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Coal Plant Retirements: A Slowdown? And Will It Matter?

 

By Stan Kaplan, OnLocation, a division of KeyLogic

April 24, 2025 - Coal-fired electric power has been like the Incredible Shrinking Man of 21st century energy in the United States. Low-cost natural gas burned in modern combined cycles, inexpensive and subsidized solar and wind power, and tighter environmental regulations have combined to outcompete coal power. Coal burning generating capacity is down 45 percent from its 2011 peak. Even more telling, coal generation on a national scale is a shadow of its former self. In the 1980s, coal accounted for almost 60% of all kilowatt-hours produced in the U.S[JS1] [SK2] . In 2024, the coal share was only about 15% of production, less than wind and solar combined.

Even a year ago, the coal-fired power segment looked like it was on the verge of extinction. But the pace of coal plant retirements appears to have slowed. There is a new fossil-friendly administration in Washington promising a rollback of environmental regulations. Perhaps of greater importance, after years of stagnation, electricity demand is growing robustly, driven by data centers and AI (see OnLocation’s recently updated data center report).

This article will look at how some coal retirements have been postponed and what this means for the overall picture of coal plant capacity and coal demand in the U.S. As we will see, if the expected death of coal may now look exaggerated, it is still not at all clear that, in the absence of technical breakthroughs or policy intervention, coal will be back as a major player in the American power sector.

Plants, units and retirements

At the outset, we need to clarify basic terminology. The term “retirement” can have different shades of meaning. If a coal unit is shut down and demolished, that is retirement by any definition. However, there are instances in which coal units are modified to burn natural gas as the sole fuel or co-fired with coal. When coal is completely displaced, the boiler is adapted to burn 100% gas and the coal-handling equipment is decommissioned. An example is the two-unit coal-burning J.K. Spruce plant in Texas. Spruce 1 is scheduled to be completely retired in 2028, but in the same year Spruce 2 will be converted to run exclusively on natural gas. From a coal standpoint, Spruce 2 will be just as “retired” as Spruce 1.

Finally, note that the data reported in this article is for relatively large generating units (minimum capacity of 125 MW) operated by utilities and independent power producers. Smaller units for which there may be data availability issues and the minor industrial and commercial coal-fired generating sectors are excluded.

Characteristics of retiring coal units

As shown in Table 1, at the end of 2024 the coal generating fleet (using the criteria described above) consisted of 329 generating units with 169.6 gigawatts (GW) of generating capacity. Of this total, about a third (57.4 GW) is currently scheduled to either retire or undergo conversion to burn exclusively natural gas. Figure 1 illustrates the timing of retirements and conversions.

 

Table 1: Characteristics of the Coal Generating Fleet 2024

 

One observation is that, at least in broad brush, the units scheduled for retirement and all others have similar operating characteristics. As shown in Table 1, the non-retiring units are somewhat larger with slightly higher capacity factors and lower heat rates (i.e., more efficient) than those planned for retirement or conversion. The differences are clear but not dramatic and suggest that other factors, such as local demand forecasts and environmental control issues, play a major role in retirement decisions.

Delayed retirements

More coal retirement and conversion announcements will certainly be forthcoming, but there may also be decisions to delay these plans. For this article, we identified 22 coal units for which retirements and conversions have been recently delayed, listed in the Appendix table at the end of this article. As shown in Table 2, these delayed units total 12 GW or 21% of the 57.4 GW of coal generators currently planned for retirement or conversion.

 

Figure 1: Currently Scheduled Coal Generator Retirements and Conversions
Table 2: Characteristics of the Coal Units Planned to Retire or Convert to Natural Gas

 

Table 2 also illustrates the differences between the units that have and have not delayed retirements and conversions. The delaying units have better capacity factors and heat rates and are larger on average by about 110 MW. Looking at the totality of the data (Tables 1 and 2), the unsurprising pattern is that larger units with higher utilization and lower heat rates are more likely to continue to operate as coal units or, if planned for retirement or conversion, to win a reprieve in the form of a delayed shut-down.

