August 18, 2020 Read More →

U.S. utility executives hint at new round of coal plant retirements

S&P Global Market Intelligence ($):

U.S. coal producers are already in a tough spot, but the hints power generators dropped on second-quarter earnings calls suggest they may soon be announcing plans to retire even more of the nation’s aging coal fleet.

Demand for coal has been decimated by the COVID-19 pandemic, with production and employment in the sector falling to new lows as the lower demand weighs further on a sector already in secular decline. In recent weeks, multiple power generators made comments about the future of their generation fleets suggesting more coal plant retirements loom on the horizon.

“We certainly look at the technology, which is out there, and we’ve certainly seen renewable energy technology and their related costs continue to come down,” Ameren Corp. Chairman, President and CEO Warner Baxter said on an Aug. 7 earnings call, responding to a question about the company’s integrated resource planning activities in Missouri. He added the company would “take a careful look at our coal-fired energy centers and the useful lives of those plants” and “really think about what’s really going to deliver value to our customers in the state of Missouri.” An Ameren spokesperson said the company would share additional details upon filing the integrated resource plan, or IRP, in September.

Executives with Wisconsin-headquartered Alliant Energy Corp. said on an Aug.7 earnings call that while they have not announced any early retirements in Iowa, they are evaluating potential coal plant shutdowns as part of the under-development “Clean Energy Blueprint” plan. “We’ll have some more information to share later this year on any potential early retirements for Iowa state,” Alliant Executive Vice President and CFO Robert Durian said on the call. A spokesman for Alliant did not respond to an inquiry about potential coal plant retirements.

Ameren and Alliant both operate coal fleets that extensively source coal from the Powder River Basin. That region, which produces a high volume of relatively low energy content coal with few export options, has seen drastically reduced demand in recent years. Both companies’ hints at reassessing their coal fleets fit into a broader theme: when U.S. power producers talk about coal on public calls held for investors, it typically involves plans to transition away from the once-dominant fuel.

Power generators continue the steady march of coal plant retirements, even under a friendly presidential administration that campaigned on bringing back jobs in coal. The U.S. Environmental Protection Agency recently completed a coal combustion residuals rule that Vistra Corp. President and CEO Curtis Morgan said would have “far-reaching implications for the power sector.” Morgan noted that the company would provide a formal update on its site-level plans at a virtual investor event in September.

Evergy Inc. President and CEO Terry Bassham touted the company’s retirement of more than 2,400 MW of fossil fuel generation since 2005. He noted that the company has added or contracted 4,600 MW of renewables in the meantime. Bassham told analysts and investors that the Missouri utility would continue to “economically retire coal-fired generation” and expand its wind and solar footprint as part of a new five-year strategic plan. “While we’re still targeting 80% reduction in CO2 emissions by 2050, compared to 2005 levels, under this plan we have the potential to reduce CO2 emissions as much as 85% by 2030. A material improvement in our CO2 footprint over the next 10 years,” the CEO said.

[Darren Sweeney and Taylor Kuykendall]

More ($): U.S. utilities, power providers continue plans to accelerate coal retirements

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