Coal Retirement Outlook 2020

Coal in 2020 now makes up 18% and 21% of total U.S. generation and capacity, respectively. Coal power plants have been under an unending assault of economic and regulatory challenges for over a decade. With that said, the headwinds for coal plants are expected to continue, with over 26% of the remaining fleet having announced retirement. Here we examine the remaining coal plants by utilization and highlight what lies ahead for coal plants, especially those with low-capacity factors. 

As shown above, is a chart of historic and announced coal retirements by year by independent system operator (ISO). Between 2015 and 2019, 65 gigawatts (GW) of coal plants has retired, with the high-water mark year in 2015. Also, note that PJM led all ISO/regions with over 21 GW of coal plants retired during this period. One clear cause is that the Marcellus shale underlying a large portion of PJM results in low gas pricing and uneconomic conditions for coal plants. Looking forward, from 2021 to 2025, 29 GW of plants are expected to retire based on announced retirements. 2022 looks to be the high-water mark year for announced retirements. MISO represents almost half of the retirements during this period, with 14 GW of retirements announced. 

Looking at coal retirements in a map format, we can see that many of the low utilization coal plants (measured as an average 2020 capacity factor of less than 30%) as shown in red above are in the eastern portion of the U.S. Notice that the announced retirements, shown in yellow, tend to hit both low utilization plants as well as smaller capacity plants. Also, note that the high utilization plants, shown in blue, tend to avoid retirement announcements logically. The Southeast, a market dominated by regulated utilities, has many large coal plants with low utilizations and few announced retirements (large red dots with no yellow).  

When looking at the remaining coal fleet, 74% or 196 plants representing 182 GW of capacity have no announced retirement. Within these 196 plants, 99 plants, or 79 GW have an average capacity factor in 2020 below 30%. 

Conclusion 

Putting regulatory change aside, economic forces are likely to continue to force retirements from this subset of plants due to potentially declining financial performance, among other things. The regions with the highest levels of low utilization coal plants are the Southeast, PJM, and MISO leaving gas, wind, and solar backfill the potential void.  

This article was originally published on the BTU Analytics website. 

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