November 14, 2023 - Environmental regulations will push the majority of coal-fired power in the Electric Reliability Council of Texas (ERCOT) to retrofit or retire in the coming years, according to a new study.

While all four Texas coal-fired plants in the Southwest Power Pool are set to close by 2028, just two of the 10 coal-fired plants in ERCOT have plans to retire by 2030 according to the research paper from Rice University's Baker Institute for Public Policy. That dynamic is likely to change, given US Environmental Protection Agency (EPA) air quality regulations, including the "good neighbor" plan to rein in interstate transport of NOx emissions and proposals to strengthen federal particulate matter standards and impose a new a new haze plan on the state.

As a result, at least 8.6GW of the remaining 13.6GW from ERCOT coal plants will have to install new emissions controls, convert to gas, or close. Eight of the 10 coal plants in ERCOT appear to need new SO2 or NOx emissions controls to meet EPA standards, including the state's two largest coal-fired plants: Vistra Energy's Martin Lake station and NRG's WA Parish power plant.

"Given the poor profitability of these plants and the high cost of emission control devices, retirements are the most likely outcome," the researchers write.

The report does not specifically mention other EPA policies that could intensify retirement pressures, including a proposed rule to set power plant CO2 limits. It also assumes that EPA's plan for increasingly ambitious power plant NOx budgets will hold, although the agency is currently unable to enforce its "good neighbor" plan in 12 states, including Texas, because of court orders. Of the 23 states with seasonal NOx requirements for power plants this year under the Cross-State Air Pollution Rule, Texas was one of just five with higher NOx emissions this year.

Regardless, the report as a whole points to significant retirement pressures on the ERCOT power plant fleet, which includes more than 20,000MW of dispatchable resources that are more than 40 years old.

The state can address grid reliability concerns brought by plant retirements and growing power demand by improving energy efficiency, expanding transmission, and avoiding "adverse policies that halt the growth in wind and solar," the report says. But the researchers note too that "additional dispatchable generation and storage resources will be needed if most coal plants close."

Texas voters last week approved a $10bn fund to finance the construction of up to 10GW of natural gas-fired and other generating capacity.