This is an excerpt from EERE Network News, a weekly electronic newsletter.

October 06, 2010

Analysis: Long-Term Viability of U.S. Coal-Fired Power Plants is at Risk

A new analysis of the challenges facing coal-fired power plants in the United States suggests that many of them could be retired from service early. The Wood Mackenzie analysis found that the power industry is facing unprecedented challenges, including new regulations and policies as well as lagging economic growth. The research firm concluded that coal-fired power plant retirements will be driven mainly by more stringent air emission regulations, potential new rules for handling coal ash, and the future potential for climate change regulations. Other factors include rising capital costs, a lack of growth in power demand, low to moderate natural gas prices, and competing renewable energy sources. Wood Mackenzie notes that most of the recent retirement announcements have been accompanied by plans to replace the retired capacity with natural gas combined-cycle facilities or to repower the facilities with natural gas. Natural gas facilities offer lower emissions and a greater ability to cycle up and down in power output, so they work better with variable power sources such as wind energy. See the Wood Mackenzie press release.

Some recent examples of coal-fired power plant retirements include Xcel Energy, which proposed in mid-August to retire 900 megawatts (MW) of coal-fired capacity at its Valmont and Cherokee plants in Colorado by 2017 and 2022, respectively, in keeping with a new state law. The 717-MW Cherokee power plant will be repowered as an 883-MW natural gas-fired power plant, and a 111-MW unit at its coal-fired Arapahoe power plant will also be repowered with natural gas. The Tennessee Valley Authority (TVA) also announced in August that it will idle nine units totaling about 1,000 MW at three of its coal-fired power plants over the next five years. One unit may be converted to burn biomass fuel. In addition, Progress Energy Carolinas announced last year that it will shut down four coal-fired plants in North Carolina by 2017. The four plants lack scrubbers and have a total capacity of nearly 1,500 MW. Exelon Power also announced plans to shut down three coal-fired units, totaling 732 MW, by mid-2012. The units are located at two power plants near Philadelphia, Pennsylvania. See the press releases from Xcel Energy, TVA, Progress Energy, and Exelon Power.