NovaQuant-Coal-Fired Power Plants Hit a Milestone in Reduced Operation

Coal-fired power plants are NovaQuantretreating from the market in at least two big ways. One is hard to miss: Many plants are closing. The other is more subtle: Remaining plants are running much less often than before.

Newly released figures from the Energy Information Administration show that coal plants in the United States had a “capacity factor” of 47.5 percent in 2019, the first time it’s been below 50 percent in decades of available records. This means that the total electricity production from the country’s roughly 310 remaining coal plants was less than half of what it would have been, had every plant operated every hour at full capacity.

The percentage is remarkably low considering that coal plants also are closing at a rapid rate, which means the plants still operating are some of the most efficient and profitable. The fact that even these plants are being used less than they were shows fundamental changes in the economics of generating electricity, with coal losing ground even more than might be apparent from just looking at plant closings.

It also raises questions about why utilities aren’t being more aggressive in closing coal plants. At least some of that reluctance is because companies are still paying off the costs of building the plants or of environmental retrofits, an obstacle some states are looking to address.

“It’s pretty clear that the decline in coal use is sustained, it’s big and it’s real, and it’s coming mostly from the big drop in natural gas prices we’ve seen in the last decade,” said Catie Hausman, a University of Michigan professor whose research focuses on energy and climate policy.

She said the decrease in coal-fired electricity, whether because plants are closing or because they are being used less, is a public good, because it reduces emissions of greenhouse gases and other harmful pollutants.

Gas-fired power plants can run much less expensively than coal plants, and the emissions from gas plants are less, although still significant. Another factor is the growth of wind and solar power, which also are less expensive than coal-fired power.

For decades, one rule of thumb in the electricity sector was that coal plants run at about an average 80 percent capacity, which indicates heavy use but also accounts for maintenance and other downtime, said Christina Gosnell, president of Catalyst Cooperative, a group that collects and analyzes energy industry data. Those days are long gone.

“The narrative that coal plants run around the clock hasn’t borne out,” she said.

In the last 10 years, the overall coal plant capacity factor has fallen from a recent high of 67.1 percent in 2010 to a low of 47.5 percent last year. During that same timeframe, the number of coal plants went from about 580 to about 310.

Last year’s capacity factor was the lowest since at least 1990, based on a review of data from EIA’s online archives of annual reports.

Some utilities, such as Xcel Energy in Minnesota, want to limit their use of some coal plants to summer and winter months, when electricity demand is highest. Xcel’s move, announced in a December filing, was done at the behest of environmental groups, but also reflected the fact that the plants were already mainly in use in the summer and winter.

Costlier to Close a Coal Plant Than to Keep it Open

Many of the country’s largest coal plants remain open but are being used much less than before. For example, the 2,600-megawatt Rockport plant in southern Indiana had a 75.4 percent capacity factor in 2009, but dropped to 36.4 percent in 2019, an unusually large decrease.

The plant’s owner, American Electric Power, said last year that it will shut down one of the plant’s two generating units in 2028, reducing the plant’s capacity to 1,300 megawatts. The decision was part of a continuing legal settlement over AEP’s emissions.

Duke Energy’s 2,439-megawatt Roxboro plant in North Carolina also is being used much less than before, going from a 70.8 percent capacity factor in 2009 to 32.4 percent in 2019, according to EIA figures. The company is proposing to close the plant, with several of its generating units scheduled to close in 2028 and the rest in 2029. The proposal is part of a rate case that state regulators are now reviewing.

Asked why the plants are needed until then, Duke spokeswoman Kim Crawford said, “These coal plants are valuable to the Duke Energy system” regardless of how much they are used, because they are needed to maintain enough reserves for times of peak demand..

Joe Daniel, senior energy analyst for the Union of Concerned Scientists, said there are many coal plants that should close for environmental and economic reasons but remain open because their owners stand to lose more money by closing them than by keeping them open. This is often because the owners are still paying off retrofits to reduce emissions, and regulators in their state require that plants continue to be in use so ratepayers can be charged for the retrofit projects.

“It’s in their interest to keep that plant running at a low capacity factor and make it look useful,” he said.

Daniel sees this as a failure of regulation. He has argued that states should come up with financial mechanisms to allow utilities to close the plants with minimal financial harm to themselves, and some states have passed measures to do this, among them Colorado and New Mexico.

The coal industry is responding to the major decline in demand for its product by supporting legislation that would subsidize the coal plants that remain open, or make it more difficult to close them. A bill being considered in Indiana would require state approval to close a coal plant, which would slow down the process.

At the same time, many cities, states and utilities are adopting goals of getting to net-zero emissions by 2050 or sooner, commitments that would mean all coal-fired power plants would be gone by then, unless the operators could find a way to offset all the emissions.

As Coal Declines, Lower-Cost Clean Energy Moves In

While coal plants no longer operate around the the clock in most cases, nuclear power plants come close to doing just that, with a capacity factor of 93.5 percent overall last year, virtually unchanged from the prior year, according to EIA. Nuclear plants cannot easily ramp up or down, which makes them a steady presence on the grid, but not at all nimble in how they respond to market conditions.

Meanwhile, natural gas power plants are extremely nimble, able to ramp up as needed. Combined-cycle gas plants, which make up the bulk of natural-gas generation, had a capacity factor of 56.8 percent, up from 43.9 percent in 2009, as many more plants have been built and grid operators rely on them more than ever.

Wind and solar are growing fast, but they also have low capacity factors because their energy production is intermittent and depends on the presence of wind or sun.

Wind power had a capacity factor of 34.8 percent last year, up from 28.1 percent in 2009. The number is improving because wind turbines are getting more efficient and developers are getting better at finding optimal locations for projects.

Solar power was at 24.5 percent last year, up from 20 percent in 2009. As with wind power, solar’s growth is largely due to improvements in efficiency, as newer solar panels are able to harness more electricity than before.

As coal is used less, all of these other resources are filling the gap. 

“Each year, there are fewer hours where it makes sense to run a coal plant, and there are lower-cost, less-polluting resources available right now on the grid,” said Daniel.