Latest market news

US coal demand to fall despite retirement shift

  • Market: Coal, Electricity
  • 02/01/24

Coal demand in the US may continue its downward trend in 2024 even though fewer power plant units are scheduled to close and some retirements have been delayed.

Coal-fired power plant unit retirements in 2024 are projected to number between six and eight, according to US Energy Information Administration (EIA) estimates and company announcements recorded by Argus. That is down from 22 units permanently closed in 2023.

The current expectation for 2024 coal plant retirements also is slightly lower than what the EIA was projecting at the start of 2023. In addition, four fewer coal units closed in 2023 than had been expected at the start of the year. Some power plant retirements have been delayed or have been flagged by grid operators as temporarily necessary for grid reliability.

But market fundamentals, including more competitive natural gas prices and expanding renewable generation capacity, are expected to continue to be less supportive of coal-fired generation and coal demand this year.

"There's a lot of questions that go into these coal unit [retirement] delays, including how long grids need these units to continue operating during peak demand," said Ian Lange, associate professor at Colorado School of Mines. "It could just be for a few hours or a few days in the winter... but the short period of operation makes me think it will probably not significantly impact coal demand."

The latest projections from the EIA have coal consumption by US electric power plants falling by 10pc this year to 346.5mn short tons (314.3mn metric tonnes).

The biggest shift in coal retirements in 2023 appears to have been in the PJM Interconnection. The grid operator initially had 11 coal units retiring in the first half of 2023, taking a combined capacity of 5,681.2MW offline. But two of those unit retirements were withdrawn after Omnis Fuel Technologies in August reopened the 1,200MW Pleasants power station in West Virginia with plans to eventually add technology to extract hydrogen from coal and run the plant on hydrogen.

For 2024, PJM so far has only one plant scheduled to close, AES' 180MW Warrior Run plant, according to the generation deactivations page on the grid operator's website.

Two coal units in the Midcontinent Independent System Operator (MISO) — WEC Energy's South Oak Creek units 5 and 6 — are expected to close in 2024. WEC previously was expected to also retire South Oak Creek units 7 and 8 in 2024, but announced in June 2022 that it was going to extend operations of those units until "late 2025."

Elsewhere, Duke Energy delayed retirement plans of the remaining two coal units of the GG Allen plant in North Carolina to "by 2025" instead of the end of 2023. And the Federal Energy Regulatory Commission recently approved plans for MISO to extend its system support reliability agreement with Ameren's Rush Island plant in Missouri until at least 1 September 2024. MISO also has asked for permission to extend the reliability agreement it has with Manitowoc Public Utilities' Lakefront 9 plant in Wisconsin beyond its 31 January 2024 expiration date.

PJM has also identified some potential reliability issues that would affect zones that stretch into six states in the grid if Talen Energy were to deactivate the Brandon Shores power plant in 2025, shutting down 1,281.6MW of generating capacity.

Many utilities are likely to use units they have extended retirement dates for as reserve capacity for peak demand seasons instead of using them as baseload generation, Lange said. Some generators already have been operating older coal units at lower rates both because of market conditions as well as environmental regulations. They also are girding for potential tighter regulations in the future.

Even if utilities use the units more frequently, they may have little need to make significant coal purchases. Inventories at most power plants remained above normal going into 2024, following lower than expected coal-fired generation and consumption in 2023.

Coal-fired generation in PJM and MISO has lagged behind year-earlier levels from January-November, while natural gas generation rose for nearly all of 2023 because of lower prices and increased capacity. Average renewable generation fell slightly from year earlier levels even though generators installed more wind, solar and other technology.

In addition, some utility buyers have asked producers to stall shipments that were scheduled for 2023. That, along with other market fundamentals, will likely offset any increase in coal-fired generation that could have been expected from the slower capacity cuts.

PJM coal shipmentsst
StateJan-Oct 2022Jan-Oct 2023±
Delaware83,97171,789-15%
Illinois23,184,01419,119,430-18%
Indiana20,035,94918,421,354-8%
Kentucky22,987,04123,078,7580%
Maryland1,583,187926,993-41%
Michigan15,404,73711,260,903-27%
New Jersey183,955 - -100%
North Carolina4,863,0894,614,632-5%
Ohio14,242,14312,672,343-11%
Pennsylvania 11,080,6415,115,860-54%
Tennessee4,244,6602,835,083-33%
Virginia1,584,570916,898-42%
West Virginia 18,746,44117,052,955-9%
TOTAL138,224,398116,086,998-16%
MISO coal shipmentsst
StateJan-Oct 2022Jan-Oct 2023±
Arkansas10,725,338317,518-97%
Illinois23,184,01419,119,430-18%
Indiana20,035,94918,421,354-8%
Iowa10,735,30210,802,9111%
Kentucky22,987,04123,078,7580%
Louisiana4,545,4624,377,569-4%
Michigan15,404,73711,260,903-27%
Minnesota8,775,7466,959,659-21%
Mississippi4,043,1263,388,542-16%
Missouri24,511,35423,026,633-6%
Montana5,826,0465,486,268-6%
North Dakota17,981,34016,489,642-8%
South Dakota1,254,330856,134-32%
Texas48,562,24745,502,403-6%
Wisconsin10,377,64410,605,5982%
TOTAL195,040,324180,256,374-8%

Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News

Houston power outages creeping down toward 1mn


11/07/24
News
11/07/24

Houston power outages creeping down toward 1mn

Houston, 11 July (Argus) — Slightly more than 1mn Houston-area homes and businesses were without electricity Thursday afternoon as local power distribution company CenterPoint Energy continues to slowly restore service after Hurricane Beryl. The storm knocked out power to about 2.1mn customers on 8 July when it made landfall southwest of the city as a Category 1 hurricane. The pace of restoration of service to areas that include major oil refineries, petrochemical plants and an LNG export terminal has been seen by many in the region as far too slow. At 6:50mp ET on Thursday about 1.04mn customers were still without power, according to CenterPoint. The company estimates that about 1.2mn customers have had power restored so far, another 400,000 should be restored by the end of day Friday and another 350,000 by the end of day Sunday. The 2 Bcf/d (57mn m³/d) Freeport LNG terminal in Texas remained offline and without power on Thursday after it was shut down ahead of Beryl's landfall. The electric power sector accounts for about 45pc of Texas' gas use, and gas generates about 43pc of the state's electricity, according to the US Energy Information Administration. Spot gas prices at the Katy storage hub, a key natural gas market near Houston, averaged $1.715/mmBtu on Thursday, down by 7.2pc from the previous session but 5.2pc higher from the start of this week. The index began July at $1.97/mmBtu. By David Haydon Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

France submits final updated NECP


11/07/24
News
11/07/24

France submits final updated NECP

Paris, 11 July (Argus) — France this week submitted the final version of its national energy and climate plan (NECP) for 2021-30 to the European Commission, putting an emphasis on its low-carbon energy targets. According to the NECP, France aims to bring its installed onshore wind capacity to 33-35GW, while offshore wind capacity should reach 3.6GW by 2030. Those targets were unchanged from the previous version of the NECP. The French government has not communicated on the share of renewable sources in final energy consumption, despite the EU's renewable energy directive (RED III) setting a 42.5pc target. Instead, it set a "low-carbon share", including nuclear and renewable sources, which would stand at 58pc by 2030, members of energy minister Roland Lescure's cabinet told Argus . This comes as the French Senate's electricity commission in its report last week questioned the EU renewable targets and also advocated for low-carbon targets instead . The European commission earlier this year recommended that France should bring its renewable target to 44pc . In comparison, renewables represented 22.2pc of overall energy consumption in 2023. The final updated NECP was due by the end of June but the government failed to submit it on time because of the political context and the snap parliamentary elections, Lescure's cabinet said. By Tatiana Serova Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

BP to expand EV charging to US malls


10/07/24
News
10/07/24

BP to expand EV charging to US malls

Houston, 10 July (Argus) — BP has agreed to install its electric vehicle (EV) charging gigahubs at 75 Simon Property Group sites across the US. The deal will create more than 900 charging bays that can "support nearly every make and model of EVs on the market today" at Simon properties, which are primarily shopping malls. The first gigahubs, which will be installed by the company's BP Pulse subsidiary, are expected to open in early 2026. BP Pulse's EV charging network includes 39,000 bays across the US, UK, Germany and China, and the company aims to surpass 100,000 globally by 2030. BP plans to invest $1bn into domestic EV charging infrastructure by the end of the decade, as well. The agreement with Simon follows BP's 2023 deal with car rental agency Hertz to add gigahubs and charging bays in "high-demand locations" of major cities in the US. By Alex Nicoll Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Taiwan's Taipower ends Hsinta biomass conversion plan


10/07/24
News
10/07/24

Taiwan's Taipower ends Hsinta biomass conversion plan

Singapore, 10 July (Argus) — Taiwanese state-owned utility Taipower has terminated its plan to convert a coal-fired generation unit into a dedicated biomass unit at its Hsinta power plant in Kaohsiung city. Taipower had set up a task force in 2022 to facilitate the usage of biomass by converting the fuel used at the Hsinta unit 1 from coal to wood pellets. But Taipower has decided to terminate the plan to follow "government instructions", it said. The four coal-fired units at the Hsinta power plant will remain "at readiness" in line with national security reasons, following government instructions, Taipower said. