The retirement schedule for America’s coal-fired power plants is likely to accelerate, moving up the timeline for big changes in communities that rely on the facilities — and the mines that supply them — for jobs and tax revenue.
The U.S. is on track to cut its coal-based power capacity in half by 2026 from peak levels in 2011, according to a new report by the Institute for Energy Economics and Financial Analysis. Reaching that milestone is closer than once thought “despite pandemic-induced supply disruptions that have led to delays in the completion of new generation resources and significant price volatility for [natural] gas,” the Ohio-based energy analysis group said in the report.
New announcements for coal plant retirements and coal-to-natural gas conversions will likely continue to hasten the decline for coal-based power, the report’s author Seth Feaster said. Compounding coal power’s demise is the fact that utilities are also dialing back output at coal-fired power plants still in operation, hitting coal supply regions like Wyoming’s Powder River Basin even faster.
By that measure, the U.S. electrical power sector already cut its 2011 peak coal use by more than half in 2020 and 2022, according to the report. “So the pace of coal use is declining faster than the pace of decline in coal [power generation] capacity,” Feaster told WyoFile.
While coal plant closures are happening throughout the nation, the supply-side impacts are more narrowly focused on regions that mine thermal coal — coal that is burned to generate electricity — rather than regions that mine “metallurgic” coal used for steelmaking. Wyoming is the nation’s largest thermal coal supplier by volume, with more than 90% of its product shipped to U.S. coal-burning power plants.
The coal plant retirement and fuel conversion outlook should put Wyoming on notice for significant shifts coming sooner rather than later, according to Feaster.
“This is definitely going to impact the Powder River Basin,” he said. “I suspect that the decline in coal consumption from the PRB is going to reflect this [utility coal use] trend overall.”
Coal’s slipping grip
Based on current plans and statements among U.S. utilities, coal capacity will fall to 159,000 megawatts by 2027 and to 116,000 megawatts by 2030, according to the IEEFA report. Utilities largely plan to replace that power-generation capacity with natural gas, as well as wind, solar and battery storage as costs for those technologies continue to decline.
Coal, which accounted for about half the nation’s electric generation in the early 2000s, made up only 20% of the sector in 2022. Coal’s power sector share could fall to 17% this year, according to the Energy Information Administration, while the IEEFA report estimates “a strong possibility” that coal will drop to 10% or lower by 2030.
“Quite simply, utilities no longer see coal as part of their future,” the report concluded.
Another factor driving the decommissioning of coal-fired power units is the fact that the U.S. coal fleet is old.
Coal units that have been retired in recent years were first commissioned in the 1970s, according to the report. Much of the remaining fleet is reaching the 50-year-old mark, and even beyond.
“For utilities, the rising cost of maintaining and operating these units, especially when cheaper, more flexible and far more technologically advanced generation alternatives are available, makes retirement an increasingly attractive option,” the report states.
The older the coal facility, the more difficult and expensive it is to maintain, Feaster said. That creates a reliability risk.
“They’re using older technology,” Feaster said. “It’s tough to compete against a new combined-cycle [natural] gas plant, for example. [Aging coal units are] not responsive in the same way that gas combined-cycle gas plants are, or batteries for that matter.”
It’s unlikely that carbon capture, use and sequestration technologies will help extend the life of existing coal-fired power plants — especially if they’re 40-50 years old, Feaster added.
“It’s incredibly expensive,” Feaster said, adding that the cost to retrofit an existing coal plant with CCUS can cost about $1 billion. It can also take years to permit and build such a massive retrofit on a coal plant. “Ratepayers are not going to want to subsidize power that’s twice as expensive as what [electricity] is right now.”
The findings of the IEEFA report parallel plans among coal-burning utilities in Wyoming.
PacifiCorp, which operates as Rocky Mountain Power in Wyoming, Utah and Idaho, announced last week that its “preferred portfolio” includes an accelerated shift away from coal and toward more renewables, natural gas and possibly nuclear power.
Of the utility’s 11 coal-fired power units currently operating in Wyoming, for example, only two will continue burning coal beyond 2030 — Wyodak near Gillette and Unit 4 at the Dave Johnston plant in Glenrock — according to the utility’s biennial Integrated Resource Plan.
Major coal producers have read the coal market trends and have begun to adapt, too, Feaster said. Both Arch Resources and Peabody Energy — which, combined, make up more than half the coal production in the Powder River Basin — have focused their capital spending on metallurgical coal. Arch has said it plans to close its western thermal coal operations, and is using the current profitability of its Black Thunder mine in Wyoming to pay for its cleanup and closure costs.
Arch has not set a closure date for the mine.
The findings of the IEEFA report come as no surprise to most in Campbell County or Wyoming, said Rusty Bell, former Campbell County Commissioner.
Bell was recently appointed to coordinate local economic diversification efforts with the federal Coal Communities program. He disagrees with skepticism that CCUS is too expensive to retrofit existing coal-fired power plants, he said. However, coal communities in Wyoming have long recognized the need to plan for a major decline in mining due to power market shifts.
“That’s the reality of the market,” Bell said. “And Wyoming — certainly Campbell County and all the other coal reliant communities — are trying to prepare, trying to be proactive, trying to do different things to get into different markets.”