More Coal Plants Slated to Close This Year
Trump may still be digging coal. But electric utilities all across the U.S. don’t seem to be.
From 2008 to 2016, 17% of U.S. coal-fired generating capacity completely retired. Another 4% was converted to natural gas.
But more shutdowns are coming.
A new study indicates that 42% of the remaining coal-fired plants are likely to shut down in the next year or two. Some may be converted to natural gas-fired ones. Twenty-five percent of the remaining plants already have a target retirement date.
Most of the rest that remain are in no less danger of closing. They are losing money.
The biggest culprit isn’t renewables, as many coal supporters believe…
Coal simply can’t cut it economically. It’s that simple.
Cheap natural gas is the single biggest source of new power plants. By 2020, there will be 387 new natural gas power plants generating a total of 92.5 gigawatts (GW).
Coal is more expensive than wind, solar and natural gas. Building a new coal-fired plant would be economical only if you compared it with building a similar-sized nuclear plant.
Trump may dig coal. But utilities dig market economics.
Here are a few recent examples of that reality playing out…
The End of Coal in the Land of Enchantment
This past summer, I was in the beautiful state of New Mexico for a financial conference.
And New Mexico’s largest electricity provider is the Public Service Company of New Mexico, owned by PNM Resources (NYSE: PNM). As of today, 56% of its electricity generation comes from coal-fired plants.
This past April, PNM released its five-year integrated resource plan. It developed a plan to see what mix of generating sources made the most sense for its 510,000 customers.
The results surprised everybody. The plan suggested that PNM’s best and lowest-cost option for reliable power was to move completely to solar and natural gas plus energy storage.
In addition, PNM will add capacity to its transmission lines that access eastern New Mexico. Constant winds provide cheap wind power there.
PNM expects to start retiring coal plants by 2022. In 2031, New Mexico will shut off its last coal-fired plant.
PNM expects its grid reliability to improve significantly from these changes.
$325 Million in Upgrades Can’t Save Coal in America’s Dairyland
Wisconsin’s biggest utility is We Energies, which serves more than 2.2 million customers. As of last year, coal made up 50.6% of its total generating capacity.
Much of that energy comes from the Pleasant Prairie coal-fired generating station. But We Energies elected to shutter the 1.2 GW Pleasant Prairie units in the second quarter of this year.
This is notable since Pleasant Prairie had $325 million in pollution controls installed a little more than a decade ago. It first opened up in 1985.
Economics took center stage in the decision to close the plant…
The problem with big legacy coal-fired plants is that if they’re not running at full capacity, they are apt to lose money… lots of money.
In recent years, the plant ran intermittently. Last spring, it completely shut down for three months.
With an abundance of cheap natural gas, solar energy and wind energy, coal-fired plants like Pleasant Prairie just can’t compete.
We Energies plans to replace part of Pleasant Prairie’s capacity with a 350-megawatt (MW) solar array. Slated to be the largest solar farm in Wisconsin, it’s expected to be complete and operational by 2020.
Winds Keep Blowing Deep in the Heart of Texas
To start 2018, Texas-based energy utility Luminant is closing its 1.8 GW coal-fired power plant in Monticello.
It also expects to close two other coal plants that together have 2.3 GW of capacity.
All three plants are economically challenged. They represent about 12% of Texas’ entire coal-fired fleet.
The good news is that Texas energy consumers have saved billions as utilities have shifted to clean energy.
More good news: There has been absolutely no impact on grid reliability in Texas due to the closures. And the wind keeps on blowing. Texas’ wind capacity surpassed the 21 GW mark at the end of last year. The Lone Star State is rapidly adding solar too.
It expects an additional 14 to 27 GW of solar will be sourcing power by 2030.
Simple Economics Trigger Missouri’s Big Switch
The biggest utility in Missouri is Ameren Missouri. This past September it announced that it will be retiring half of its coal fleet (about 2.65 GW).
To replace some of the lost capacity, Ameren is spending $1 billion on 100 MW of new solar and 700 MW of new wind capacity. It’s all expected to be operational by 2020.
Once again, the reason for the switch is simple economics. The utility will spend far less to operate the new wind and solar plants.
And Ameren customers will save money on energy.
The story is the same nearly everywhere…
The End for Montana’s Big Polluter
Montana is one of the last places you would think one of America’s biggest greenhouse gas emitters would be located. But the 2.2 GW Colstrip power plant has picked up that distinction.
Its owners are planning to close it by 2027 or sooner. That’s 20 years sooner than the owners’ estimates from just five years ago.
Once again, the story is the same. Cheap natural gas and renewables will replace the lost capacity.
The bottom line is this: Everywhere across America, utilities are choosing renewables and natural gas. They are cleaner and cheaper than many existing coal-fired plants.
I expect we’ll see even more coal plant closures announced this year. Even the president can’t change the economics of natural gas and renewables.