Coal in 2020 now makes up 18% and 21% of total US 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. In this Energy Market Insight, we will look at remaining coal plants by utilization and highlight what lays ahead for coal plants, especially those that have low capacity factors.
As shown above, is a chart of historic and announced coal retirements by year by ISO. Between 2015 and 2019, 65 GW of coal plants have retired with the high-water mark year in 2015. Also note that PJM, lead all ISO/regions with over 21 GW of coal plants retired during this period. One clear cause is the Marcellus shale underlying a large portion of PJM resulted 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 average 2020 capacity factor less than 30%) as shown in red above are in the eastern portion of the US. Notice the announced retirements, shown in yellow, tend to hit both low utilization plants as well as smaller capacity plants. Also, note the high utilization plants, shown in blue, tend to logically mostly avoid retirement announcements. 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%. 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. To further follow power plant retirements across all fuels, request a demo of BTU Analytics’ Power View or email us to request a list of the 99 low utilization coal power plants at info@BTUAnalytics.com subject line: Coal Retirements 2020.