The Changing Role of Coal in Electrical Generation
Coal-fired power plants have been generating electricity in the U.S. for over a century. In 2015, coal plants generated 39% of the 3,944 billion kilowatt-hours of electricity generated in the United States. However, coal’s contribution has steadily eroded; down from 50% just a decade earlier.
The pressure on coal generating assets stems from several sources.
Aging infrastructure has made many older and smaller units uneconomical to operate. Nearly 70 percent of coal fired generating units comprising more than 50% of the coal generating capacity are more than 40 years old. At the end of 2015, the coal-fired generating units in the United States totaled 286 gigawatts of capacity. In 2015 alone, 11.3 gigawatts of coal-fired capacity were retired. EIA projects that a total of 30 gigawatts of coal-fired generating capacity will retire by 2025, 87% of which by the end of 2020.
Tightening environmental regulations have accelerated the trend. New regulatory standards require reductions in emissions of mercury, acid gases, and toxic metals. These standards are scheduled to take effect in April 2015. The capital improvements required to reduce these emissions would make many coal plants uneconomical to operate resulting in the bubble of closures over the next few years. Extensions on compliance are being traded for pledges to close older, dirtier plants completely. The growing public concern with climate change and CO2 emissions further increases the pressure for coal plant closures.
When it comes to replacing retiring generation, coal now faces greater competition from another fossil fuel, natural gas. Due to technological advances, accessible natural gas reserves have increased dramatically. Natural gas is now available in greater quantities and at low prices. While cleaner and, for the moment, cheaper, natural gas still produces substantial CO2 emissions and fuel prices are volatile.