In 2020, coal generation accounted for 20% of the overall generation mix in the U.S. This was down from one-third just five years earlier. While there are many factors leading to why any power plant retires, here we look at how renewables development has either front run or backfilled retiring coal plants.
Coal Plant Retirements Snapshot
First, let's look at the U.S.' current fleet of about 600 coal-fired units. These units total just over 230 gigawatts (GW), with 185 units totaling almost 89 GW of that capacity set to be retired. The map below shows the U.S.' currently operational fleet of coal plants with red circles signifying plants that have either announced partial or full retirements. If you are interested in seeing the coal fleets' top emitters, refer to this recent Insight article.
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Factors Straining Already Struggling Plants
Broadly speaking, renewables and natural-gas-fired generation have pushed overall marginal costs down, lowering power prices and coal generation revenue. Coupled with environmental regulation and state/utility emissions targets, retrofitting, or maintaining emissions control equipment, mounting coal ash liabilities puts a strain on already struggling plants.
The following graphic shows the 10 GW of coal capacity that was retired in 2020, along with operating and proposed renewable capacity in their vicinity. Across the board, all the plants that retired in 2020 have some amount of proposed renewable capacity in the area as measured by radial analysis. Depending on the region of the country, this could be an attempt to utilize newly freed up infrastructure and mitigate potential interconnection costs for renewables. Only a handful of plants had meaningful operational renewables capacity in the area when they retired.
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Coal Plants Still in Operation
We can take this same approach but now look at the 292 coal plants that are still in operation. The graphic below shows the top 30 coal plants with the most proposed renewable capacity in the area. Of the plants listed below, 17 have already announced plans to fully or partially retire, totaling about 12 GW of a total 21 GW.
Insight/BTU%20blogs/05.28.2021_Renewables_Next_Door_Coal_Plants_Feel_the_Pain/of-the-top-30-coal-plants-with-the-most-proposed-renewables-development.png?width=981&name=of-the-top-30-coal-plants-with-the-most-proposed-renewables-development.png)
Conclusion
As mentioned earlier, increased renewable generation is just one factor to consider when identifying plants potentially at risk of retirement. Economic dispatch and transmission capacity between areas can mitigate the risk of having nearby competitors, so the presence of a large renewable in the area of a plant does not mean that plant will retire. However, it is difficult to find a silver lining, especially for plants that have a slow start-up time or are not able to economically ramp intermittent backfill generation.
BTU Analytics Power View provides a comprehensive dataset of power plants, including proposed, existing, and plants with planned retirements.
This article was originally published on the BTU Analytics website.
This blog post is for informational purposes only. The information contained in this blog post is not legal, tax, or investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.
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