Since 2008, coal has dropped from nearly half the U.S. power market to about 37 percent. Coal in their stockings

Coal-fired power plants are shutting their doors at a record pace — and for the most part, nobody’s building new ones.

The latest round in the war on coal? Not exactly. The reality is that Americans’ lights will stay on just fine even as coal plants continue to close, thanks to a quiet revolution in energy efficiency and a boom time for cheap natural gas. Throw in some stricter rules for older plants, and the result is a sharp drop in the economic viability of coal-fired power.


Since 2008, coal has dropped from nearly half the U.S. power market to about 37 percent. In the next several years, industry analysts say, hundreds of older coal-fired units will power down for good.

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The coal industry and its supporters have blamed these trends on a “war on coal” by President Barack Obama, but the facts on the ground don’t entirely support the political rhetoric. True, Environmental Protection Agency regulations are forcing older plants to reduce pollution and upgrade their equipment, helping drive the wave of shutdowns. But increasingly efficient homes, office buildings and factories and a fall in demand for electricity are big reasons why power companies don’t need to build replacements right away — possibly for another two decades.

Even in coal-heavy Kentucky, utilities have decided that at times, closing a big coal plant is the least costly option. And many customers won’t even notice that the plants are gone.

“While many coal plants are expected to close, for a variety of reasons we are unlikely to feel it at the light switch,” said Jennifer Macedonia, a senior adviser at the Bipartisan Policy Center.

The coal industry adamantly disagrees. Laura Sheehan, a senior vice president of the American Coalition for Clean Coal Electricity, warned last week that dozens of states will see “dire social, economic and electric reliability consequences of taking coal offline.”

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Even so, power companies are likely to build few plants in the next 20 years, according to numerous analysts, the U.S. Energy Information Administration and the EPA. Instead, many experts say, it’s more fiscally prudent to invest in energy efficiency and upgraded transmission lines.

In many states, power suppliers have ramped up previously underused natural-gas-fired power plants to take the place of the shuttered coal plants. Increasing numbers of wind, solar, geothermal and hydropower projects are coming online too, though not nearly enough to make up for the lost capacity.

Mainly, people and businesses are just using less electricity. Nationally, the U.S. averaged a 1.3 percent drop in power generation from 2011 to 2012.

In typically coal-loyal Ohio, net power generation dropped 4.3 percent from 2011 to 2012, according to data the Energy Information Administration released this month. During the same period, the net amount of power in the state generated by coal fell 18.7 percent, while the amount generated by natural gas skyrocketed 83.7 percent.

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In most states, power generation has continued to fall during 2013. U.S. electricity sales have dropped in four of the last five years and are on track to do the same this year, the EIA reported Friday . Industrial electricity sales went down, and electricity sales to homes and commercial buildings stayed flat, “despite growth in the number of households and commercial building space.”

“Some of it is due to slowly coming out of the recession, but a large part of that has to do with increasing energy efficiency,” Macedonia said. In addition, existing power plants have a lot of unused capacity — many natural gas plants are operating nowhere near 100 percent.

Environmentalists are thrilled with the changes, which aid the campaign many activists have been waging to drive coal power into the history books. “In most places demand is flat or slightly declining, so as you bring coal offline you don’t need any replacement whatsoever,” said Bruce Nilles, senior director of the Sierra Club’s Beyond Coal campaign.

In Kentucky, where several coal-fired power plants intend to shut down, electricity planners have “no concern with adequate reserve,” said Andrew Melnykovych, a spokesman for the state Public Service Commission.

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Some experts are skeptical about that optimism, expressing concern that enough reserve power will exist to keep the lights on in the Midwest. Widespread coal plant shutdowns will come fast in that region, thanks to EPA’s tight deadline for utilities to ratchet down toxic air pollution.

Even if the Midwest’s electric grid operator has enough spare capacity, some smaller areas within the region could find themselves stretched, leading to blackouts or brownouts, said Philip Moeller, a board member of the Federal Energy Regulatory Commission. Moeller has warned about the difficulties that planning agencies will face in preparing for this unprecedented overhaul of the power system.

Trusting demand to stay low isn’t the solution, Moeller said. “We can hope for a cool summer in 2016, but that’s not necessarily a prudent approach for doing our jobs,” he said.

