March 27, 2018 Read More →

On the Blogs: In a ‘Game of Chicken,’ U.S. Coal Plants Vie for Survival

Think Progress/Bloomberg New Energy Finance:

Coal power plants are becoming too expensive to operate compared to natural gas and renewable energy, a new report shows.

“Half of U.S. coal capacity ran with net losses last year,” explains a detailed Bloomberg New Energy Finance (BNEF) report, noting that “operating expenses exceeded revenue.” BNEF had similarly concluded last year that over half of U.S. nuclear reactors are bleeding cash.

The marginal cost for operating a coal plant is simply too high compared to both natural gas and renewables in most regions of the country, BNEF explains. Indeed, building and running new renewable energy is now cheaper than just running existing coal (and nuclear) plants in many areas.

“A tide has clearly turned against coal’s energy dominance,” explains BNEF, “gas and renewables have stolen coal’s place” as the cheapest power plants to run. Solar and wind invariably have the lowest operating costs — you don’t have to pay for sunlight or wind.

One reason coal plants aren’t shutting down even faster is that, as the report states, “There is also a ‘game of chicken’ being played by neighboring coal operators.”

Every time a coal plant shuts down, the nearby plants all become a bit more profitable. With less competition, they now have a greater chance of being dispatched during times of peak demand and operating margins improve. Thus “the reward for ‘outliving your neighbor’ factors into retirement decision.”

More: Unprofitable coal plants now play ‘game of chicken’ to survive, says Bloomberg

More: Half of All U.S. Coal Plants Would Lose Money Without Regulation

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