According to a new Government Accounting Office (GAO) report released in September, actual and planned retirements of coal-fired power plants has accelerated due to new U.S. EPA rules and regulations and other market forces. 

Back in 2012, GAO performed an analysis of projected closure of coal plants due to four new EPA rules:

  • Cross-State Air Pollution Rule (CSAPR)
  • Mercury and Air Toxics Standard (MATS)
  • Cooling Water Intake Structures Regulation (316(b))
  • Disposal of Coal Combustion Residuals from Electric Utilities (CCR)

Noticeably absent from this list are the new climate change regulations announced by the Obama Administration in June of 2014.  The new regulations seek overall reductions in CO2 emissions of 30% by 2030.

Other factors have contributed greatly to the large number of coal plant retirements.  Those include cheap natural gas resulting from the Utica and Marcellus discoveries in the Midwest.  As well as lower demand in electricity overall. 

Based upon the combination of regulations and market changes, in 2012, GAO forecasted that between 2 to 12 percent of coal-fueled generating capacity could retire.  GAO’s new report indicates that the rate of retirements have actually exceeded the top end of the range predicted just two years ago. 

GAO now predicts that 13 percent of coal-fueled generating capacity – 42,192 megawatts (MW)- has either been retired since 2012 or is planned for retirement by 2025.  See, chart below  

NOTE:  Three-quarters of the plant closures will occur by the end of 2015 which corresponds to the initial MATS compliance deadline

 

 

 

 

 

 

 

 

Ohio Impacts

The majority of plant closures will occur in the Midwest with Ohio having the largest percentage of retired generating capacity- 14%

It is difficult to predict what this significant disruption in the electricity generation portfolio will have in terms of capacity and prices.  It will be critical to see new natural gas generating capacity come on line before the end of 2015 to replace a large portion of the lost capacity.  

Such impacts were inevitable due to the fact that Ohio relied almost exclusively on coal power prior to the natural gas revolution.