Coal’s Slow Burn
© Can Stock Photo Inc. / mandj98
Todd Williams is a
U.S. Coal Fleet—Status of Environmental Controls
partner and leads
practice area. Reach
him at toddwilliams@
by Todd Williams and Stuart Pearman, ScottMadden
Anticipated coal-fired plant retirements spurred by
Environmental Protection Agency (EPA) regulations and
persistent low natural gas prices continue to increase.
There are 986 electric generation coal units in the U.S. with
a total nameplate capacity of 307 gigawatts (GW). They
generated some 37 percent of 2012 total electric energy,
down from 42 percent in 2011. Coal’s share of generation is
projected to continue to decline as units come offline and are
More than 600 units do not have the requisite pollution
controls, including flue gas desulfurization (FGD) or
selective catalytic reduction (SCR) installed and are at risk
for compliance with proposed EPA rules.
Retirements—What is Order of Magnitude?
Many generation owners have not decided the fate of their
coal units. As a result, expert estimates on the total impact of
coal retirements sound a little more like Las Vegas odds than
fact-based industry analytics.
Most estimates range from 30 to 100 GW, depending
on the forecast window. Some 44 GW of U.S. coal unit
retirements are believed to be confirmed, based upon
announcements and system operations resource plans. The
North American Electric Reliability Corp. (NERC) estimates
nearly 71 GW of retirements by 2022, with 90 percent of that
retiring by 2017.
Of the known retirements, plants are predominantly
older with low capacity factors, meaning they do not run
often. At retirement, the average plant age is 53 years. The
average capacity factor is 34 percent.
Two Primary Drivers of Coal Unit Retirements
Although other considerations exist, there are two key drivers
to coal unit retirements: costs associated with compliance to
EPA regulations and the low price of natural gas.
Costs associated with compliance to EPA regulations.
With the re-election of President Barack Obama, a tsunami
of EPA regulations that affect power generation is expected
to be promulgated and implemented. Many regulations will
be subject to litigation and negotiation, but absent a change
in Senate party control, the underlying laws are unlikely to
be changed. There are five main rules to consider. Figure 2
summarizes each rule, its status, impacts and requirements.
is a partner and
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59 GW ripe for retirement in addition
to estimated 41 GW announced
(100 GW total)
The Brattle Group 59-77 GW
Sanford C. Bernstein 58 GW by 2015
Bipartisan Policy Center 56 GW by 2016
Friedman Billings Ramsey 50-55 GW by 2018
Guggenheim Partners 50 GW by 2015
ICF International 50 GW by 2015
Energy Information Administration 49 GW by 2020
Reuters/Factbox 35 GW by 2015
Wood Mackenzie 30 GW by 2015,
additional 45 GW by 2025
Selected U.S. Coal Plant Retirement Forecasts:
30-100 GW Between 2015 and 2020 Figure 1:
Cooling water intake under the Clean Water Act
§316(b). The cooling water intake rule requires units
install the best available control technology, which is
location- and unit-specific and will require discussion,
negotiation and agreement. Compliance might include
a closed-loop system with a cooling tower, but it is
not necessarily required. Cooling towers are expensive
and for some sites pose physical challenges. Entergy
estimates building a new cooling tower system at its
Indian Point nuclear complex in New York could cost
some $1.4 billion. Dominion estimates $600 million
for two cooling towers at its Brayton Point plant in
2. Mercury and Air Toxics Standard (MATS).
Compliance with the MATS rule is more expensive
and might affect generators most. Southern Co.’s total
compliance cost initially was estimated at $2.7 billion
during 2012-2014. American Electric Power Co. Inc.
has estimated its EPA compliance costs (includig but not
limited to MATS) at $4 billion to $5 billion. Some relief,
however, came as the November 2012 update to MATS
eased the particulate matter standard, which created
opportunities to reduce compliance costs. Southern Co.
announced the relaxed rule allows it to reduce spending
by $900 million by 2014.
3. Cross-State Air Pollution Rule (CSAPR). CSAPR
replaced the Clean Air Interstate Rule (CAIR), struck
down by the U.S. Court of Appeals for the D.C. Circuit
in 2008, but was struck down by that same court in
August. The court found the EPA had overreached. In
sending CSAPR back for revised rulemaking, the court
reimposed CAIR, the same rule it struck down in 2008.