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December 9, 2013 

Updated Study Highlights Eroding Economics of U.S. Coal Fleet

Cleaner and More Affordable Alternatives are Readily Available to Replace Coal

WASHINGTON (Dec. 9, 2013) –Market factors are making more and more of the nation’s coal-fired power plants less economically viable, especially in Michigan, Alabama, Georgia and Texas, according to a new article from researchers at the Union of Concerned Scientists (UCS) published last week in the Electricity Journal.

"Coal-fired generation is getting increasingly expensive compared with cleaner power sources,” said Jeff Deyette, assistant director of energy research at UCS and co-author of the study, which was initially released last year and updated this month. “This shift in economics is a historic opportunity to modernize our electric sector and gain the economic, health and climate benefits that come with it."

The analysis showed that in addition to the 18 gigawatts (GW) of coal units that were retired between 2011 and 2013 and the 28 GW that have already been announced for retirement by 2025, another 59 GW – about 329 generators – are no longer economically competitive and should be considered for closure. These ripe for retirement generators produce electricity that is more expensive than electricity from an average existing natural gas plant, once the costs of installing modern pollution controls are included.

Many of the nation’s natural gas plants are running well below maximum capacity and could be ramped up to replace the electricity from these coal-fired generators. Projected investments in energy efficiency and renewable energy driven by strong state policies could also more than replace the uneconomic coal generation in most regions of the country while only requiring a modest increase in generation from existing natural gas plants in a few regions.

 “The nation’s fleet of coal plants is becoming less and less economic,” according to the study. “Many older, dirtier, and underutilized coal units simply cannot compete with natural gas or wind power.”

The article is an update of UCS’ 2012 report Ripe for Retirement, which examined the economic viability of coal-fired electricity generation in the United States compared to other electricity sources based upon data about the nation’s coal-fired power fleet in 2009.

Some highlights of the new analysis, based upon 2011 data—the most recent available—and updated cost and performance assumptions for natural gas and wind power, include:

  • Michigan, Florida, Alabama, Georgia and Indiana top the list with the most ripe for retirement coal generation capacity by state when compared with existing natural gas. Michigan moved to number one from the number five spot it occupied in the 2012 analysis due to an additional 10 generators found to be uneconomic.
  • Southern Company holds the top spot for utilities with the most coal-fired capacity ripe for retirement, followed by the Tennessee Valley Authority, Duke Energy, DTE Energy, and CMS Energy. 
  • Texas ranks first in the nation for the most ripe for retirement coal generation capacity when comparing coal-fired electricity costs with that of new wind power projects supported by federal tax incentives. Texas led the nation with 12.2 GW of installed wind capacity at the end of 2012 and has a significant untapped potential of low cost wind resources still available.  Michigan, Alabama, Georgia, Oklahoma and Indiana follow Texas in this state ranking. 

The declining economics of many coal generators is being noticed by utilities nationwide, with coal-fired electricity falling from nearly half of U.S. generation in 2008 to 37 percent in 2012. The competitiveness of natural gas and renewable energy combined with greater energy efficiency efforts will continue that trend, with the Energy Information Administration’s latest projections showing that very few new coal plants will be built through 2040. 

The study comes just a few months after the U.S. EPA announced carbon emission standards for new power plants. These proposed standards along with ones for existing power plants expected next year could help significantly reduce carbon emissions in the country, but current market trends already show that a shift away from coal to cleaner generation sources makes economic sense.

The study says that realizing the benefits of a shift away from coal toward renewable energy and energy efficiency—including reducing costs, improving public health, and reducing emissions that drive climate change—will depend on state and federal policies such as a national power plant carbon standard, strong renewable electricity and efficiency standards, tax credits, and improved planning and development of the power grid. 

“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,” the paper concluded. “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.”

To learn more about the analysis, follow the report authors’ blog posts here.

 

The Union of Concerned Scientists puts rigorous, independent science to work to solve our planet's most pressing problems. Joining with citizens across the country, we combine technical analysis and effective advocacy to create innovative, practical solutions for a healthy, safe, and sustainable future.

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