US Coal Plant Closures Likely To Eliminate 30 Million Tons Of Annual Coal Demand

April 24th, 2017 by Joshua S Hill

The United States is closing 46 coal-fired generating units at 25 electricity plants across 16 states over the next few years, transitioning to natural gas or intentionally closing them, and a new report shows that this will likely result in eliminating about 30 million tons of annual coal demand by the end of 2018.

The Institute for Energy Economics and Financial Analysis (IEEFA) published its new research brief last week, working step-by-step through the implications inherent in the expected coal-fired generating closures over 2017 and 2018 (the full list can be seen at the bottom). The brief concludes that the expected closures will eliminate about 28.2 million tons of annual coal demand by the end of 2018, worth nearly $1.1 billion (2016 prices).

The plant closures currently expected over the next few years are across 16 states — Colorado, Florida, Kentucky, Illinois, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, North Dakota, Ohio, Tennessee, Texas, Virginia, West Virginia, and Wisconsin. Coal producers in the Powder River Basin of Wyoming and Montana, and those in the Illinois Basin are expected to be the hardest hit — with two thirds of the expected annual demand losses predicted to stem from those two coal regions.

“Nearly 46 percent of the coal no longer required at these units, or 10.6 million tons, came from the Powder River Basin, and further 23.6 percent came from the Illinois Basin, making these the two hardest-hit regions,” said Seth Feaster, IEEFA data analyst and author of the report. Nearly 70% of coal that was purchased in 2016 was delivered to plants that will be closing.

“While some plants may have flexibility in which mine they purchase from, significant regional shifts in coal sourcing are unlikely, both because of economic reasons such as shipping costs and limits on changing the physical properties of the coal each plant uses,” the report explained. “This means that the coal shipments cited here are likely to represent permanent losses in demand for each mining region.”

The IEEFA also believe that coal mining operations in the Four Corners region of the Southwest US — Colorado, Utah, Arizona, and New Mexico — will take a sharp hit from plant closures. Additionally, those with operations in Appalachia and the Uinta Basin of Utah will continue to be affected, having already suffered loss of demand.

As for individual coal producers, Peabody Energy and Cloud Peak Energy are both expected to suffer the most. IEEFA predicts that by the end of 2018, Peabody Energy will lose nearly 4.9 million tons of coal sales to nine different plants — the most of any company. Cloud Peak Energy will suffer losses of 4.1 million tons to five plants.

By the end of 2018, the plant closures detailed in this report will amount to a net capacity (by 2016 figures) of 16 gigawatts (GW), or approximately 5.7% of the total coal-fired US electricity generation capacity. These closures represent what the IEEFA believes is a long-term trend that will only likely continue. “Indeed, the transformative shift in electricity generation across the U.S. is likely to continue as intense cost competition from renewables and natural gas continues a trend toward more coal-fired plant closures and has even led to some nuclear plant retirements over the past few years.”











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