US power generators pump the brakes on coal plant retirements

Planned closures of coal-fired power plants in the US are slowing as forecasts show rising power demand from datacenters and manufacturing.

Utilities will retire just 3.0 GW of US coal-fired capacity in 2024, the lowest level since 2015, when utilities closed a wave of plants to comply with mercury and air toxics rules, according to an analysis of S&P Global Market Intelligence data. While 14.1 GW is scheduled for retirement next year, that is down from 16.6 GW of planned coal-fired capacity projected to come offline in 2025 when analyzed in late 2023.

But tech companies are building power-hungry datacenters to support new artificial intelligence applications. Additional demand from new datacenters will double in just a year, to 47,448 GWh between 2024 and 2025, and rise more than eightfold by 2030 to 199,982 GWh, according to a forecast from S&P Global Commodity Insights. That could be a lifeline for coal power.

"There is certainly a strong chance for many of the existing coal [plants] out there to run longer than what was expected prior to the now-explosive growth forecasts in datacenter electricity demand forecasts/electrification," CreditSights analyst Nick Moglia told Commodity Insights.

Utilities had plans to retire 34.2 GW of coal capacity between 2025 and 2027 when the data was analyzed in late 2023. That projection has since dropped by 12.6%, to plans to retire 29.9 GW of coal capacity.

Datacenters buoy coal power

Wall Street analysts that track the US electric utilities sector also have indicated that coal plant owners could ramp up usage of existing facilities to help serve rising demand.

A preliminary study in April from the US Energy Department's Lawrence Berkeley National Laboratory shows that datacenters could account for about 9% of US energy consumption this year. The Electric Power Research Institute, in a May 28 white paper, predicted that datacenters could consume anywhere from 4.6% to 9.1% of US electricity generation by 2030 under various growth scenarios.

"The past three to five years, we feel like coal has been taken for granted," said Michelle Bloodworth, president and CEO of coal plant advocate America's Power. "We had high reserve margins. We had a lot of dispatchable generation. Now we're seeing electricity demand growth, at least forecasts, explode."

The US Environmental Protection Agency's final greenhouse gas regulations require coal-fired plants scheduled to operate beyond 2039 to capture 90% of their carbon emissions beginning in 2032.

"The industry is facing a regulatory mandate to close — or upgrade using technologies that are not yet commercially proven at scale or available at a reasonable cost — the coal fleet by 2032," Conor Bernstein, spokesperson for the National Mining Association told Commodity Insights. "That mandate is crashing into the nation's energy reality, which is soaring new power demand, rapidly eroding grid reliability and immense challenges to actually building and effectively integrating renewable energy."

The issue has caught the attention of coal miners, who have long seen their customer base dwindle. Now, many producers hope that the rising need for electricity to meet the demand for new technologies will delay the retirement of US coal capacity and force a reconsideration of the EPA's rules.

"I mean, if you look at the situation we're in, we have an all-time high for electricity demand, and it continues to grow based on datacenters, electrification, manufacturing, all the things that are going to require more electricity, not less," Jimmy Brock, CEO of Pennsylvania coal producer Consol Energy, said in an interview. "We're in such a big hurry to go to these renewables and shut these coal-fired plants down that there could be severe unintended consequences with that."

Retirements delayed

However, the new EPA greenhouse gas rule also has offered some relief to coal-fired power plants. The final rule also allows 40% natural gas co-firing for coal-fired units that plan to retire before 2039 while exempting units planned for retirement before 2032 from any new requirements.

Duke Energy signaled the possibility of keeping its 3,157-MW Gibson plant in Indiana online longer to meet growing power demand and comply with the final rule for regulating carbon emissions under section 111 of the Clean Air Act.

Duke Energy Indiana, in an Oct. 3 presentation to stakeholders on its 2024 integrated resource plan, said it is preparing to co-fire units 1 and 2 at the five-unit Gibson plant to run on coal and natural gas through 2038.

This would delay the retirement of about 1,270 MW of coal-fired capacity beyond a companywide goal to exit the fuel by 2035.

Court challenges and reliability concerns are other factors underpinning coal plant retirement delays. In August 2023, the US Appeals Court for the 10th Circuit halted the EPA's new so-called good neighbor ozone rule from going into effect in Utah. In April 2024, PacifiCorp filed a resource plan with Utah regulators outlining plans to extend the life of two coal-fired power plants in the state.

The utility proposed operating its 1,363-MW Hunter plant in Emery County, Utah, until 2042, which is 11 years longer than planned. The retirement of the 909-MW Huntington plant in Emery County would be delayed four years to 2036.

Meanwhile, the PJM Interconnection has formally requested that Talen Energy postpone the retirement of its 1,273-MW Brandon Shores plant and units 3 and 4 of its Herbert A. Wagner plant, which runs on fuel oil, because of reliability concerns. Both plants are in Maryland.

Wisconsin utility Alliant Energy updated its energy transition plans and now expects to be out of coal generation by the end of the decade instead of by the middle of 2026, a spokesperson said.

The company previously delayed the retirement of its 1,161-MW Columbia Energy Center to June 2026 to help offset reliability concerns in the Midcontinent ISO.

Alliant also has since suspended the retirement of its 409-MW Edgewater station, which will be converted to natural gas, according to the company spokesperson.

A fragile lifeline

Even with the delays, utilities plan to shutter 61.0 GW of coal-fired power plants between 2025 and 2030, which is equal to more than one-third of the coal capacity online in 2024.

"It seems a lot tougher" to push back coal retirement dates for publicly traded regulated utilities, due to investor pressure on environmental issues, Moglia said. However, independent power producers and private equity firms are likely to be more successful in delaying previously planned retirements, according to Moglia.

The Institute for Energy Economics and Financial Analysis disputes views that a sharp increase in electricity demand will offer a lifeline for coal plants. Based on announced retirements, the fleet's age and the steady fall of capacity factors at operating units, the institute believes the coal capacity remaining at the end of 2030 could be closed by 2040.

"The outlook is not going to improve, particularly as the rapid buildout of solar and battery storage, additional wind and gas continue to undercut coal's economic and technological viability," analysts wrote.

While he believes cleaner energy resources should be the solution and that demand forecasts might be overblown, Bruce Nilles, executive director of the Climate Imperative Foundation, conceded that the coal industry has succeeded in several recent battles to prolong use of the fuel nationwide.

"I do think the coal industry has done a very nice job of creating a sense of crisis ... and as a consequence, these coal plants are sticking around longer," Nilles said.