National Energy Technology Laboratory Driving Innovation ♦ Delivering Results Chris Nichols USAEE Conference October 2015 An analysis of the capacity factors of aging coal-fired electricity generating units BLUE OPTION White space is filled with one or more photos

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3 National Energy Technology Laboratory Overview Many energy market forecasts project that the existing coal- fired power plant fleet will continue to operate at capacity factors above historic levels Past operational data suggest that coal units over 30 years old experience significant declines in capacity factor as they age Regression analysis implies a decline of 0.94 to 0.56 percentage points per year in capacity factor for a typical >30 year old unit The delta between the forecasted generation and that suggested by the regression is equivalent to a shortfall of up to 120 GW of generation capacity by 2040

4 National Energy Technology Laboratory Coal-based generated projected to remain constant to 2040

5 National Energy Technology Laboratory No new coal (or nuclear) capacity is forecast

6 National Energy Technology Laboratory Capacity factors follow steady decline after age 30 based on last 15 years

7 National Energy Technology Laboratory Kernel density analysis of >30 age groups appear more spread out and display lower peak concentration capacity factors than younger age groups

8 National Energy Technology Laboratory Regression analysis used to estimate the rate of decline for units >30 years old A simple regression of capacity factor on age (units >30 years old) resulted in a statistically significant coefficient estimate of , implying these units see a decline in capacity factor of around 0.94 percentage points per year A multiple regression analysis was conducted in which capacity factor is the dependent variable and the explanatory variables include age, nameplate capacity, and the ratio of average fuel cost of the unit to the Henry Hub natural gas price implied that for each year a plant ages beyond 30 years, the capacity factor declines approximately 0.56 percentage points.

9 National Energy Technology Laboratory Regression results incorporated into a spreadsheet model to calculate annual generation of the remaining coal units based on their calculated capacity factors from 2014 to 2040

10 National Energy Technology Laboratory Conclusions and next steps Energy forecasts could underestimate the need for baseload generation capacity renewal by over 100 GW, based on overly optimistic assumptions about the coal fleet – Other assumptions could be exacerbating the shortfall: nuclear unit operations, kWh to GDP ratio, etc. Lower availability could push more coal units into an area of the dispatch curve where they are load-following vs baseload NETL is continuing to examine the negative feedback loop of declining capacity factors in aging units: – Classifying retiring units by cycling mode of operation – Developing model inputs to characterize damage to units’ operability from different modes of cycling operation

Questions? Please contact Chris Nichols in the Office of Strategic Energy Analysis and Planning

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