More US coal plants to retire due to green rules-study

Mon Oct 8, 2012 9:57am EDT

* Coal retirement/retrofits to cost up to $144 billion

* Brattle says up to 77,000 MW of coal could shut

* Higher natural gas prices will reduce coal retirements

By Scott DiSavino

Oct 8 (Reuters) - More U.S. coal-fired power plants could retire due to environmental regulations and weaker-than-expected electric demand, costing the industry up to $144 billion, economists at consultancy Brattle Group said.

In a new study, Brattle's economists forecast 59,000 to 77,000 megawatts (MW) of coal plant capacity would likely retire over the next five years.

That was about 25,000 MW more than the firm had estimated in 2010, Brattle said in a release. There is about 317,000 MW of coal-fired capacity now in the United States.

Brattle estimated more coal units would shut than other recent studies, including a report by the power industry's research arm Electric Power Research Institute that forecast 36,000 to 61,000 MW could shut over the next several years. One megawatt can power about 1,000 homes.

"Everything else being equal, this amount of retirement will be enough to increase prices in both electric and gas markets for a few years, but we do not envision that impact to be large or persistent enough to alter retirement decisions," Frank Graves, Brattle principal and co-author of the study, said.

The economists estimated the power industry would have to invest $126 billion to $144 billion to retrofit and replace the coal capacity.

Since December 2010, when Brattle released its prior estimates of coal plant retirements, natural gas prices and the projected demand for power have decreased.

The economists said these shifts in market conditions had resulted in an acceleration in announced coal plant retirements.

As of July 2012, generating companies had announced the retirement of some 30,000 MW of coal plants (roughly 10 percent of total U.S. coal capacity) by 2016, Brattle said. For factbox on coal plant retirements, click on

But the U.S. Environmental Protection Agency still has to finalize some rules related to emissions, cooling water and coal ash.

To reflect the remaining environmental uncertainty, Brattle said its economists had developed "strict" and "lenient" scenarios, with about 59,000 MW likely to retire under lenient rules versus 77,000 MW under strict regulations.


The economists said natural gas prices would play a major factor in determining the number of coal plants to retire.

Retirements would drop to between 21,000 and 35,000 MW if natural gas prices increased by just $1 per million British thermal units (mmBtu) relative to April 2012 forward prices.

If gas prices fell by $1, the economists projected coal retirements would increase to between 115,000 and 141,000 MW.

Natural gas prices in April bottomed at $1.90 per mmBtu. Over the past decade, natural gas has traded in a wide range from less than $2 to more than $15, averaging about $6. The current spot cost is $3.35.

The biggest coal-fired generation companies in the United States include units of American Electric Power Co, Duke Energy Corp, Southern Co, Xcel Energy Inc , GenOn Energy Inc and FirstEnergy Corp.

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see
Comments (2)
Paulson545 wrote:
President obama and his radical left wing EPA is destroying the coal mining industry in West Va and Kentucky. When electricity prices between to soar who will the democrats blame.

Oct 08, 2012 12:31pm EDT  --  Report as abuse
ronwagn wrote:
Natural gas is the future of energy. It is replacing dirty, dangerous, expensive coal and nuclear plants. It is producing the electricity for electric cars. It will directly fuel cars,pickup trucks, vans, buses, long haul trucks, dump trucks, locomotives, aircraft, ships etc. It will keep us out of more useless wars, where we shed our blood and money. Over 1,800 natural gas story links on my blog. An annotated bibliography. The big picture of natural gas.

Oct 08, 2012 1:05pm EDT  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.