January 10, 2019 Read More →

U.S. utilities increasingly looking to speed coal plant closures

The Wall Street Journal ($):

Just last summer, Northern Indiana Public Service Co. planned to retire two of its five remaining coal-fired power plants by 2023. Now, it plans to do away with all of them over the next decade, and buy more solar and wind power instead.

The Midwestern company’s decision is part of a shift among some American utilities toward less costly energy sources. The companies are accelerating the closure of coal plants, as wind and solar power become more economical alternatives, aided by federal subsidies, and natural gas continues to be a cheap fuel for electricity in the U.S., thanks to the shale-drilling boom.

The shift is taking place as the Trump administration tries to revive the coal industry by rolling back environmental regulations and easing restrictions on building new plants. Those efforts have done little thus far to curtail the closure of coal plants, which account for the majority of U.S. coal demand. The Energy Information Administration estimated that domestic coal consumption in 2018 fell to 691 million tons, the lowest level since 1979, and expects it to continue dropping this year.

Xcel Energy Inc. said last month that it plans to shift entirely to 100% carbon-free power generation by 2050, becoming the first major U.S. utility to make such a pledge. The company, which covers parts of Colorado, Minnesota and six other states, says that coal could account for as little of 10% of its power mix by 2030. It was more than one-third of the mix in 2017. Xcel expects lower fuel and production costs will eventually offset some initial rate increases.

Last summer, Colorado regulators approved Xcel’s plans to retire two coal units in 2022 and 2025, respectively, with each roughly a decade ahead of schedule. Xcel plans to replace them with renewable energy and battery storage, a shift the company says will at first be cost-neutral with longer-term benefits. Retiring the units more quickly is likely to reduce Xcel’s costs by as much as $215 million by 2054, the company says.

The moves are leading some experts to step up estimates for the phaseout of coal power in the U.S. In 2017, research firm Wood Mackenzie projected that companies would retire 46 gigawatts of coal-generating capacity by 2027. Last year, it raised that projection to 57 gigawatts.

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