"We’re going to see massive retirements within the next five, eight years," U.S. Energy Secretary Steven Chu said at a renewable energy conference on February 9 in Washington. "Much of our fleet of coal plants is 40 to 50 years old," he said. Chu went on to say that the U.S. should get 80% of its energy from "clean energy sources" such as wind power, nuclear reactors, and coal plants that store their carbon dioxide emissions. The conversion should occur by 2035, according to the plan President Obama put forward during his State of the Union address.
Plant Closure in the Headlines
Headlines from the past year and a half confirm Chu’s prognosis for the coal fleet: "Big Utility [Progress Energy] to Close 11 Plants Using Coal" (December 1, 2009); "Duke Energy Considering More Coal-fired Plant Closures" (September 2, 2010); "Alliant to Close Coal Boilers at 7 Sites Across Iowa" (November 8, 2010); "Georgia Power to Retire 569 MW of Coal Capacity" (March 24, 2011); and "TVA to Retire 18 Older Coal-Fired Coal Plants" (April 13, 2011) are good examples.
However, the common reason noted for these closures is the enormous cost to retrofit air quality control equipment to meet new environmental rules—notably those related to greenhouse gases, Utility MACT, Clean Water Act 316(b), and wet bottom ash—that were initiated or pushed forward during the Obama administration. Clean coal plants, defined by Chu as those having carbon capture and sequestration, are still in the early development phase, as he noted. Chu also noted during this presentation that the Department of Energy is funding research into the technology.
The big question is, how much capacity will be retired? When asked that at the conference, Chu declined to answer. Of the 314 GW of coal-fired capacity in the U.S. at the beginning of 2011, the Energy Information Administration (EIA) predicts that 7.7 GW will close by 2018. Another study, conducted by the Brattle Group and released in December, concluded that 50 GW to 65 GW of capacity may be closed by 2020 because of environmental regulations. Bloomberg reported that analysts at the Zurich-based bank Credit Suisse Group AG said in September that about 60 GW of coal capacity may be retired.
Not content with those estimates, I decided to explore other data sources for further analysis. For example, I asked ICF International to assess coal plant closures, and the result was "Added Regulatory Hurdles Will Accelerate Coal Plant Retirements," which appeared in the May issue of POWER. In that article the authors explore the new regulatory burdens that are being added to the coal fleet and conclude, after beating the data to death in their Integrated Planning Model, that approximately 51 GW will retire by 2018. The article explains in detail their assumptions and caveats, but the magnitude of the closures is similar to that estimated by the Brattle Group.
For my own analysis, I used a Burns & McDonnell database of all U.S. coal plants while researching "Predicting U.S. Coal Plant Retirements" for the May issue of POWER. The Burns & McDonnell database includes the expected performance data but also defines the various environmental controls present at each plant. Rather than take the direct economic evaluation approach used in the previous studies, I elected to take a more direct approach by identifying which specific units are at risk because of their age, low recent capacity factors, and lack of environmental equipment.
According to the database, of the 1,105 coal-fired units in the U.S., 846 do not have a selective catalytic reduction (SCR) system and 619 lack flue gas desulfurization (FGD). It’s reasonable to conclude that some subset of those units will likely be retired in the coming years. In fact, the plants without FGD and SCR, over 50 years old, and with low capacity factors seem to me to be likely candidates for retirement. If the hurdle of 60% capacity factor is set, the there are 305 units with an average nameplate rating of 145 MW built in 1958 (on average) totaling 48.2 GW. That number appears to be right in line with the earlier predictions using different analytical approaches.
If we assume that about 48.2 GW worth of coal-fired capacity, about 14.1% of the U.S. coal-fired installed capacity (per the Burns & McDonnell model), is ripe for retirement during the next decade, these closures represent about 11.9% of the GWh produced by the coal fleet, given their lower-than-average capacity factors.
The electric power industry is not immune to the epidemic of plant closures that so many other industries have experienced over the past decade. In fact, it would be reasonable to consider that the power industry has been much slower to close plants than other industries. Perhaps it’s just our turn to share the pain.
Some Replacements Planned
However, unlike other industries that close their doors forever because the work is being exported or the products produced are passé, electricity will always remain a valuable commodity that cannot be put on the shelf. Generally speaking, the product must be locally produced in the quantities required at the time of demand. That means when one plant closes, another of likely larger size may rise in its place.
In fact, as of December 13, 2010 (in a report issued January 14, 2011), the National Energy Technology Laboratory listed 21 coal plants either under construction, near construction, or permitted. They represent 14.4 GW of new capacity: about 5 GW in 2012, 4 GW in 2013, and perhaps 3 GW in 2014. In addition, 6.7 GW of new coal-fired capacity were commissioned in 2010—that’s the most in 25 years.
—Dr. Robert Peltier, PE is COAL POWER’s editor-in-chief.