Coal-fired plant closings increasing
Research shows the plants' cost is the biggest factor in their decline
OKLAHOMA CITY — It isn't getting any easier for the operators of coal-fired power generating stations to make a living.
The Institute for Energy Economics and Financial Analysis, an organization that conducts research on financial and economic issues related to energy and the environment, issued a report in October that states coal-fired power capacity retirements are happening at a record rate this year.
The report states the institute expects a total of 15.4 gigawatts of coal-fired capacity will close this year through the retirement of 44 units at 22 plants in more than a dozen states, besting the previous record of 14.7 gigawatts that was retired in 2015.
It also notes an additional 21.4 gigawatts of U.S. coal-fired capacity is set to close during the next six years, and report adds that it expects that number to significantly increase, given that fully two-thirds of this year's retirements were only announced last year.
Cost, the institute says, is the biggest force behind coal's decline, given that renewables and natural gas-fired generation are becoming cheaper and more flexible.
Oklahoma Gas & Electric Co. is among utilities with coal plants that are being affected by today's economics.
OG&E, for example, is working to convert two of its coalfired generators at its Muskogee power station to run on natural gas instead.
The company also spent a $500 million to install coal scrubbers at its Sooner generating station near Red Rock, with plans to keep using those
well into the future. It also recently asked for new proposals from power generators to meet its other needs, and, citing affordability issues, cut a long-time contract with an independent coal-fired generation facility owned by AES Shady Point in LeFlore County.
Still, the utility's top executive doesn't see coal going anywhere as a power source anytime soon, especially in this part of the nation.
OGE Energy CEO Sean Trauschke said OG&E's coal units are more economical than its natural gas-fired generating units, as long as natural gas is trading for less than $3 a thousand cubic feet.
Trauschke said that in part is because plant operators in the Great Plains generally have access to clean-burning coal that is affordable to ship.
He said increased retirements aren't surprising, noting much of today's fleet is decades old. While he expects some companies may be deciding to retire older units so they can build new power plants, Trauschke said OG&E taking a different tact.
Trauschke said the utility's costs are 29 percent below the national average, and said he expects that advantage to widen, going forward. The utility will continue to use coal as long as it is affordable for its customers.
“My view is, I want to make investments that keep the economics where we have a competitive advantage in Oklahoma and Arkansas,” he said.
“Our job is economic development. When we can attract industries to our service territory, our economies and communities grow, allowing us to spread our costs to more people and to make that competitive advantage even wider.”
The AES Shady Point LLC coal plant is located in LeFlore County.