Still, the shutdowns show no signs of slowing.

In the past year, power companies have announced plans to close big coal plants in Pennsylvania and Massachusetts, while the Tennessee Valley Authority last month announced a string of shutdowns coming in the next few years. In Kentucky, the company American Electric Power scrapped a planned $1 billion anti-pollution upgrade of its Big Sandy coal plant at the urging of various groups, including some who worried manufacturers would flee the area when faced with a potential 30 percent boost in electricity

About 60 gigawatts of coal power has shut down or been designated for shutdown in the last three years, including 13 gigawatts so far this year, said Christopher Van Atten, senior vice president at M.J. Bradley & Associates, an energy and environmental consulting firm that has tracked shutdown announcements. Since 2009, 6.2 percent of the U.S. coal fleet has retired, the environmental-minded Union of Concerned Scientists said in a report this month.

At the start of 2012, the U.S. power supply had about 323 gigawatts of coal capacity, the research firm SNL Energy said in a report called “Coal under fire.”

An additional 55 to 60 gigawatts of coal-fired power is likely to shut down by 2020, depending on who’s doing the counting. The U.S. has “room for significant additional coal retirements,” the SNL report said.

Another trend: The shutdowns are affecting bigger and bigger plants.

The spate of shutdowns began soon after the EPA issued a rule in 2011 requiring cuts in mercury and other toxic air pollution from power plants. That rule fell most heavily on the nation’s dirtiest coal-fired plants, many of them 50 to 70 years old. But at first, the shutdowns tended to hit small, barely used plants — run only to add extra juice to the grid during times of peak demand, such as especially hot days.

In 2013, the trend started spreading to much larger plants, the kind that keep the lights running day in, day out.

“I do notice that the size of the units retiring this past year has been higher than average,” Van Atten said. He said the average size of the plants being closed this year was 210 megawatts, up from 150 megawatts the year before.

“The fact that we’re seeing some of these larger units retire is maybe a sign that the economic conditions are eating further into the fleet,” he said.

The efficiency gains are coming from several directions.

For starters, many utilities are making their power plants and transmission systems more efficient, which means less power is lost in combustion and transport, and more power from a plant can make it to consumers. It also drives down costs for customers.

At least 24 states have set targets for savings through energy efficiency investments, often aimed at power customers. In nine states, those standards cut 1.5 percent of their electricity sales, according to a 2011 report by the American Council for an Energy-Efficient Economy. The statewide programs contain a mix of options, such as replacing appliances and giving credits for new light bulbs, as well as industrial efficiency programs in which states help companies retrofit their facilities.

Those efforts have historically taken place on the West Coast and in the Northeast, but now they’re popping up in states like Illinois, Michigan, Ohio and Minnesota, as well as seemingly unlikely candidates like Oklahoma and Arkansas.

Federal programs that require higher efficiency standards for appliances and lighting are also having “a fair amount of influence” on demand, Macedonia said.

Those types of programs make it easier to get by when a power plant closes.

“Energy efficiency is one of the quickest and least costly ways of replacing existing capacity,” the Union of Concerned Scientists report said.

In Kentucky, all the state’s investor-owned utilities are participating in so-called “demand-side” efficiency programs, the PSC’s Melnykovych said. He said the industry most interested in cutting its power needs is manufacturing — the state’s second-largest industry after coal.

Energy efficiency isn’t the only thing slowing the construction of new power plants.

For example, 29 states mandate that a certain percentage of their power come from renewable energy, which moves investment in new power generation away from coal. Utilities also have to sort out their uncertainties on myriad factors, including the future price of natural gas and the possibility of the government someday taxing carbon.

FERC’s Moeller said increasing efficiency adds to the uncertainty: When conservation cuts into power demand, that complicates a utility’s calculations on whether a new plant will pay for itself.

Both sides may be able to agree on one thing: The market conditions buffeting coal will throw a series of big curve balls at the people responsible for keeping the lights on.

“Retiring a large amount of coal-fired generation represents a transition that is both a challenge and an opportunity,” the Union of Concerned Scientists’ report said. “The decisions each state and region makes about how to respond to this transition will have significant and lasting implications.”