The Risks to Coal Plants in Coming Years David Schlissel May 28, 2019

These are Troubled Times for the Coal Industry Coal’s share of the U.S. electricity mix fell to 27% in 2018, down from 48% in 2008. More than 250 coal plants have been retired or have announced that they will be retired in coming years. Total installed wind capacity increased to more than 94,000 MW at the end of 2018, up from 11,450 MW in 2006. Total U.S. utility-scale solar capacity rose over 30,000 MW in 2018, with over 20,000 MW more in various stages of development. Yet the current administration and its allies in Congress and some states still claims coal will be “ Great Again”

Coal-Fired Generators Continue to Face Same Market Risks as They Have in Recent Years Low natural gas and energy market prices. Increasing competition from wind & solar. Low gas prices and increased competition from renewables means less generation from coal-fired plants and lower revenues from sales. Flat or nearly flat peak demands (MW) and energy loads (MWh) – this means increased competition to serve essentially same sized loads. An aging coal fleet. Low and/or volatile capacity market prices. Rising coal plant O&M expenses. Environmental Regulations.

Falling U.S. Coal Generation

Coal’s Declining Share of US Fuel Mix

Coal Capacity is Being Retired as New Gas-Fired Capacity is Being Added to the Grid Thus, over 74,000 MW of coal-fired capacity has been retired since 2011, and another 28,000 is expected to be retired by 2024.

Coal Capacity Factors Are Going Down

Coal-Fired Generation is Falling in Competitive ISO Wholesale Markets

Coal’s Share of the Generation in Competitive ISO Wholesale Markets Is Falling

Major Utilities are Moving Away from Coal

U.S. Coal Production Has Fallen Sharply Since Reaching Its Peak in 2008

U.S. Consumption of Coal for Electricity Generation Also Has Declined Precipitously

U.S. Wind & Solar Generation Has Skyrocketed

Areas with Highest Potential for Wind are in the Middle of the U.S.

States with Highest Percentage of Their Generation from Wind in 2018 – No Surprise Almost All Are in the Middle of the U.S.

Wind’s Market Share in Some of the Key ISO Competitive Wholesale Markets Is Growing Rapidly

Wind Installation Costs Source: U.S. DOE 2017 Wind Technologies Market Report

Wind Power Purchase Agreement Prices Source: U.S. DOE 2017 Wind Technologies Market Report

Utility- Scale Solar Installation Costs Source: LBL 2018 Utility-Scale Cost, Performance and PPA Pricing Report

Utility-Scale Solar PPA Prices Source: LBL 2018 Utility-Scale Cost, Performance and PPA Pricing Report

Natural Gas Prices Are Expected to Remain Low in Coming Years

Peak Energy Market Prices in Hubs Near Coal-Fired Generators Are Expected to Remain Low

Off-Peak Energy Market Prices in Hubs Near Coal-Fired Generators Also Expected to Remain Low

Operations & Maintenance Costs at Coal-Fired Generators Are Rising – Example Four Corners

U.S. Electricity Demands Have Flat-Lined

Why Are the Loads So Flat Impact of formal energy efficiency investments and increased interest from consumers in saving energy. Increased generation from distributed “rooftop” solar PV. GDP growth has outpaced increases in electricity consumption as a result of strategies by industrials and large utilities to better manage their power use and load + changing residential consumption habits. All of these likely to continue to dampen future growth. Recovery from Great Recession.

The U.S. Coal Fleet is Aging

Result – Coal Plants Are Caught in Death Spiral (Or At Least Near-Death Experience) Many coal-fired plants generating much less power than before and/or not operating as base load generators. Plus, because energy market prices are so low, owners getting less for each MWh of power their plants generate. This means significantly lower revenues from power sales. But production costs at many plants are increasing. Capex, some expensive, also necessary. Generating at high cost and selling at low cost is never good! Coal is in serious trouble even without the EPA!

For More Information David Schlissel david@schlissel-technical.com