February 2, 2021 - Despite retirement of 131.8 GW of coal-fired generation capacity since 2010, about 225.3 GW of such capacity remains operating today, led by Texas, Indiana and West Virginia, and replacing that capacity with low- or no-carbon alternatives by 2050 would likely coincide with declining wholesale power prices, industry observers say.

Since 2010, almost 8.5 GW of coal-fired generation has retired in Texas, but it still has more than 18 GW of coal-fired capacity operating, the largest amount among the 50 states, according to the S&P Global Market Intelligence power plant database.

"The Texas coal fleet is younger than the US average and a growing demand has likely kept some coal [capacity operating] in Texas, although the amount of coal is dropping quickly," said Joshua Rhodes, a University of Texas Webber Energy Group research associate. "Other states that either produce coal or have monopoly utilities are often slower to move away from the rock."

Of the 10 states that have had the most coal capacity retired since 2010, five lie all or partly in the PJM Interconnection, accounting for more than 45 GW of retired capacity.

These states have also been affected by the boom in natural gas production from the Marcellus and Utica shale formations via hydraulic fracturing, which has resulted plunging gas prices. Spot gas at the Texas Eastern M-3 pipeline fell from $5.101/MMBtu in 2010 to $1.593/MMBtu in 2020, according to the S&P Global Platts price database.

Power prices have fallen, also, in the PJM area. PJM West Hub day-ahead on-peak prices have fallen from an estimated average of $53.68/MWh in 2010 to an average locational marginal price of $23.31/MWh in 2020.

"The future will depend on where you are, but near-term it is likely to be won by solar, wind, storage, and gas," Rhodes said in a Feb. 1 email.

The 'Sun Belt'

The other five states among the top 10, in terms of coal capacity retirements since 2010, are Arizona, Texas, Alabama, Florida and Georgia, which lie in what many call America's "Sun Belt."

Solar power has been growing in several of these states, as the unsubsidized levelized cost of energy for solar power has fallen from about $248/MWh in 2010 to about $37/MWh in 2020, according to the Lazard investment firm.

Texas leads the 50 states in terms of wind generation capacity, and the LCOE for wind has fallen from $124/MWh in 2010 to about $40/MWh in 2020, according to Lazard.

Wholesale power prices have also fallen, from about $41.15/MWh for average day-ahead on-peak indexes at the Electric Reliability Council of Texas North Hub in 2010 to about $26.15/MWh for ERCOT North Hub day-ahead on-peak LMPs in 2020.

Joe Daniel, senior energy analyst and manager for electricity markets at the Union of Concerned Scientists, said this trend is likely to continue.

"With low demand and increasing adoption of wind and solar, market prices have been driven down to near historic lows," Daniel said in a Feb. 1 email. "This trend is only going to continue meaning that there will be fewer and fewer hours of the year when coal plant operators can recoup their fuel costs in the energy market. The trend of utilities to change their operations from year-round to seasonal operation will grow in popularity and eventually coal plants won't be necessary at all. If you own or operate a coal plant right now, and you aren't thinking of retiring it, then you are the one that should retire."