August 7, 2020 Read More →

S&P analysis shows planned power plant retirements threaten 25% of current U.S. coal production

S&P ($):

Despite drastic cuts in production, U.S. domestic thermal coal markets could continue to face oversupply for the foreseeable future as about a quarter of U.S. coal production is bound for power plants where customers have already set a future retirement date.

An S&P Global Market Intelligence analysis showed that nine coal basins across the U.S. produced about 683.5 million tons of coal in 2019. Of that, producers delivered 174.3 million tons to power plants that have already set retirement dates.

The announced retirements will occur over the next 22 years. However, just under half of the total coal delivered to plants with retirement plans went to facilities retiring by the end of 2025. More than 75% of those deliveries went to plants retiring by the end of 2030. The tonnage figures are likely to increase as more generators set retirement dates for their aging coal fleets.

Some coal-producing regions are more likely to struggle than others with the shrinking domestic customer base. Southern Wyoming delivered about 84.9% of the coal produced in 2019 to plants that have set retirement dates. The nearby Powder River Basin provided about 30.8% of the coal produced in the period to plants that will retire before the end of 2042.

More than one in five tons delivered to U.S. power plants from the Illinois Basin went to plants with plans to retire. The Uinta Basin delivered about 48.9% of its coal to plants that are set to close. On the other hand, Central Appalachia, which has pivoted mainly to a focus on metallurgical coal after substantial downsizing in the last several years, delivered only about 1.8% of its coal to plants with plans to retire.

[Taylor Kuykendall and Krizka Danielle Del Rosario]

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