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

2. 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
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”

3. 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.

4. Falling U.S. Coal Generation

5. Coal’s Declining Share of US Fuel Mix

6. 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.

7. Coal Capacity Factors Are Going Down

9. Coal-Fired Generation is Falling in Competitive ISO Wholesale Markets

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

11. Major Utilities are Moving Away from Coal

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

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

14. U.S. Wind & Solar Generation Has Skyrocketed

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

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

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

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

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

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

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

22. Natural Gas Prices Are Expected to Remain Low in Coming Years

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

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

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

26. U.S. Electricity Demands Have Flat-Lined

27. 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.

28. The U.S. Coal Fleet is Aging

29. 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!

30. For More Information
David Schlissel