By Molly Christian and Neil Powell

Data feature produced by S&P Global Market Intelligence research groups in cooperation with the news department to highlight emerging trends and topics of interest.

Approximately 4,600 MW of U.S. coal-fired generation has already retired this year through April and another 7,700 MW will close in the rest of 2015 as utilities work to comply with the U.S. EPA's new Mercury and Air Toxics Standards, or MATS, which took effect last month.

This year's closures represent about 4% of installed U.S. coal capacity and will make up a third of nationwide coal plant retirements between 2010 and 2015, an SNL Energy analysis shows. The pace of retirements eases in 2016, when units with one-year MATS compliance extensions finally close. Next year, nearly 7,300 MW of coal-based power will shut down. Retirements continue to taper off after that, with less than 7,000 MW slated between 2017 and 2022.

Assuming scheduled retirements proceed as planned, approximately 46,000 MW of U.S. coal capacity would be closed between 2012 and 2022. That number will almost undoubtedly grow as generators continue to decide the fate of their fossil fleets.

The average age of units closing between now and 2022 is 56 years, meaning that many are less efficient and have fewer environmental controls than the surviving coal fleet.

"These generating units have provided the backbone of the American dream for decades," American Electric Power Co. Inc. President and CEO Nick Akins said during an April 23 earnings call. "In the age of the word 'coal' being a four-letter word in some circles and not even mentioned among America's resources, even though coal still is the predominant fuel, we want to say 'Thank you and job well done' for those that understand what it takes to make our power system work."

Ohio-based AEP is the single largest source of near-term reductions. It will shutter a little over 6,500 MW of coal generation in 2015 and 2016 combined, most of it in West Virginia, Ohio, Kentucky and Virginia.

Much of AEP's lost capacity will be replaced by renewable sources and energy efficiency.

AEP is refueling three units in Kentucky and Virginia with natural gas, but "we don't have any new, large-scale baseload generation investments planned at this time," AEP spokeswoman Melissa McHenry told SNL Energy on May 7. "We are expanding our renewable energy mix both through power purchase agreements and the construction of five new, utility-scale solar installations in Indiana and Michigan."

Coal's share of AEP's capacity is expected to drop to 48% in 2026 from 61% now. Gas will stay relatively steady on a proportional basis, at 25% of AEP's capacity in 2026 compared with 23% now. Renewables and energy efficiency together will provide about 21% of its electric output in 2026, up from 11% now. Nuclear will stay steady at 5% to 6%.

Tennessee Valley Authority is the next biggest coal unit closer between 2015 and 2022, with nearly 5,000 MW scheduled to retire during the period. That total includes the 476-MW Widows Creek unit 7 in Alabama, which TVA recently announced it will retire no later than October.

"In recent years, we have diversified our mix so we are not overly dependent on any one fuel source, and we have more clean generation, including nuclear, hydro, natural gas, renewables and energy efficiency," TVA President and CEO Bill Johnson said at a May 7 quarterly meeting with the utility's board of directors.

TVA announced the closure of the last Widows Creek coal unit after the meeting, saying the move is needed to comply with the EPA's new coal ash storage and handling rule.

"The ash pond for the remaining operating unit will reach capacity as early as next spring," Johnson said. "As a result, we will need to set a retirement date for the final unit earlier than we had planned."

TVA's coal closures will be partly offset by a new 1,150 MW nuclear reactor at its Watts Bar plant in Tennessee, which will be the first new U.S. nuclear generation added this century. Watts Bar unit 2 is about 98% complete, the utility said in a U.S. SEC filing this month.

The dash to gas

Of the nearly 26,400 MW of coal capacity closed or closing between 2015 and 2022, about 40% will be converted to burn other fuels, mainly natural gas. A little over 11,000 MW of the retiring units will switch to gas, with a much smaller 335 MW converting to burn oil and 58 MW to biomass.

Many of the conversions will be in the ReliabilityFirst Corp., or RFC, region of NERC, which includes parts of the mid-Atlantic and Midwest.

NRG Energy Inc. will perform many of the RFC gas conversions in the next two years. Gas already makes up about half of NRG's installed generating capacity, and it plans to switch more than 5,600 MW of mostly coal-based power to gas across its U.S. service territory from the spring of 2015 through fall 2017. The coal-to-gas conversions include Avon Lake units 7 and 9 in Ohio; Dunkirk units 2-4 in New York; Shawville units 1-4 in Pennsylvania; Joliet units 6-8 in Illinois; and Big Cajun unit 2 in Louisiana.

The SERC Reliability Corp., covering the southeastern U.S., is the second-largest single NERC region for coal plant conversions, with gas the biggest beneficiary.

Southern Co. subsidiary Alabama Power Co. closed units 6 and 7 at its Gorgas plant and stopped using coal at units 1 and 2 of the Barry plant in April, when EPA's MATS rule took effect. Southern also retired nearly 2,000 MW in April across the Branch and McManus plants in Georgia and the Yates plant in Alabama.

Gas will succeed coal at many of Southern's coal units. Unit 7 at Yates was scheduled to be repowered on gas on May 4, followed by unit 6 at the plant in mid-2015.

By April 2016, Alabama Power will cease burning coal at units 1 and 2 of the Greene County plant and start operating them solely on gas.

Despite the already large drop in coal demand, Southern has made additional plans this year to reduce its dependence on the fuel. On April 23, subsidiary Mississippi Power Co. decided to retire units 1 and 2 at the Watson plant in Mississippi by July 1, to avoid environmental compliance costs. And in February, Southern's Gulf Power Co. unit disclosed plans to retire coal capacity at units 1 and 2 of the Smith plant in Florida by the end of March 2016.

Greenhouse gas rule presents another long-term threat

More coal closures could be announced after the EPA puts out its final rule for lowering carbon emissions from the power sector. The agency's Clean Power Plan for existing plants sets state-specific greenhouse gas intensity reduction targets that are estimated to cut emissions by 30% from 2005 levels by 2030.

The final rule is expected by mid-summer 2015, with state implementation plans due a year later.

"We don't have specific projections for AEP unit retirements based on the Clean Power Plan proposal," an AEP representative told SNL. "The ultimate impact will be determined by the final rule and the resulting state implementation plans."

The rule established a 2012 baseline for carbon cuts, frustrating utilities that made significant investments in lowering emissions before then. Many coal-fired generators have also balked at the Clean Power Plan's proposal for a 6% reduction in the CO2 output rate of coal-fired units, deeming the cut too steep even for newer and more efficient facilities.

"For recently constructed coal units that were built with more advanced and more efficient technologies, many of the potential heat rate improvement opportunities have already been incorporated into their base designs," AEP said in comments filed with the EPA on Dec. 1, 2014. "Any potential improvement opportunity will be minimal and certainly far from the 6% level that EPA has considered in the proposed rule."

To view an updatable SNL template of coal unit retirement data, click here.

To find more details about U.S. power plants, go to SNL Energy's Power Plant Briefing Book Search.