POWER May 2011 - 56

THE FUTURE OF COAL
Predicting U.S. Coal Plant
Retirements
The question concerning coal plant retirements forced by looming regulatory
rules, low gas prices, and moribund load growth has changed from
" Why? " to " How many plants? " Many highly detailed analyses and reports
have been written on the subject by superbly qualified analysts. This
approach to estimating potential plant closures is much more qualitative,
and much easier to understand. However, the results closely align: About
50 GW are threatened.
By Dr. Robert Peltier, PE
F
ew subjects elicit such a visceral response
from members of the U.S. power
industry as the forced retirement of
coal-fired power plants. For the first half of
the last century, commissioning of a new coal
plant was considered an economic bonanza
for the local economy, heralding an increase
in the regional standard of living through
electrification and steady, good-paying jobs.
Jobs and electricity trumped most environmental
issues, not by design but by circumstance.
The second half of the 20th century
saw the struggle to balance environmental
stewardship with power plant development.
Since the formation of the Environmental
Protection Agency (EPA) in late 1970, polluting
discharges have steadily decreased to
the point that today's air and water cleanliness
is unmatched since before the start of
the industrial revolution. However, reducing
the environmental impact of generating
electricity was seldom voluntary. Industry
compliance usually was forced by legislative
imperatives. Once a legislative goal was
set, technology to meet the new rules quickly
followed-a process that continues today.
Nevertheless, many utilities still firmly resist
basic environmental upgrades, such as flue
gas desulfurization (FGD) and selective catalytic
reduction (SCR). That fight is futile and
will only delay the inevitable.
Today, the question has evolved into " How
much regulation is enough? " Given that the
technology for economic upgrades is reasonably
well defined (scrubbers, SCRs, low-NOx
burners, fabric filters, and the like) and that
upgrades are steadily progressing across the
nation's fleet of coal-fired plants, there must
be a balance between costs and benefits. One
might describe this as the regulatory finish
line. But that's not the case.
The industry has " taught " regulators that
technological solutions will inevitably follow
56
any new, more-stringent rule. This " lead-lag "
approach to regulating the industry is fitting
when the cost of compliance is reasonably
well understood and the benefits are well
defined. This was the case for the rules to remove
SO2
and NOx
from plants' stack gases,
for example. Massive quantities of those and
other emissions have been successfully captured
over the past two decades at reasonable
cost to ratepayers.
Future scenarios will be different. Removing
additional pollutants will be significantly
more challenging because the technology
required is much more expensive-because
the chemicals are tougher to remove and their
amounts are minute. You might say all the
low-hanging fruit has been picked; now we
have to bring in the ladders and lifts.
The other challenge is the number of new
technologies that the industry is being asked
to develop and deploy simultaneously in response
to proposed new rules: the upcoming
Clean Air Transport Rule (replacing the defunct
Clean Air Interstate Rule), the Utility
MACT rule, the wet ash classification rule,
and the Clean Water Act Section 316(b)
upgrades that may force plants using oncethrough
cooling to upgrade to cooling towers.
These rules, plus others, such as potential
rules covering carbon dioxide (CO2
) emissions,
are packed end-to-end in the EPA's
regulatory queue with no end in sight.
Some Plants Threatened
Given the significant and myriad capital
investments required to complete these upgrades
in coming years, plants with poor efficiency,
old plants with limited remaining life,
plants that are relatively small, plants with
few environmental upgrades, and/or plants
that operate with very low capacity factors
may be forced to close.
An added complication: Low natural gas
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prices, projected to continue for some time,
have further eroded the economic value of
older coal plants. This confluence of multiple,
expensive upgrades and the cost of
maintaining poorly performing assets will
undoubtedly force utility executives to make
tough choices-often between mothballing,
retiring, or repowering-in order to focus
investment on baseload-quality coal-fired
plants that have decades of life remaining.
The discussion of coal plant retirements
is rapidly reaching a crescendo, and it seems
that EPA officials are listening to industry
concerns, although I'm not sure they are
hearing. At the annual winter meeting of the
National Association of Regulatory Utility
Commissioners (NARUC) in February, EPA
Assistant Administrator for Air and Radiation
Gina McCarthy tried to soothe industry
fears of forced coal plant closures with carefully
chosen words when speaking about the
just-released utility hazardous air pollutants
(HAP) rule: " I think we are not seeing anywhere
near the types of retirements that have
been projected for worst-case scenarios. " Instead,
McCarthy said, the EPA is working to
ensure that the HAP and other rules that will
control criteria pollutants are " harmonized "
so that utilities can use scrubbers to comply
with all of the new air regulations.
McCarthy also made a promise to coalfired
generators: " [The Utility MACT rule]
is going to be creating standards, but those
standards are very sensitive to the different
types of technology that are out there in the
fleet and in the diversity of the fleet. "
The regulatory approach described by
McCarthy is laudable and highly desired by
power generators. However, it's not " worstcase
scenarios " that are troubling but rather
the " expected case " discussed here (and in
ICF International's companion article, p.
48).
POWER | May 2011
http://www.powermag.com
POWER May 2011

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