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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--A new round of closure announcements for coal-fired power plants, plus a new lower estimate for coal use this year has further clouded the outlook for coal use in the U.S. electric power business.
Coal use by electric generators is projected to fall 18% this year from 2019's consumption, according to the latest Short-Term Energy Outlook from the U.S. Energy Information Administration (EIA) (Washington, D.C.). Coal's share of the electric generation fuel mix will fall to 20% this year, from 24% in 2019, the agency said.
During the first half of 2020, coal use by the electric power sector fell to 184.8 million short tons, a 30% decline compared to the year-earlier period, according to the EIA, which said the decline stemmed from retirement of coal-fueled generators, conversion of generators to burn natural gas, rising costs of coal generation and the increasing competitiveness and public policy support for renewable energy.
For 2020, U.S. electric generators are expected to reduce their coal use by about 18%, EIA estimated. Coal use by this sector peaked in 2007 at 1,045 million short tons, the agency said.
But EIA sees a bright spot for coal in 2021. Natural gas prices, which have risen sharply from their mid-2020 lows, are expected to continue rising, particularly during the winter heating season. That will enable coal to grab market share from gas. Coal's share of the electric fuel mix is projected to rise to an estimated 25%. By tonnage, that would represent a 23% year-over-year increase in coal use by generators.
Click on the image at right to see historical and projected coal use by U.S. electric generators.
But a rash of recent coal-fired power plant closures could further dim the long-term outlook for coal-fired generation.
These announcements likely will increase pressure on coal mining companies and further lower employment in the mines. According to data tracked by the St. Louis Federal Reserve, coal miner employment fell to about 43,500 in October 2020. In May 1985, there were about 176,700 coal miners working, the bank said, citing U.S. Bureau of Labor Statistics data.
Click on the image at right to see a graphic of job losses among coal miners since 1985.
One factor accelerating electricity generators' turn away from coal is the rise of environment, social and governance (ESG) criteria for investment firms and other stakeholders. For more on that, see October 26, 2020, article - Investment in Renewables Expected to Soar as Duke Energy Unveils Bold Decarbonization Plan.
Other electric utilities that have historically burned a lot of coal, such as Southern Company (NYSE:SO) (Atlanta, Georgia) and Tennessee Valley Authority (TVA) (Knoxville, Tennessee), are joining Duke, AEP and Xcel in shuttering coal plants and increasing reliance on natural gas, for the short term, and renewables and storage for the long term. But a study from consultants Deloitte said there is a disconnect between announced coal plant closures and actual plant closures, suggesting even more coal plant closures may be on the way. For more on that, see October 5, 2020, article - Deloitte Study: Utilities' Decarbonization Math 'Doesn't Yet Add Up'.
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.
Coal use by electric generators is projected to fall 18% this year from 2019's consumption, according to the latest Short-Term Energy Outlook from the U.S. Energy Information Administration (EIA) (Washington, D.C.). Coal's share of the electric generation fuel mix will fall to 20% this year, from 24% in 2019, the agency said.
During the first half of 2020, coal use by the electric power sector fell to 184.8 million short tons, a 30% decline compared to the year-earlier period, according to the EIA, which said the decline stemmed from retirement of coal-fueled generators, conversion of generators to burn natural gas, rising costs of coal generation and the increasing competitiveness and public policy support for renewable energy.
For 2020, U.S. electric generators are expected to reduce their coal use by about 18%, EIA estimated. Coal use by this sector peaked in 2007 at 1,045 million short tons, the agency said.
But EIA sees a bright spot for coal in 2021. Natural gas prices, which have risen sharply from their mid-2020 lows, are expected to continue rising, particularly during the winter heating season. That will enable coal to grab market share from gas. Coal's share of the electric fuel mix is projected to rise to an estimated 25%. By tonnage, that would represent a 23% year-over-year increase in coal use by generators.
Click on the image at right to see historical and projected coal use by U.S. electric generators.But a rash of recent coal-fired power plant closures could further dim the long-term outlook for coal-fired generation.
- American Electric Power Company Incorporated (NYSE:AEP) (Columbus, Ohio) at a November 9 meeting with financial analysts said it would close two coal-fired plants totaling about 1,111 megawatts (MW) this year. During the coming decade, executives said they would close about 4,264 MW of coal-fired generation. For more on that, see November 23, 2020, article - AEP Capital Investments Will Remain Focused on its T&D Business.
- Xcel Energy Incorporated (NASDAQ:XEL) (Minneapolis, Minnesota) on November 10 said it will convert its 1,018-MW coal-fired Harrington Generating Station in Texas to run on gas by January 2025. This announcement is part of the utility's commitment to cut carbon dioxide (CO2) emissions from its generation facilities 80% from 2005 levels by 2030. By 2050, Xcel Energy plans to be carbon-free.
- The Orlando Utility Commission (OUC) (Orlando, Florida) on November 10 said it planned to convert its coal-burning Curtis Stanton Energy Center to gas by 2027. The two-unit, 1,225-MW plant, began operating in the late 1980s.
- Talen Energy Corporation (The Woodlands, Texas) on November 10 said it would eliminate the use of coal at all its wholly owned generators by 2025 as part of its embrace of environment, social and governance (ESG) initiatives. Specifically, the merchant power company said it would stop burning coal in three Mid-Atlantic plants, specifically the 1,534.5-MW Montour project in Montour County, Pennsylvania, as well as at its 1,278-MW Brandon Shores and 828-MW Herbert A Wagner plants, both in Anne Arundel County, Maryland. Earlier, the company committed to ending coal use at its Brunner Island generation facility in Pennsylvania, by the end of 2028.
- WEC Energy Group Incorporated (NYSE:WEC) (Milwaukee, Wisconsin) on November 2 told investors it would retire the four-unit, coal-fired 1,133-MW Oak Creek Power Station in 2023 and 2024. The company also said next year it would announce the closure of an additional 300 MW of coal-fired generation. WEC executives told investors that the shuttered generation would be offset by 1,500 MW of clean energy and storage capacity along with 300 MW of natural gas generation.
These announcements likely will increase pressure on coal mining companies and further lower employment in the mines. According to data tracked by the St. Louis Federal Reserve, coal miner employment fell to about 43,500 in October 2020. In May 1985, there were about 176,700 coal miners working, the bank said, citing U.S. Bureau of Labor Statistics data.
Click on the image at right to see a graphic of job losses among coal miners since 1985. One factor accelerating electricity generators' turn away from coal is the rise of environment, social and governance (ESG) criteria for investment firms and other stakeholders. For more on that, see October 26, 2020, article - Investment in Renewables Expected to Soar as Duke Energy Unveils Bold Decarbonization Plan.
Other electric utilities that have historically burned a lot of coal, such as Southern Company (NYSE:SO) (Atlanta, Georgia) and Tennessee Valley Authority (TVA) (Knoxville, Tennessee), are joining Duke, AEP and Xcel in shuttering coal plants and increasing reliance on natural gas, for the short term, and renewables and storage for the long term. But a study from consultants Deloitte said there is a disconnect between announced coal plant closures and actual plant closures, suggesting even more coal plant closures may be on the way. For more on that, see October 5, 2020, article - Deloitte Study: Utilities' Decarbonization Math 'Doesn't Yet Add Up'.
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.
