Coal Plants Closing at Faster Rate Than Predicted

Coal Plants Closing at Faster Rate Than Predicted

Posted 01.04.2016 in News by Steve

When Sierra Club launched its “Beyond Coal” campaign in 2010, there were 523 coal-fired electricity generating plants in the U.S. To date, 222 of those coal plants have been closed. The group has also been instrumental in stopping the development of many new coal-fired plants. This is significant to environmental policy proponents because burning coal is responsible for one third of U.S. carbon emissions, which is a primary cause of climate change.

Carbon emissions are also a leading public health issue responsible for ailments ranging from throat and eye irritation to asthma, premature birth, kidney disease and lung cancer. A 2010 study by the RAND Corporation that focused on California found air pollution that was higher than federal clean air standards caused almost 30,000 hospital admissions and visits to California emergency rooms between 2005 and 2007. Those admissions were attributed to exposure to fine particulate matter, which is emitted from smokestacks and cars, and high ozone levels. The study found that these hospital visits added up to more than $193 million in added costs to the state.

A November 2015 report issued by SNL Energy - an international consultant that provides data and analysis for the energy industry - states the amount of coal-fired electric capacity it estimated would be retired in 2015 will be nearly 20% greater than they first stated. Originally, SNL forecasted 12.3 gigawatts would be retired. That number has been boosted to 14.6 gigawatts. The plants being retired this year represent about 5% of the total coal-generating capacity in the U.S.

According to the SNL report, the utility that accounts for the largest portion of this year’s retirements is the Tennessee Valley Authority (TVA) - the Depression-era entity that helped bring a large chunk of Appalachia into the modern age by electrifying the region in the 1930s. Many of the plants being closed are in the coal industry's back yard.

In November 2013, the Tennessee Valley Authority (TVA), one of the nation’s five biggest users of coal for electricity generation, said it would close 8 of its 59 coal-fired power units by the beginning of 2018. That represented nearly 3,000 megawatts of coal capacity. The TVA has sped up the plant closures though because of three main factors: the cost of natural gas has dropped making it a cheaper fuel source than coal; new regulations on emissions, which previously didn't require coal-fired plants to pay for their environmental impact, now make coal more expensive when compared to cleaner options; and the cost of renewable energy sources like solar and wind are dropping dramatically.

Utilities buy more than 90 percent of the coal mined in the United States. So, with the declining reliance on coal, the mining producers have seen their stock drop by as much as 90% in 2015. There have been six large producers that have filed for bankruptcy because they have unprofitable mines and capital obligations they can't fill. These unprofitable companies continue to produce rather than idle mines in hopes that markets in India and China will develop enough demand to make them profitable again. This over-production is leading to excess supply that is effecting the entire coal industry. 

The TVA still burns coal at 10 plants, but their portfolio is much more diverse than is was several years ago: 109 hydroelectric units, dozens of plants driven by natural gas, and a rising amount of solar production. And, the same factors that are pushing TVA to shutter coal-fired plants are causing other major utilities to rethink their production models. With the recently passed extensions to solar and wind tax investment credits, the push to add alternative energy production to the mix continues.

 

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