Upcoming, Recent Coal-fired Power unit Retirements

Announced retirements of coal-fired generating units at U.S. power plants continue to grow at a rapid pace as generators continue to feel the heat from looming clean-air regulations being pushed by federal and state regulators.

A new SNL Energy analysis found that U.S. power companies have announced plans to retire more than 23,000 mw of coal-fired capacity between 2011 and 2020, marking a sharp increase from just a few months ago. SNL Energy’s last examination of announced coal-fired unit retirements, published in late February, showed generators had announced plans to retire approximately 14,000 mw of coal capacity between 2011 and 2020. The data is based on planned or projected retirements with a publicly announced retirement year.

The large increase in announced retirements during the past few months was largely due to American Electric Power Co. Inc.’s June 9 announcement that it will retire 6,000 mw of coal-fired generation and upgrade or install new environmental controls on an additional 10,100 mw of generation in order to meet current regulatory deadlines for several air standards proposed by the EPA. AEP coal plants targeted for shutdown include several large multi-unit stations, such as Philip Sporn, Kammer and Kanawha River in West Virginia, as well as numerous large coal units at Big Sandy, Conesville, Muskingum River and Tanners Creek.

The U.S. coal power fleet also received a blow in mid-April when the Tennessee Valley Authority announced it would eventually retire 18 aging coal-fired units as part of a settlement with the EPA, environmental groups and four states. The 18 units include two units at the John Sevier plant in east Tennessee, six at the Widows Creek plant in northern Alabama, and all 10 units at the Johnsonville plant in middle Tennessee. The retirements, which include about 1,000 mw of coal-fired capacity previously slated for idling, mean the TVA will have idled or retired about 2,700 mw of its 17,000 mw of coal-fired capacity by the end of 2017, the TVA said. The utility’s plan is expected to affect millions of tons of coal burn.

Of the 23,103 mw of announced coal unit retirements in the U.S. between 2011 and 2020, the majority is still slated to occur in the mid-Atlantic and parts of the Midwest and South. Breaking them out by NERC region, the SERC region would be most affected in the current scenario, with more than 8,400 mw of coal capacity scheduled to be retired. SERC is followed closely by the ReliabilityFirst Corp. region, where generators have announced plans to shutter approximately 7,600 mw of coal capacity. The other two NERC regions expected to be noticeably affected are the Western Electricity Coordinating Council and the Electric Reliability Council of Texas regions, with announced coal capacity retirements of 2,801 mw and 2,533 mw, respectively, between 2011 and 2020.

Looking at the impact of announced retirements on ISOs and RTOs, the PJM Interconnection would be hit hardest, with nearly 7,000 mw of coal capacity planned to be closed between 2011 and 2020. Figures for 2011, for both the NERC regions and ISOs/RTOs, include some units that have already been retired this year.

As has been the case in SNL Energy’s other analyses of announced U.S. coal retirements, the majority of the targeted units are older, with the weighted average age typically between 50 and

60 years, depending on the specific announced retirement year. However, what does seem to be changing, due largely to the AEP and TVA announcements, is the size of the retiring units. In SNL’s February report, the largest unit targeted for retirement between 2011 and 2020 was Progress Energy Inc.’s L.V. Sutton 411-mw unit 3. There are now several larger units with announced retirement dates during the forecast period, including the 800-mw Big Sandy unit 2, the 528-mw Welsh unit 2 and the 450-mw Philip Sporn unit 5—all of which are owned by AEP.

Data on average heat rates for retiring coal units shows a pattern of largely more inefficient units slated for retirement. Units retiring between 2011 and 2015 had an average last-reported heat rate ranging from 10,791 Btu per kWh to 11,555 Btu per kWh. That compares to an average heat rate of approximately 10,500 Btu per kWh for all operating U.S. coal units. Interestingly, the average heat rate for units retiring in 2014 and 2018 are close to the average heat rates seen across all operating coal units, and the five units scheduled for retirement in 2020 had an average last-reported heat rate of 10,301 Btu per kWh, lower than levels reported for all operating coal units.

AEP is now significantly above its competitors in terms of sheer volume of announced retirements scheduled to occur between 2011 and 2015. The company plans to shutter a total of 25 units encompassing more than 5,800 mw of coal capacity during this period. Other generators with a significant amount of retiring capacity during the 2011-2015 window include Duke Energy at 2,022 mw, Progress Energy at 1,533 mw, the TVA at 1,517 mw and Southern Co. at 1,094 mw.

The current list of announced retirements is widely expected to grow much larger in the coming years, or even coming months, as the EPA continues to announce several significant clean air regulations, including its pending Clean Air Transport Rule and Mercury and Air Toxics Standards.