USA COAL

U.S. coal consumption is likely to decline sharply again in 2020, though the current roster of planned and completed coal plant retirements suggests the year may not be quite as rough as the past two.

At 13,703 MW, 2019 marks the highest level of annual coal capacity retirements in the U.S. since 2015, a new S&P Global Market Intelligence analysis of federal data shows. The amount of coal capacity planned for retirement in 2020 is expected to exceed the amount retired in each of 2014, 2016 and 2017. Another retirement has already been announced.

Tri-State Generation and Transmission Association Inc. said on Jan. 9 that it was closing its 247-MW Escalante power plant in New Mexico by the end of 2020. Since 2014, U.S. power generators retired nearly 62,000 MW of coal-fired generation capacity, with another 26,947 MW of retirements teed up through 2025.

 

I would say, overall, utilities seem pretty keen to retire coal … sooner rather than later,” Scotia Capital (USA) Inc. analyst Andrew Weisel said in a Jan. 8 phone interview. “I think that a lot of companies, from an investor perspective, they are very focused on [environmental, social and governance]. So, there is a generic interest, not to mention it is what their customers want.”

Morgan Stanley & Co. LLC forecast in a December 2019 report that about 70,000 MW to as much as 190,000 MW of coal-fired generation is “economically at risk” from the deployment of a “second wave of renewables” in the U.S. The research firm said these projections exclude about 24,000 MW of coal generation already set to shut down.

“[W]e believe that carbon-heavy utilities that have not historically led the pack in clean energy deployment will accelerate their earnings growth by pursuing a ‘virtuous cycle’: shutting down expensive coal plants and investing in cheap renewables,” the analysts wrote.

Targeted advocacy from groups such as the Sierra Club and their Beyond Coal campaign also played a significant role in the U.S. coal sector’s precipitous decline over the past several years. In a recent interview, Beyond Coal director Mary Anne Hitt highlighted the group’s work to drive a shift away from coal.

“That includes holding coal plants accountable for their air and water pollution and forcing decisions by utilities to either clean up or retire those plants and also making smart economic arguments in front of regulators about the competitiveness of clean energy,” Hitt said. “I think it’s instrumental and it’s also a sign of the role advocacy can play in some of the other sectors of our economy as we get serious about tackling climate change.”

Beyond Coal recently celebrated the retirement of the 300th coal plant since 2010 with the announcement that an AEP subsidiary would shut down its 642.1-MW lignite-burning Dolet Hills plant by the end of 2026. The next day, two more coal plants were added to their list.

“The key thing I would think about though is it used to be that a utility had to choose between being dirty and cheap or clean and expensive,” Weisel added. “The overarching trend, of course, is that you have had such technological advancements in renewables that you can now be both clean and cheap.”