In the last 10 years, coal power generation has fallen from providing more than half of the electricity in the United States to less than 30% today. While that number held steady for 2016 and 2017, coal plant owners have announced 13 GW of planned retirements for 2018, the largest since a record 15 GW retired in 2015. Another 10 GW of capacity is already planned for retirement over the next six years; including more than 2 GW by Duke Energy alone, with more announcements likely. The only coal plant that will begin operating this year is a 17 MW unit being installed at a campus microgrid in Fairbanks, Alaska. If shutdowns were to continue at this rate of more than 10 GW per year with no replacements coming online, coal power generation would cease to exist in the United States in less than 25 years. Before we rush to write the epitaph for coal power, let’s take a step back and look at what is driving some of these retirements.
Coal power is facing a lot of headwinds. Wind and solar power generation technology is becoming more efficient, capital costs are decreasing, and cost-effective, utility-scale storage technology is on the horizon. Natural gas fuel prices are projected to remain historically low, gas turbines produce much lower emissions, and they can cycle for flexible operation. In comparison, coal prices are at a five-year high, coal plants produce higher emissions and more byproducts, carbon capture technology has only worked in very limited conditions, and rapid cycling is not feasible for most designs. The current White House leadership and the Secretary of Energy have been very vocal in their support of the coal industry, but their recommendation for rules to subsidize “secure-fuel” power plants (nuclear and coal) was rejected by the Federal Energy Regulatory Committee – for insufficient evidence of retirements impacting grid resiliency or reliability.
EIA: Reference case for energy consumption, by fuel, in quadrillion Btu
The U.S. Energy Information Agency (EIA) recently published their Annual Energy Outlook for 2018, with projections to 2050. An accompanying graph representing the EIA reference case forecasts rising natural gas and renewable energy consumption but curiously indicates a hard stop to the loss of coal generation at between 10%-15%. This breaks from expected reference case forecasts made in previous years but matches prior forecasts for non-implementation of the Clean Power Plan. This projection, however, appears to ignore the various market forces listed above that are driving uneconomic plants to close.
Of the recently constructed coal plants and those retrofitted with pollution controls, some will remain economically sound to operate and provide necessary power and services to the grid for decades to come. However, given the expense of coal power relative to natural gas and renewables and its lack of operational flexibility, it is unlikely that investment in new, coal-fueled power plant construction will occur. When the last of the current fleet retires somewhere around 2070, it is quite possible the United States will see the end of coal.
Bloomberg New Energy Finance: 2018 Sustainable Energy in America Factbook
Union of Concerned Scientists: A Dwindling Role for Coal
This report is part of ScottMadden’s Fossil Minute series. To view all featured Fossil Minutes, please click here.
Additional Contributing Author: Jonathan Aronoff
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