EIA projects more coal-fired power plant retirements by 2016 than have been scheduled

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Coal-fired power plants in the United States have been under significant economic pressure in recent years because of low natural gas prices and slow electricity demand growth. The U.S. Energy Information Administration’s (EIA’s) Annual Energy Outlook 2014 (AEO2014) Reference Case projects that a total of 60 GW of capacity will retire by 2020, which includes the retirements that have already been reported to the EIA.

Coal-fired power plants are subject to the Mercury and Air Toxics Standards (MATS), which require significant reductions in emissions of mercury, acid gases, and toxic metals. The standards are scheduled to take effect in April 2015, a deadline that is conditionally allowed to be extended by up to one year by state environmental permitting agencies. Projected retirements of coal-fired generating capacity in the AEO2014 include retirements above and beyond those reported to EIA as planned by power plant owners and operators. In these projections, 90 percent of the coal-fired capacity retirements occur by 2016, coinciding with the first year of enforcement for the MATS.

To comply with MATS, it is assumed that all coal-fired plants have flue gas desulfurization equipment (scrubbers) or dry sorbent injection systems installed by 2016. Retirement decisions are based on the relative economics and regulatory environment of the electricity markets. A plant may retire if higher coal prices, lower wholesale electricity prices (often tied to natural gas prices), or reduced utilization make investment in equipment like scrubbers uneconomical.

At the end of 2012 there were 1,308 coal-fired generating units in the United States, totaling 310 GW of capacity. In 2012 alone, 10.2 GW of coal-fired capacity was retired, representing 3.2 percent of the 2011 total. Units that retired in 2010, 2011, or 2012 were small, with an average size of 97 MW, and inefficient, with an average tested heat rate of about 10,695 Btu/kWh. In contrast, units scheduled for retirement over the next 10 years are larger and more efficient: at 145 MW, the average size is 50 percent larger than recent retirements, with an average tested heat rate of 10,398 Btu/kWh.

The full Annual Energy Outlook 2014 including all sensitivity cases will be released in the spring.

Source: U.S. Energy Information Administration

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