The U.S. coal fleet is aging fast. The average age of a gigawatt (GW) of coal capacity is now 42 years, perilously close to the average retirement age of 50, and with no new coal plants the age is increasing year for year.
The vast majority of U.S. coal capacity in operation was added in the boom years from the mid-’60s to the mid-’80s, as can be seen in the chart below. By 2030, some 105 GW, more than half of the 197 GW operating at the end of 2022, will have reached the age of 50 years. To date, there are retirement plans for only 20 GW of this capacity, but there is a lot more superannuated capacity heading for retirement over the next decade – and the grid will need a lot of new capacity to be ready.
Generating capacity becomes less efficient, more expensive to maintain, and more prone to breakdown and poor health as it ages. For this reason, the typical coal power plant was retired at around 50 years over the last decade. If the U.S. coal fleet had been built at a constant pace, the grid would be facing a stable retirement rate; however, the U.S. power system had a coal boom in the late ’60s to the early ’80s. These power plants have been the backbone of power generation, but the time has come for them to retire. This means we will need to find 8 to 10 GW per year of replacement baseload generation for the next decade.
BloombergNEF forecasts solar and wind additions of 40 GW per year through 2030 and battery storage additions approaching 10 GW, but none of these solutions will provide the baseload seasonal reliability of the coal fleet. The build-out of natural gas plants will deliver some additional capacity in future years, but the queue of generation has dried up and will not come close to replacing the volume of coal capacity that needs to retire.
U.S. grid operators and utilities are going to have their work cut out for them managing the speed and volume of this transition.
Bloomberg
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