GAO:  Coal Power Sector Poised for “Significant” Change

A report released on Wednesday by the Government Accountability Office (GAO) surveying the U.S. coal-fired power sector says that retirements of older units, retrofits of existing units with pollution controls, and the construction of some new coal-fueled units are expected to significantly change the coal-fueled electricity generating fleet,  but that coal will likely remain a key fuel source through 2035.

As several previous analyses on the nation’s coal power future have shown, the report, "Significant Changes Are Expected in Coal-Fueled Generation but Coal is Likely to Remain a Key Fuel Source," identifies two "broad" trends affecting the power sector: environmental regulations and changing market conditions.  One of the most "significant" regulations in terms of the Environmental Protection Agency’s (EPA’s) estimated benefits and costs is the Mercury and Air Toxics Standards (MATS), the GAO says, pointing out that the EPA’s proclaimed benefits range between $39 billion to $96 billion, whereas costs are estimated at $10.2 billion in 2016. But it notes: "The requirements and deadlines these regulations may establish for generating units are uncertain. In particular, several regulations have not been finalized, and finalized regulations could be subject to legal challenges that result in changes."

Among key market conditions weighing heavily on the viability of coal-fired generating units are natural gas prices that make gas units more attractive, and a slow expected pace of growth in demand for electricity in some areas.

According to GAO statistical analysis, power companies have already reported plans to retire 174 coal-fired units with a total capacity of 30 GW through 2020, or about 10% of coal-fired capacity in 2011. The Energy Information Administration (EIA) has projected that nearly 49 GW of coal-fired capacity will be retired through 2035, while industry estimates have been higher, projecting retirements of up to 76 GW through 2035.

Most units planned for retirement are older (with an average age of 54 years), smaller (with a capacity of between 175 MW and 351 MW), and more polluting, the GAO found. About 12% of units planned for retirement have equipment installed to reduce SO2 emissions, while almost 60% of units with no retirement plans have such equipment, the report found. Similarly, units planned for retirement emitted on average about 60% more NOx and 1% more CO2 than units not planned for retirement.

Power companies have plans to build 42 new coal plants with a capacity of 21.6 GW, the report finds. However, as the number of new projects under development fails to keep pace with the number of retirements, the total coal capacity will decline to 25% of the nation’s total capacity in 2035.

Yet "coal is likely to continue to be a key fuel source for electricity generation in the United States," the report concludes. Other factors affecting the fuel’s future include increasing exports of coal, "though the extent of future exports is uncertain."

The report was requested by Sen. Jay Rockefeller (D-W.V.), chair of the Senate Committee on Commerce, Science, and Transportation, who asked the GAO to examine how the U.S. coal-fired power plant fleet would change in terms of generating capacity and other aspects, and to identify key factors affecting the future of coal power.  It uses data as of July 2012 from Ventyx Velocity Suite to describe characteristics of the U.S. coal-fired power sector.

Most coal mined in the U.S. is used to generate power, and in 2011, 1,386 coal-fired power units had a capacity of about 317 GW, or about 30% of the country’s total generating capacity.  Coal-fired generation accounted for 42% of the nation’s total in 2011. Though the nation harbors the world’s largest recoverable coal reserves, coal production and consumption peaked in 2008 and have since fallen due to declines in the use of coal to generate power. The GAO report notes that half as many workers (about 86,000) produced 24% more coal in 2011 than in 1985.

Sources: POWERnews, GAO

—Sonal Patel, Senior Writer (@POWERmagazine)

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