The US coal-fired power plant fleet continues to shrink, while the remaining coal burners are being used less than half of the time.

The weighted average capacity factor of the US coal fleet, a measure of how much electricity a plant generates versus its potential capacity, was 40.7% in 2023, according to S&P Global Market Intelligence data. Coal plants are generally designed to run most economically at a steady rate, and a plant's low capacity factor is often a strong indicator of an early retirement. The nation's coal fleet has not logged a weighted average capacity factor greater than 50% since 2018.

"The disadvantage of steam turbines that use coal is they take time to ramp up and ramp down," said Steve Piper, director of energy research for S&P Global Commodity Insights. "You've got to be more confident that you won't be running the plant for several hours at a loss while you bring it up, and I think that kind of compounds the issues of utilization."

The weighted average capacity factor has been in rapid decline. In 2011, plant owners operated active US coal units at 62.2% of capacity. By 2020, they hit a low of 39.7%. However, operators revved coal plants up to rates just shy of half capacity for two years as the economy bounced back from the COVID-19 pandemic. In 2023, coal plant utilization dropped back about 6 percentage points.

"It indicates that coal has gotten pretty expensive, especially relative to natural gas starting, basically, last spring," Piper said. "Natural gas got very cheap domestically again and it is kind of the preferred fossil generation source. At the same time, expanding renewable energy is taking up a lot of the space in the dispatch stack where gas isn't out-competing coal."

There is a wide spread of capacity factors among the power plants included in the average. For example, the Prairie State Energy Campus, a coal plant owned by nine public power agencies, reported capacity utilization of 87.4% in 2023, the highest of any coal plant in the US with available data. On the other hand, Dominion Energy Inc.'s Virginia City Hybrid Energy Center had a capacity utilization rate of just 13.8% in 2023. Both plants came online in 2012.

Only 18 of the 205 coal-fired power plants with available 2023 data reported capacity utilization above two-thirds for the year.

"I would say that a 40% capacity factor is probably a good indication that really June, July, August and September are when those plants are coming up and running consistently and less so, or maybe not at all, during other times of the year," Piper said.

As the coal fleet has shrunk, so has domestic coal production. US coal production totaled 572.1 million short tons in 2023, compared to 1.00 billion short tons as recently as 2014. Exports have been rising on an absolute basis and are a small but growing percentage of the total market for US coal.

Consol Energy Inc. President and CFO Mitesh Thakkar said during a Feb. 6 earnings call that increasing demand for datacenters due to the deployment of AI technologies, new commercial factories and electric vehicles should cause electricity usage to soar in the US. The Pennsylvania-based coal producer hopes the need for more electricity means coal plants will begin operating at a higher capacity.

"In Virginia, one utility had to briefly pause new data center connections in Loudoun County because of insufficient electricity supply. In Kansas City, Evergy is seeing the most robust electricity demand growth in decades," Thakkar said. "This leads us to believe that we could see some slowdown in coal power plant retirements or higher utilization of surviving coal plants."