Report: 59 GW of Coal-Fired Generation Capacity Should Retire; Could Open Door for Renewable Energy

19 january 2013

Nashua, NH — Today, the Union of Concerned Scientists (UCS) released the findings of an economic analysis indicating as much as 18 percent of the country’s coal-fired energy generating capacity should be considered for closure. The study found as many as 353 generators in 31 states, totaling 59 gigawatts (GW) of electricity generation capacity, likely will be more expensive to operate after installing modern pollution control equipment than switching to cleaner energy alternatives such as natural gas, renewable energy, or using greater energy efficiency measures. These potential closures are in addition to 41 GW of already announced coal retirements.

The comprehensive report ranks the ten states with the most coal-fired generating capacity that should be considered for closure:  Georgia, Alabama, Tennessee, Florida, Michigan, South Carolina, Wisconsin, Indiana, Mississippi and Virginia. (see chart, below.)

The report also shows that Southern Company, one of the nation’s largest private utilities, owns the most coal-fired generating capacity ready for retirement, followed by government-owned Tennessee Valley Authority, Duke Energy, American Electric Power and FirstEnergy.

To determine the economic competitiveness of a coal plant, the UCS compared that cost of coal-fired generation after a plant installed modern pollution controls with the cost of generation from a new natural gas-fired plant. If the cost was greater for the coal plant, it was considered ripe for retirement.  Many of the ripe-for-retirement generators identi­fied in the report are more expensive to operate than wind power generation with or without the extension of the production tax credit (PTC).  The UCS also factored in a modest price on carbon emissions for its analysis.

See the chart and description below for more information.

 

UCS analysis revealing that low natural gas prices and a price on CO2 have the greatest impact in expanding the pool of coal-fired generators deemed ripe for retirement, and that extending the federal tax credits for wind power is also significant. Alternative scenarios explore three external economic factors that could influence the coal-fired generating capacity deemed ripe for retirement. In the core analysis (far left), the low estimate (dark blue alone) compares the operating cost of coal generators with the operating cost of a new NGCC plant; the high estimate (combined dark blue and light blue) compares the operating cost of coal generators with the operating cost of existing NGCC plants. The middle three bars repeat the analysis for hypothetical scenarios where natural gas prices might be 25 percent higher or 25 percent lower, or where a $15/ton price might be put on carbon dioxide emissions. For the wind power scenario (far right), the analysis illustrates the capacity of coal-fired generators deemed ripe for retirement if federal tax credits for wind power are allowed to expire (dark green) or are extended (combined dark green and light green).

“Our analysis shows that switching to cleaner energy sources and investing in energy efficiency often makes more economic sense than spending billions to extend the life of obsolete coal plants,” said Steve Frenkel, report co-author and director of UCS’s Midwest office. “Regulators should require utility companies to carefully consider whether ratepayers would be better off by retiring old coal plants and boosting electricity generation from natural gas and renewable energy sources like wind. Spending billions to upgrade old coal plants may simply be throwing good money after bad.”

According to the UCS, the possible retirement of these uncompetitive generators presents a historic opportunity to accelerate a transition to a clean energy economy that will protect public health, cut carbon dioxide emissions and diversify the power mix.