It’s been a year of ups and downs for the coal industry.
Even while the White House considered different ways to extend a lifeline for coal plants and proposed a replacement for the Clean Power Plan that may soften emissions regulations, many generators still faced a difficult market.
The Energy Information Administration (EIA) projected this month that 2018 will end with 14 gigawatts of coal retirements, second to only 2015. Earlier in the year, a report from the Institute for Energy Economics and Financial Analysis suggested retirements would even surpass 2015, at 15.4 gigawatts.
EIA analysts also expect coal consumption in 2018 to fall to its lowest level since 1979.
John Larsen, head of U.S. power sector and energy systems research at the Rhodium Group, said the year "has not been the worst-case scenario for coal,” but he added that more problems are undoubtedly on the way.
Coal is still losing ground to natural gas and renewables. In its lowest closure scenario, Rhodium Group forecasts that 71 gigawatts of coal will shut down by 2030. In the most aggressive scenario, 124 gigawatts of coal go offline.
“Looking to the medium term out over the 2020s, we...don’t see anything fundamentally changing for coal,” said Larsen. “There’s very little upside, let’s put it that way.”
As 2018 draws to a close, Greentech Media rounded up the year's most significant U.S. coal developments.
Zero gigawatts and economic competition
Rhodium’s projections are one of many reports out this year about the fate of coal.
In its Annual Energy Outlook, EIA forecasts 44 gigawatts retiring by 2030 in a scenario with higher natural-gas prices and 85 gigawatts retiring by 2030 with lower prices.
The analysis from Rhodium found that, as more coal plants retire, the remaining facilities may run more often, “blunting the impact on the coal industry and efforts to combat climate change.” But another report from Carbon Tracker analyzed 6,685 existing coal plants and found that new-build renewables are already cheaper than over one-third of the coal fleet.
Even the coal-friendly current federal government, in an economic impact analysis tied to a revision of emissions standards for new fossil-fuel plants, forecasted 0 gigawatts of added coal capacity by 2035.
Utilities going lower-carbon and carbon-free
This year, EIA projected that coal consumption in the power sector would drop 4 percent. That trend was reflected in a number of announcements from utilities transitioning to lower-carbon fuels.
Xcel Energy recently announced a 100 percent carbon-free by mid-century target in all of its service territories. Days later, Xcel’s peer in Colorado, Platte River Power Authority, said it would strive for the same goal.
The draw for cheaper power is influencing other Colorado co-ops, too. Delta-Montrose Electric Association affirmed in December that it plans to leave the Tri-State Generation and Transmission Association. A Rocky Mountain Institute report released this summer found that Tri-State could save its members $600 million by 2030 should it incorporate more renewables. Last year, coal produced 49 percent of the G&T utility’s energy, and it planned to get one-third of its power from wind and solar by the end of 2018.
Elsewhere in the West, PacifiCorp found in a recent analysis that retiring coal plants could save millions. The utility did say it still has to further explore reliability issues tied to potential retirements.
Earlier in 2018, Midwestern utilities including Kansas’s Evergy and Wisconsin and Iowa’s Alliant Energy made moves to retire old coal plants or double down on renewables commitments.
When measuring the impact of these announcements, it's important to note where these utilities operate, and whether they have access to cheap renewables, said Larsen.
“Most of the bigger announcements are utilities that do have reasonably large coal fleets, but have access to relatively good renewable resources in their service footprint,” he said.
Not all utility pledges to reduce coal will result in a large-scale build-out of renewables. In 2017, for instance, AEP pledged to spend $1.8 billion on wind and solar in the next three years. But when announcing a 2018 goal to cut carbon emissions 80 percent below 2000 levels by mid-century, the company noted it will follow an “all of the above” energy strategy — a mindset that means natural gas and other fossil fuels will still play a role.
Ramping up natural gas generation over coal “of course has a huge climate upside in the near to medium term,” said Larsen, “but it’s not a deep decarbonization.”
NOPR to "coal plants of the future" and back again
The year started with the Federal Energy Regulatory Commission rejecting Energy Secretary Rick Perry’s plan to support coal and nuclear. But that was only the start.
After the FERC rejection, the Trump administration reportedly considered the use of emergency powers to support coal and nuclear plants.
Later, a fuel security report from grid operator PJM found that “the system can withstand a considerable period of stress while remaining reliable and fuel secure in most circumstances,” even with planned coal and nuclear retirements. The conclusions from PJM could undercut arguments that coal and nuclear provide essential resilience.
The administration isn't talking about the emergency proposal, now on hold. But it did recently succeed in placing one of the plan’s collaborators, Bernard McNamee, formerly of the Department of Energy, on FERC.
Larsen said the White House push to talk about resiliency could have the most significant impact on the coal industry.
“If something happens in that space where there’s a multibillion-dollar injection of money to support the existing coal fleet and prevent it from retiring, that would obviously make a material change in the future of the coal fleet,” said Larsen. “It would also completely distort electric markets.”
The Affordable Clean Energy Rule, proposed this summer, will likely be less impactful, Larsen said. That rule might make it easier for some plants to stay open longer, but it doesn’t provide actual monetary support like a potential resilience proposal.
This month, the Environmental Protection Agency also moved to loosen carbon dioxide emission standards on new thermal power plants. But because markets are motivating coal retirements more than policy, the downward trajectory is likely to continue barring even more significant policy changes.
“As the EPA finalizes or attempts to finalize a lot of these rollbacks, they don’t really change that picture at all,” said Larsen.
In addition to trying to buoy older, large plants, the administration has also announced a different tack: providing research and development funds through DOE for “coal plants of the future.” That meant a request for information on small, modular coal plants. In December, the department also announced a request for proposals for coal technologies that “are capable of flexible operations” and “provide resilient power.”
Ultimately, coal will be around for the foreseeable future. Because natural gas, wind and solar are pushing out inefficient and more expensive coal units, Larsen explained, “the ones left standing are the most efficient units, and they’re going to be able to run and maintain their market share.”
According to Larsen, that doesn’t mean those units aren’t under threat. But in assessing how swiftly the U.S. moves away from coal, it’s also important to recognize how much remains on the grid.
EIA’s projected retirements through 2018 mean there’s still over 240 gigawatts of coal-fired power in the U.S. EIA also foresees flat coal demand in the coming decades in spite of retirements, in part because use of the remaining coal fleet will increase from 56 percent last year to nearly 70 percent by 2030.
“The thing I think gets lost in some of the more bearish assessments for coal...[is that] the ones left standing at the end of that slog are the most efficient units out there. And they’re left standing given all these really bearish market conditions,” said Larsen. “Absent some new policy that fundamentally shifts the economics away from carbon intensive generation, you’re going to see a lot of these units stay online and produce power.”