With respect to the units that have delayed retirement or conversion, the following examples illustrate the diversity of factors that are part of the decision to delay:

These examples illustrate the uncertainties and variables associated with retirement and conversion delays. The retirement date for Hunter is now so far in the future that any number of electricity demand, policy, fuel cost, and technology contingencies could lead to a change. The plan to install CCS equipment at Bridger relies on technology which has been successful at the pilot scale but has never been deployed commercially in the United States. The plans for the North Omaha and Southern Company units are all based on demand forecasts which are just that – projections, not certainties. Higher or lower demand growth could lead to new plans.

The bigger picture

One consequence of delayed retirements of coal burning generators is, of course, continued emissions of greenhouse gases from a high carbon fuel and the resulting climate change impacts. For this article, we will focus on the significance of coal retirements and delays to the electric power and coal production industries.

For coal producers, the continued operation of coal burning generators is a matter of life and death. Demand for coal has dropped from a high of 1,128 million tons in 2007 to an estimated 409 million in 2024, a 64% decline. The industry also exported about 108 million tons of coal in 2024, but whether any of this will be at risk due to current tariff and trade issues is yet to be seen.

 The coal plants included in this study burned 356 million tons of coal in 2024, or 87% of total national consumption (the balance was shared among smaller power plants, industrial and commercial customers, and coke ovens). In round numbers, at current utilization rates, every 1,000 MW (1 GW) of coal capacity accounts for about two million tons of annual coal demand. Given the reduced state of the coal industry, almost any delay in retirements is a material benefit to coal producers.

In the case of the electric power industry, as noted earlier, the importance of coal generation has greatly declined and if current trends continue, its importance will continue to shrink. Table 3 shows projected U.S. total electricity generation to 2050 as estimated in OnLocation’s Energy Horizons study (Reference Case). These estimates are compared to coal generation in 2024.

 

Table 3: Comparison of 2024 Coal Generation with Current and Projected Total U.S. Generation.

 

OnLocation is projecting robust growth in U.S. power demand and therefore net generation, increasing 52% by 2050. Assuming that only the coal units with current plans to retire or convert to natural gas stop using coal – that is, all other coal-fired units continue to operate indefinitely – the coal share of net generation drops to just 6.6% by 2050. Even in the improbable case that every existing coal unit delayed retirement indefinitely, the coal share is a meagre 9.6% in 2050.

An argument can be made that coal-fired generation, which can be called on as-needed unlike variable renewables, is more important to power system reliability than its share of total generation might suggest. There is certainly strength to this argument. But as shown in Table 1, the average capacity factor for coal plants is only around 40%. This indicates how the deteriorating economics of coal-fired power have forced coal generators into cycling (intermittent) or even peaking service, which can be met as easily by natural gas-fired plants.

The foregoing assumes that a large-scale domestic buildout of new coal-fired power plants is unlikely. The new administration has made clear its support for new coal power development overseas and perhaps it will seek to do the same at home. But in the United States, any effort to expand coal-fired capacity will face powerful economic headwinds in the form of competition from low-cost gas-fired combined cycles and renewable power.

Conclusion

What the foregoing suggests is that coal will likely fade into near inconsequence as a source of electricity unless at least two things happen. First, more generating units have to delay or avoid retirement. Plant operators might follow the example of PacifiCorp and consider adding carbon capture equipment to existing plants. Second, the utilization of units will have to increase. Even if the entire existing coal fleet is preserved indefinitely, utilization will have to increase by 50%– that is, in lockstep with the increase in total generation – to maintain the coal share of generation at the current 15%. Longer-term sustainability, much less an increase in market share, will require either technological breakthroughs—such as large-scale carbon capture—or strategic policy shifts, in either case supported by continued strong demand growth.

Appendix table: Coal-fired generating units that have recently delayed retirement or conversion decisions

 

 

About the Author: Stan Kaplan (Stan.Kaplan@Keylogic.com) has worked in the electricity and fuels areas since 1978, as a consultant, regulator, utility executive, and until retiring in 2018, a senior manager with the Department of Energy. He is currently an energy consultant with KeyLogic.