EPA Rules To Force 85 Coal-Fired Generators To Close By The End Of This Year

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Michael Bastasch DCNF Managing Editor
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Energy companies are preparing to shut down nearly 16 gigawatts of power by the end of this year as the deadline for compliance with new federal environmental regulations looms.

In total, some 85 coal-fired generating units at 36 locations are expected to close in the coming months in part because of Environmental Protection Agency regulations. The largest set of retirements is set for June, when electricity demand starts to peak as Americans turn on their air conditioners for the summer. Most of these retirements will come from coal-fired power plants in Appalachia.

“We are currently showing nearly 300 GW of in-service coal capacity at the end of December 2014, so 13 GW would represent a reduction of approximately 4.3%,” U.S. Energy Information Administration economist Tim Shear told The Daily Caller News Foundation.

“This may not sound like a huge number, but US electricity markets are traditionally balkanized so if much of these retirements take place in a small region, the balancing authorities in those areas will have to plan accordingly,” Shear said.

Utilities are looking to close smaller, less efficient coal plants by the end of this year before the EPA’s Mercury Air Toxics Standards, or MATS, kick in, according to EIA.

EIA does say that coal plants are being retired “primarily” because of MATS, but Shear noted that it’s impossible to tell the exact number of coal plants being forced to retire early because of EPA rules.

“We are currently showing nearly 5.2 GW of additional coal retirements in 2016 (based on current survey responses), though exactly how much of the 2015 and 2016 retirements are directly a result of EPA rules, we don’t know,” Shear said. “We simply get retirement notices, not necessarily the reason behind them, so your guess is as good as mine if the operator has not stated publicly their rationale behind a particular move.”

EIA notes that “MATS requires large coal- and oil-fired electric generators to meet stricter emissions standards by incorporating emissions control technologies in existing generating facilities.” But the high cost of the rule has some power plant operators thinking that “retrofitting units to meet the new standards will be cost-prohibitive and are choosing to retire units instead.”

For years, Republican lawmakers and utility regulators have criticized MATS for causing the premature retirement of coal plants and imperiling the reliability of the electrical grid. Indeed, EIA predicts that EPA rules will contribute to the closing of 60 gigawatts of electric power capacity by 2020.

“We’re closing an enormous amount of coal generation, through a variety of rules, and a good number of those plants are set to retire next April,” Philip Moeller, commissioner on the Federal Energy Regulatory Committee, told Platts Energy Week.

“But most people would say about 90% of that capacity was running and used and necessary during the polar vortex events,” Moeller added, referring to the severe power struggles some parts of the U.S. faced during 2014’s harsh winter.

“So the question is: Are we going to have mild weather for the next 2-3 years? If so, we can probably get through it. But if we have more extreme weather events, like we had this winter, and that power is no longer available, we could be in a real situation that’s not good for consumers,” Moeller said.

“Units that retired in 2010, 2011 or 2012 were small, with an average size of 97 megawatts … and inefficient,” EIA warned in a report last year. “In contrast, units scheduled for retirement over the next 10 years are larger and more efficient: at 145 MW, the average size is 50 percent larger than recent retirements.”

The EPA, however, argues it consults with federal agencies on how its rules will affect the integrity of the electrical grid. It says its air pollution rules have resulted in huge public health and economic benefits all while not imperiling the grid.

But another problem energy experts are warning about is the fact that coal power is being replaced by intermittent energy from wind and solar power.

EIA notes that while 16 gigawatts of power is being retired in 2015, energy companies are planning to add about 20 gigawatts of power — mostly from wind and solar power.

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