The pace of U.S. coal-fired plant closures quickens, coal’s share of generation to plummet

The pace of U.S. coal-fired plant closures quickens, coal’s share of generation to plummet

Energize Weekly, April 5, 2023

The pace of U.S. coal-fired plant closures continues to accelerate with half of all the capacity, which peaked in 2011, closed by 2026, according to the Institute for Energy Economics and Financial Analysis (IEEFA).

In 2010, coal-fired capacity peaked at 318 gigawatts (GW) and coal plants provided the largest share, 44 percent, of the nation’s electricity, but by 2022, capacity had dropped below 200 GW, and the share of generation was just 20 percent. An IEEFA study estimates 2026 capacity at 159 GW.

Renewable generation – wind, solar, hydropower, and biomass – surpassed coal in 2022, generating 21 percent of the country’s electricity, according to the U.S. Energy Information Administration (EIA). The agency projects coal’s 2023 share at 17 percent.

The IEEFA analysis said another 80 GW of capacity are projected to close by 2030, reducing coal’s share of total U.S. electricity generation to as little as 10 percent.

Record levels of closures are projected for 2025, with 17 GW of capacity shuttered, and 2028 with 22 GW set to be closed.

The 173 coal-fired units closing between now and 2030 are in 33 states, and another 55 units with announced closure dates between 2031 and 2040 are spread across 17 states.

A boom in gas-fired units, fueled by cheap natural gas from the country’s fracking and drilling boom, and the rapid growth in wind farms and utility-scale solar installations, which have also seen a sharp decline in prices, led to an end of coal’s dominance.

“Coal generation may continue to fall faster, as aging units face higher operation and maintenance costs, and utilities increasingly favor the responsiveness of gas generation and battery storage to complement the variable output from solar and wind, both of which continue to be built at a rapid clip,” the IEEFA study said.

There are fewer than 200 utility coal-fired units rated at 50 MW or more without announced closure dates, totaling 80.3 GW of capacity, and most of the units being retired date back to the 1970s. By the 2030s, the IEEFA calculates that the average retirement age for plants will rise to 60 years.

“For utilities, the rising cost of maintaining and operating these units, especially when cheaper, more flexible, and far more technologically advanced generation alternatives are available, makes retirement an increasingly attractive option,” the study said.

The trend will accelerate even more quickly, the IEEFA said, as a result of the Inflation Reduction Act, passed by Congress last year. It provides incentives for new wind, solar and battery storage and aid for closing coal-fired plants.

“The closure of the coal-fired units means a permanent shift in the mix of fuels used to power the U.S. electrical grid, since no new coal plants are being built to replace them,” the study said.

This will have a major impact on the coal mining industry. From 2003 through 2008, U.S. utilities burned more than one billion tons of coal annually. In 2023, the EIA expects the power sector to use only 402 million tons, a 61 percent decline.

The result will force a “deep restructuring” of the coal industry and led to mine closures, layoffs and falling tax and royalty payments.

“For the mining companies that supply coal to power plants, and the communities where mines are located, this reduction in coal use signals more lean years of restructuring and downsizing are ahead, a trajectory that is becoming increasingly locked in,” the IEEFA analysis said.

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