The US is on track to shutter half of its peak coal-fired generation capacity by 2026, a key milestone in its energy transition, according to an April 3 report from the Institute for Energy Economics and Financial Analysis (IEEFA).
That milestone falls just 15 years after coal-fired generation in the US reached its peak in 2011, according to the report. Coal use by US electric power producers is falling quickly after a short-lived post-pandemic recovery, potentially declining to 400 million tons in 2023, or less than half of what was used a decade ago.
By the end of 2026, coal capacity is expected to fall to 159 GW, down from 318 GW in 2011, and is set to fall to 116 GW by 2030, based on current announcements from utilities, report authors wrote.
Although some coal plants' retirement dates were extended due to pandemic-induced supply chain disruptions — which delayed completion of new generation resources and caused significant price volatility for gas — other plants have accelerated their retirement dates, according to the report.
Coal generation will likely fall precipitously as aging units face higher operations and maintenance costs and utilities increasingly rely on gas generation and battery storage to complement solar and wind.
Fewer than 200 large-scale coal-fired units — of 50 MW or more — do not have announced retirement dates, and 118 of those are at least 40 years old, according to the report.
"These milestones portend an ongoing and deep restructuring of the US coal industry as demand for the fuel continues to drop quickly," the authors wrote. "It is likely to result in significant mine closures, layoffs and falling tax and royalty payments in coal-producing states."
More than 80 GW of coal generation in 33 states is set to close from 2023 through the end of 2030. About 10.5 GW of that is expected to be converted to run on gas exclusively.
"Utilities appear increasingly committed to these coal unit retirement plans as their long-term spending and resource plans are implemented," the authors wrote.
In 2022, coal produced about 20% of the sector's energy, compared to 44% in 2011. The US Energy Information Administration expects coal's market share to fall to 17% in 2023, and IEEFA projected coal's market share could fall to 10% or lower by 2030.
The most significant shift, according to the report, has been the addition of more planned wind, utility-scale solar and battery storage capacity as utilities respond to financial incentives in the 2022 Inflation Reduction Act.
Nearly 58 GW of US coal plant capacity is projected for retirement by 2030, according to S&P Global Market Intelligence data, with the potential for the Inflation Reduction Act to accelerate the trend. Federal power provider Tennessee Valley Authority expects to exit coal generation by 2035, replacing at least part of the fleet with natural gas generation.
American Electric Power Co. Inc. is moving forward with plans to retire more than 4.7 GW of coal-fired capacity from 2023 through 2028, including its Pirkey, Northeastern 3, Rockport and Welsh units. Coal generation is expected to represent less than 5% of the utility's fleet by the end of 2028.
Duke Energy Corp., one of the nation's top investor-owned utilities with about 16 GW of coal-fired generating capacity, aims to reduce its coal fleet to about 5% by 2030 and completely exit coal by 2035, subject to regulatory approval.
In Kentucky, lawmakers passed legislation in March to slow or potentially halt coal-fired generation retirements over utility objections.
Other states have also pushed back on utilities' plans for coal retirements. In December 2021, South Carolina regulators rejected Duke's preferred power plant construction plan, instead approving a plan that would allow the utility to continue operating some coal plants through 2035 rather than the 2030 deadline that Duke proposed.
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