trending Market Intelligence /marketintelligence/en/news-insights/trending/ZE5jcCfPmuXqQJtAYVfrKw2 content esgSubNav
In This List

Trump environmental order does little to change coal retirement plans

Blog

European Energy Insights - May 2021

Blog

Metals & Mining Insights May 2021

Blog

Corporate Credit Risk Trends in Developing Markets An Expected Credit Loss ECL Perspective

Blog

Highlighting the Top Regional Aftermarket Research Brokers by Sector Coverage


Trump environmental order does little to change coal retirement plans

U.S. coal producers and trade associations cheered President Donald Trump's package of actions aiming to boost the coal industry, but many of their customers are on track to move away from the fuel regardless.

SNL Image

According to an S&P Global Market Intelligence analysis of coal plant retirement data, 44.1 GW of coal capacity is or was scheduled for retirement between 2013 and 2021. About 10.9 GW of these scheduled retirements fall in the period between 2017 and 2021.

Many of the companies retiring their coal assets reiterated to S&P Global Market Intelligence that Trump's March 28 executive order would not change those plans.

Those figures do not include multiple large retirements that have been announced but have not yet met criteria for the S&P Global Market Intelligence analysis, which includes only scheduled retirements that have obtained regulatory approval. Recent announcements that did not meet the criteria include Dayton Power and Light Co.'s plans to retire the 2,308-MW J.M. Stuart and 600-MW Killen Station coal-fired power plants in Ohio by June 2018, and a recent announcement that JEA and Florida Power & Light Co. would close the St Johns River Power plant in early 2018.

"That is what this is all about: bringing back our jobs," Trump said at a public event signing an order that begins to roll back the U.S. EPA Clean Power Plan, reverses a moratorium on coal leasing and more. However, many experts have warned that a coal comeback is unlikely. Even coal producer Murray Energy Corp.'s CEO, Robert Murray, has said he has asked Trump to temper promises that coal jobs and production would come back to previous levels.

The coal industry, which has seen a slight uptick in demand after a crash to record lows in 2016, is likely to see its customer base continue to shrink in the near future.

The Tennessee Valley Authority is scheduled to retire 2,494 MW of coal capacity between 2017 and 2020 — more than any other company. Jim Hopson, manager of public relations at TVA, said on March 29 that the federally owned corporation has no plan to change those resource decisions because they were based on "least-cost planning principles and a balanced portfolio goal," which will include coal as part of the energy mix. The TVA has lowered its carbon dioxide emissions by 30% below 2005 levels and is on course to hit a 60% reduction by 2018.

"TVA was committed to and investing in a low-carbon future before the Clean Power Plan was created, as part of our efforts to improve life in the Tennessee Valley," Hopson said. "We've closed aging and inefficient coal plants and invested in technology, renewables, natural gas and nuclear energy. Our energy efficiency programs have also contributed to lower power demand, which further reduces carbon emissions."

SNL Image

SNL Image

Duke Energy Corp., which operates power plants across the Carolinas, the Midwest and Florida, has scheduled the retirement of 1,259 MW of coal capacity between 2017 and 2020. Duke spokeswoman Dawn Santoianni pointed out Duke has reduced its carbon emissions 30% since 2005 and is planning $11 billion in cleaner energy investments over the next 10 years.

Houston-based power producer Dynegy Inc. has scheduled retirement of 1,083 MW of coal capacity in 2017. Dynegy spokesman David Onufer said it is too early to speculate on how Trump's executive order will affect operating costs, investment decisions and operations strategy.

"The real challenge to coal plants has been keeping uneconomical nuclear plants ... running with zero emission credits and subsidies," Onufer said. "The lack of a cohesive national plan has led to inefficient state-by-state policies that have turned markets from a competition to produce the lowest cost electricity to a competition for subsidies."

While CPS Energy, TransAlta Corp. and Portland General Electric Co. did not immediately respond to a request for reaction to Trump's plan, the rest of the 10 companies retiring the most coal capacity in the next three years indicated they likely will not change course on scheduled retirements based on the executive order.

SNL Image

Part of the reason Trump's order will not resuscitate coal demand is that many of the retirements are the result of non-regulatory factors, or regulations other than the Clean Power Plan.

NiSource Inc.'s recently announced plans to retire 50% of its coal-fired generation by 2023 were driven by "natural gas costs, market changes and an aging coal fleet," spokesman Nick Meyer said.

"We believe our current generation strategy provides customer and environmental benefits and is reflective of our goal to focus on providing affordable, clean energy while maintaining flexibility for future technology and market changes," Meyer said. "We did evaluate a no carbon price scenario in our recently submitted Integrated Resource Plan, and that scenario does not change our preferred generation retirement plan."

Pahl Shipley, PNM Resources Inc.'s director of corporate communications and brand management, said the company's plans to retire two units at the San Juan Generating Station by the end of this year were mandated by other regulatory actions.

Other power providers that have been dominant names in coal generation also told S&P Global Market Intelligence they were not planning to slow their transition away from coal. Xcel Energy Inc., which recently announced plans to build 11 new wind farms in seven states, adding a total of 3,380 MW of new wind generation to its system, intends to forge ahead.

"Xcel Energy's plans make economic and environmental sense regardless of the future of the Clean Power Plan," said spokeswoman Lisa Kiava.

WEC Energy Group Inc. said the company continues to monitor laws, regulations, orders and other regulatory actions at the federal and local levels. However, spokeswoman Amy Jahns noted that WEC is working with industry partners, environmental groups and the Wisconsin government to reduce carbon dioxide emissions by approximately 40% of 2005 levels by 2030.

The comments illustrate a major hurdle to bringing back coal demand — the federal government is far from the lone entity pushing utilities to reduce coal generation. In a joint statement following the executive order, California Gov. Jerry Brown and New York Gov. Andrew Cuomo reaffirmed a commitment to not only meeting but exceeding the Clean Power Plan's targets.

"Together, California and New York represent approximately 60 million people — nearly one in five Americans — and 20% of the nation's gross domestic product," the governors said. "With or without Washington, we will work with our partners throughout the world to aggressively fight climate change and protect our future."

FirstEnergy Corp. said the news from Trump was positive and an "important first step in ensuring fuel diversity and a secure electric grid." FirstEnergy criticized the Clean Power Plan over concerns it did not provide credit for nuclear power as a zero emissions source and promoted renewables and energy efficiency over other sources of generation.

"FirstEnergy has already reduced the company's greenhouse gas emissions more than 40 percent below 2005 levels, and we expect CO2 emissions will continue to decline whether or not the Clean Power Plan remains in place," said spokeswoman Stephanie Walton. "Today's executive order does not impact FirstEnergy's decision to exit competitive generation, which is based on challenges of operating in a competitive market."

SNL Image

SNL Image

To see a list of coal units that retired from 2012 through 2017, click here.

To see a list of planned coal unit retirements from 2017 through 2021, click here.

To see a list of coal unit fuel type conversions, click here.

SNL Image

Did you appreciate this analysis? Click here to turn on alerts for future power Data Dispatches.

To download an updatable SNL template of coal unit retirement data, click here.