Multiple US Coal-Fired Electricity Generating Plants Closing: What Gives?

Coal fired plant. Image credit:Brent Wojahn/The Oregonian

To illustrate 'what gives', let's start with an example. Progress Energy of North Carolina has proposed deactivation of 11 coal fired electricity plants - all built between 1949 and 1972 - which together produce about 1,500 megawatts of power. The state utility commission is considering the proposed phase out, which would be completed by 2017 (over the course of 8 years).

From The News and Observer "For the power company it came down to simple math. The cost of replacing those plants with new ones mostly fueled by natural gas would be about $1.5 billion. The cost of retrofitting all 11 of the old coal-burning plants to cut emissions is at least $2 billion and rising." Replacement power in North Carolina will come largely from natural gas.Pennsylvania is closing two coal-fired power plants as well; and that power will be replaced with locally generated power from nuclear and gas fired operations: stemming from upgrades; additions, and 'de-bottlenecking.'

Many more coal plant closings can be expected in metro areas around the nation.

At the national level, several things are driving the closings or "mothballing" of old coal-fired plants.

  1. The closing plants are very old, and are relatively inefficient, with many parts and components at the end of design life. Physical size of the property may not allow for large scale upgrades. Moreover, an upgrade that ups capacity would open up the air emissions permitting process (see point 2. below).
  2. Older coal-fired plants may not support cost-effective implementation of the pollution controls that will be needed to meet new standards for mercury and fine particulatesl.
  3. These plants may be in air sheds where air quality standards are not currently being met (true in Pennsylvania for certain). Once such plants are closed, emission credits embodied in their air emissions permits can be in effect 'traded' for a new permit that puts out fewer grams of pollution per kilowatt generated: more power output for the same emission load.
  4. Because of deregulation of power markets which occurred in the recent past, utilities are under pressure to keep power prices down, which makes it harder still to justify added capital upgrade costs on these old plants. With loans still hard to come by, the cheaper, faster to build, less-polluting natural gas plant gets the banker's nod every time.
  5. You will read and hear plenty of speculation about how the prospect of a 'cap and trade' regime is what is behind these closings. That's load of horse apples being dumped by people who do not understand capital investment and pollution control standards. The climate bill, as proposed, gives these utilities free credits for carbon emissions above the moving cap. The costs of managing fly ash and mercury, and the relatively high expense of keeping these nags running is what the game is about.
As USEPA gets down to reviewing more air permits, you will see numerous additional announcements of capacity cut backs, mothballing, and outright plant closures. Keep in mind that some of the old coal fired plants are on polluted ground and that outright closure would mean expensive cleanup. Therefore, I am betting that 'mothballing' will be the prevailing modality. ('In case we need it later.')

Local job and supply chain impacts.
I don't want to let this post drag on too far; but it is worth hitting on one more point to put a wrap on it. When you lower coal consumption at this scale, the price of coal will eventually go down as well, increasing the operating margins of remaining coal plants. That also means less demand for mountain-top removal.

Yes I agree it is awful to see jobs go: from the utilities on up to the mines. On the other hand, work will be opening up in the design, construction, and operation of nuclear and gas powered plants and to a lesser extent in renewable energy power development . Still more will be added in the manufacture of boilers, pipes, bricks, concrete and so on. If I was young person beginning my career, I would look seriously at power engineering and generating plant operations in general. Pollution control too.

Additional posts on coal plant closings.
Closing The Door On Building New Coal-Fired Power Plants In ...
China Speeds Up Its Drive to Close Inefficient Coal Plants ...
Province Of Ontario Canada Plans To Close All Coal-Fired Plants ...

Tags: Electricity

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