The U.S. power sector is in a period of unprecedented change, with record numbers of coal plants being announced for retirement. An analysis of which additional coal units are economically vulnerable and should be considered for retirement shows that these uneconomic coal plants can be replaced with affordable alternatives in each region of the country
In January 2013, Georgia Power announced that it would retire 10 coal units totaling 1,976 MW, and in September 2013, American Electric Power announced that it would retire the 580 MW coal-fired Tanners Creek Unit 4. These retirement decisions are part of the dramatic transition underway in the U.S. power sector, in which old and inefficient coal units are being retired in favor of cleaner energy sources like natural gas, renewable energy, and energy efficiency. Since 2009, 20.8 GW of coal-fired electricity generation has retired, representing 6.2 percent of U.S.’s 2009 coal fleet, and another 30.7 GW of coal generators is slated for retirement in the near future.1
Coal-fired electricity fell from nearly half of U.S. generation in 2008 to 37 percent in 2012. There are many reasons for this decrease in coal-fired generation: an aging and inefficient coal fleet, the low cost of natural gas, the falling costs of renewables, slowing growth in electricity demand, rising construction costs for coal plants, and rising coal prices.2 As a result of these economic factors, the Energy Information Administration's (EIA) latest projections show that very few new coal plants will be built through 2040.3
In addition to these market dynamics, state renewable energy and energy efficiency policies have bolstered the economic viability of renewable energy and energy efficiency. There is also an increasing recognition of the need to upgrade coal plant pollution controls to protect public health and address climate change. Coal is one of the most polluting sources of energy, and coal-fired power plants contributed 74 percent of electricity-related carbon dioxide (CO2) emissions in 2012.4 Harmful pollutants—such as sulfur dioxide, nitrogen oxides, mercury, and particulate matter—released by burning coal—have been linked to an increase in asthma attacks, heart disease, neurological problems, and premature deaths.
While EPA standards may be hastening and increasing the number of coal plant retirements, it is clear that retirements have been and will continue to be driven by multiple factors. Recent coal plant retirements are part of a long-term trend that started well before EPA began to issue the latest pollution standards.
Numerous recent studies, including Ripe for Retirement: The Case for Closing America's Costliest Coal Plants, a 2012 analysis by the Union of Concerned Scientists, have estimated how much additional coal-fired electricity generation may be economically vulnerable. 5 Our research takes an analytic approach to understanding the economic factors driving these changes and identifies which coal units are the most vulnerable ( Figure 1). We also show that there are several cost-effective options to replace the retiring coal generation and provide policy recommendations that would help enable a transition from coal to cleaner alternatives and address global warming.
The nation's fleet of coal plants is becoming less and less economic. Many older, dirtier, and underutilized coal units simply cannot compete with natural gas or wind power. Combining these and other cleaner resources with upgrades to the power grid and investments in energy-saving technologies can more than replace the generation from the 329 coal-fired generators (58.7 GW) we identified as ripe for retirement.
Utilities, investors, grid operators, and regulators should seriously assess whether cleaner alternatives can more affordably meet customers’ energy needs instead of burdening ratepayers with hundreds of millions of dollars of capital investments to extend the life of uneconomic coal plants. Thoughtful planning about how to retire coal plants can help maximize economic returns, human health, and environmental benefits of a cleaner energy future, while maintaining reliable and affordable power for American families and businesses
