U.S. rules seen shutting 20 percent of coal power capacity

NEW YORK Wed Jul 27, 2011 2:50pm EDT

NEW YORK (Reuters) - The U.S. power industry will probably retire up to 20 percent of the country's coal-fired electricity generating capacity this decade, due to proposed federal environmental regulations, consulting firm ICF International said in a report on Wednesday.

Fairfax, Virginia-based ICF, which helps utilities meet environmental rules, among other things, said grid operators and regulators in charge of reliability will have to work with environmental regulators to ensure the system remains reliable as 30 to 50 gigawatts of coal-fired generation are shut.

"This type of large-scale retirement can be accommodated without sacrificing system reliability, provided that the retirements are undertaken in a coordinated manner and with sufficient flexibility," ICF said.

ICF said the units would likely retire due to various proposed air emissions rules by the U.S. Environmental Protection Agency (EPA) with implementation deadlines over the next few years.

To meet the proposed rules, ICF said many utilities will retire older and smaller coal plants rather than spend millions to retrofit the units. Most retirements will occur in the Midwest and Southeast, which has the largest concentration of coal-fired capacity.

"The scope and scale of this potential loss of generation capacity is unprecedented, and there is little comparable real-world experience to draw upon," ICF said.

Shutting a plant is not as easy as it sounds.

It requires an economic decision by the owner, a request to deactivate the plant, analysis by a regulator on that request, possible assignment into so-called reliability must run (RMR) status, possible development of replacement capacity and finally removal of the plant, ICF said.

Many plants slated for closure will probably have to delay their decommissioning for years to ensure reliability of the power grid, ICF said, under special RMR rules designed to keep plants running long enough to support reliability concerns.

CIVIL AND CRIMINAL PENALTIES

Plants that fail to retrofit or retire by the EPA deadlines "could incur heavy civil and criminal penalties", ICF said.

The Midwest ISO, which operates the power grid in all or parts of 12 U.S. Midwest states and the Canadian province of Manitoba, could lose 11 GW of coal plants, according to ICF, which would affect reliability in some states.

Two other regions ICF pointed to with a lot of small and old coal plants are PJM, which operates in all or parts of 13 U.S. Midwest and Mid-Atlantic states and the District of Columbia, and the SERC region, which oversees all or parts of 16 U.S. Southeast and Central states.

The Ercot grid in Texas and the Southwest Power Pool, which operates grids in nine Great Plains and South Central states, have also said the proposed EPA rules could hurt reliability in their regions.

As of July 2011, generating companies have already announced plans to retire about 23 GW of coal power plants.

A gigawatt equals 1,000 megawatts. A megawatt is enough energy to power about 1,000 homes.

(Reporting by Scott DiSavino; Editing by David Gregorio)

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Comments (1)
NickE wrote:
It is high time the oldest and dirtiest coal plants in the US were taken off the grid – I don’t understand why this has taken so long to happen. We have the technology to produce energy in cleaner ways, while maintaining grid reliability and creating thousands of jobs. This is a win-win, and the sooner it happens the better.

Jul 28, 2011 1:13pm EDT  --  Report as abuse
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