The Troubled Future of Coal-Fired Power Generation: Decommissioning is Set for Martin Drake Power Plant's Unit 5 in Colorado

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Researched by Industrial Info Resources (Sugar Land, Texas)--Last month, Industrial Info published an article detailing a pending vote on the future of the Martin Drake Power Plant in Colorado Springs, Colorado. In December, members of the Colorado Springs City Council who also sit on the Colorado Springs Utilities (CSU) governing board voted 6-4 to shut the entire plant down by 2035. Unresolved at the time was the more immediate future of Unit 5. In essence, the options were to either decommission the unit, or to convert the unit to run on natural gas rather than coal. That vote has now been held and the decision is clear: Unit 5 will be decommissioned by the end of 2017.

For related information, see January 11, 2016, article--Vote on Coal-Fired Martin Drake Power Plant Closure is Part of Growing Trend

Bigger Picture Context--Coal, Market Forces, Environmental Regulations
Martin Drake's Unit 5 was put into service in 1962, so investing additional funds in a 54-year-old unit was a significant factor in the decommissioning decision. There is a larger context to this story however, one that touches on the future of coal-fired power generation across the country.

There has been a large drop-off in coal-fired plant construction in recent years. Coal-fired plants are more expensive to build than natural gas-fired plants, but the relatively low prices of natural gas mean that coal-fired plants are more expensive to operate as well. Adding to coal's poor prognosis as a fuel supply are increasingly stringent environmental regulations.

The coal mining industry is struggling to stay alive under these circumstances. While coal supply to keep Martin Drake's Unit 5, and other coal-fired units around the country, is not in question in the short term, there are serious long-term concerns for the future of coal mining. In economic terms, the numbers are unambiguous. For example, the Dow Jones Industrial Average was up 69% from 2008-2014, while the Coal Sector Index was down 76% during that same period. As a result, several large companies have declared bankruptcy. In addition, the Obama administration has curtailed new coal leases on federal land. The economic and regulatory outlook for coal-fired power generation in the U.S. is stark.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 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/.