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David Schlissel is IEEFA’s Director of Resource Planning Analysis. His work focuses primarily on the technical and economic viability of resources being used or being proposed for use in the electric power sector.
We published a research report today describing how the coal-fired electricity industry in Texas is in decline and unlikely to recover in the face of rising competition from other energy sources.
Our report—“The Beginning of the End: Fundamental Changes in Energy Markets Are Undermining the Financial Viability of Coal-Fired Power Plants in Texas”—looks specifically at seven aging plants that will likely be retired for their failure to compete.
We consider these seven plants emblematic of a fading industry.
None of the units is financially viable, as none can be expected to produce substantial pre-tax earnings for their owners or be economic for ratepayers in coming years. Indeed, all but one of the plants can be expected to produce pre-tax losses for their owners in coming years
The seven plants are emblematic of a fading industry.
Our analysis plumbs the performance of four merchant generators—the Big Brown, Martin Lake and Monticello plants owned by EFH’s Luminant subsidiary, and the Coleto Creek plant owned by Dynegy. It analyzes three coal-fired plants owned public power utilities or power agencies—the Fayette Power Project, Gibbons Creek, and J.K. Spruce Unit 1. The 8,100 MW of capacity from these seven plants represents a little more than 40 percent of the total coal-fired capacity in ERCOT.
WE SEE SEVERAL FORCES ARRAYED AGAINST COAL-FIRED GENERATION AND THAT SUGGEST RETIREMENT OF COAL-FIRED PLANTS IS LIKELY:
Our research demonstrates, in short, how it is not a question of whether ERCOT’s reliance on coal will fade, but when.
The discussion should shift now to how to phase out these plants, what to replace them with, and how to retrain their workers.
David Schlissel is IEEFA’s director of resource planning analysis.