agreement about the overall downward trajectory of the U.S. coal fleet.
Pain being experienced by coal-fired generators is affecting coal mines as well. Last month, the U.S. Energy Information Administration (EIA) reported more than half of all U.S. coal mines closed during the worst decade for coal in modern memory. In 2008, there were 1,435 coal mines in the United States. By the end of 2017, there were 671.
"The uptick in mine closures since 2008 has largely been driven by economics, and smaller, less profitable mines have been more susceptible to closures," the EIA wrote. "Several factors dictate the profitability of mines, including the method used to extract the coal."
Recent news reports have said that more coal-fired generating units have been closed during the Trump administration's first two years than were retired during the first four years of President Obama's presidency. This is despite Trump's frequent vocal support for coal, criticism of the alleged "war on coal" and his installation of industry-friendly leaders at the Environmental Protection Agency (EPA) and the Department of Energy (DoE).
On February 14, the Tennessee Valley Authority (TVA) (NYSE:TVE) (Knoxville, Kentucky) voted to close two coal-fired generators: Unit 3 of the Paradise Fossil Plant in Kentucky, and the Bull Run Power Station, in Tennessee. The decision will shutter about 1,841 MW of generating capacity. The Bull Run plant began generating electricity in 1967. Unit 3 of the Paradise station went into service in 1970. Units 1 and 2 of the Paradise station were retired in 2017. For more on this, see February 19, 2019, article - With Focus on Hydro, Nuclear, TVA Opts to Close Two Coal-fired Plants.
In late 2018, a "Generation Retirement Scenario" report prepared by North American Electric Reliability Corporation (NERC) made this comment about retirement of coal and nuclear baseload power plants: "If these retirements happen faster than the system can respond with replacement generation, including any necessary transmission facilities or replacement fuel infrastructure, significant reliability problems could occur."
Most of this retired generating capacity is being replaced by gas-fired power plants, mainly combined cycle plants. These gas-fired generators are expected to provide adequate levels of voltage support and frequency response as the retiring resources, the NERC report said. "However, such a significant shift to natural gas-fired generation could leave the (bulk power system) more vulnerable to natural gas supply and transportation disruption events or curtailments if firm service and new pipeline capacity are not procured for these replacement resources."
"There's no question the U.S. power mix is becoming greener and gassier," Burt commented. "Is that a problem? The fact that the nation's generation system came through last month's Polar Vortex better than it did in 2014, during the last Polar Vortex, suggests not, though last month's Polar Vortex only lasted a few days. What will happen if we get a week or more of sustained frigid temperatures? Stay tuned."
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.
"We tracked about 17,000 megawatts (MW) of coal-fired power plant closures in 2018, significantly more than in any single year since 2013," he said. "We expect that number to fall to about 9,000 MW in 2019, then rise to about 13,000 MW in 2020."
"How dead is coal-fired generation?" Burt asked rhetorically at the briefing. "New-build coal generation is as dead as a doornail. We don't see construction beginning on any new coal plants for the next few years. And the economics of gas-fired generation, plus public-policy support for renewables and tighter regulation of coal plants, has been a powerful combination that has idled hundreds of existing coal-fired plants over the last several years."
"There are, of course, several billion dollars of in-plant capital projects, like environmental retrofits, that are scheduled to kick off at U.S. coal-fired power plants between 2019 and 2021," Burt continued. Most of this work is expected to take place in the Mid-Atlantic, Great Lakes and Southeast regions, he added.
There are several factors behind the surge in coal plant closures in 2018, Burt pointed out. "We've seen a sustained growth in supply of low-cost natural gas, coupled with the completion of construction for a number of gas-fired generators. The retirement of many coal units was tied to the completion of replacement gas-fired capacity."
"Add to that the continued declines in levelized cost of electricity (LCOE) from renewable generation: Wind generation costs have declined 15% over the last five years while solar costs have fallen 65%. Power producers are on a mission to move to lower-carbon options. It took some time to bring on new natural gas generation and renewable generation, which for now has to be backed up by natural gas generation."
Burt's comments largely tracked reports from other sources, including Standard & Poor's, about the bleak future of coal-fired generation in the U.S., despite President Donald Trump's efforts to support that fuel. While there is no agreement on the exact number of plants and megawatts that were closed in 2018, or how many units could be closed this year and 2020, there is agreement about the overall downward trajectory of the U.S. coal fleet.
Pain being experienced by coal-fired generators is affecting coal mines as well. Last month, the U.S. Energy Information Administration (EIA) reported more than half of all U.S. coal mines closed during the worst decade for coal in modern memory. In 2008, there were 1,435 coal mines in the United States. By the end of 2017, there were 671.
"The uptick in mine closures since 2008 has largely been driven by economics, and smaller, less profitable mines have been more susceptible to closures," the EIA wrote. "Several factors dictate the profitability of mines, including the method used to extract the coal."
Recent news reports have said that more coal-fired generating units have been closed during the Trump administration's first two years than were retired during the first four years of President Obama's presidency. This is despite Trump's frequent vocal support for coal, criticism of the alleged "war on coal" and his installation of industry-friendly leaders at the Environmental Protection Agency (EPA) and the Department of Energy (DoE).
On February 14, the Tennessee Valley Authority (TVA) (NYSE:TVE) (Knoxville, Kentucky) voted to close two coal-fired generators: Unit 3 of the Paradise Fossil Plant in Kentucky, and the Bull Run Power Station, in Tennessee. The decision will shutter about 1,841 MW of generating capacity. The Bull Run plant began generating electricity in 1967. Unit 3 of the Paradise station went into service in 1970. Units 1 and 2 of the Paradise station were retired in 2017. For more on this, see February 19, 2019, article - With Focus on Hydro, Nuclear, TVA Opts to Close Two Coal-fired Plants.
In late 2018, a "Generation Retirement Scenario" report prepared by North American Electric Reliability Corporation (NERC) made this comment about retirement of coal and nuclear baseload power plants: "If these retirements happen faster than the system can respond with replacement generation, including any necessary transmission facilities or replacement fuel infrastructure, significant reliability problems could occur."
Most of this retired generating capacity is being replaced by gas-fired power plants, mainly combined cycle plants. These gas-fired generators are expected to provide adequate levels of voltage support and frequency response as the retiring resources, the NERC report said. "However, such a significant shift to natural gas-fired generation could leave the (bulk power system) more vulnerable to natural gas supply and transportation disruption events or curtailments if firm service and new pipeline capacity are not procured for these replacement resources."
"There's no question the U.S. power mix is becoming greener and gassier," Burt commented. "Is that a problem? The fact that the nation's generation system came through last month's Polar Vortex better than it did in 2014, during the last Polar Vortex, suggests not, though last month's Polar Vortex only lasted a few days. What will happen if we get a week or more of sustained frigid temperatures? Stay tuned."
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.
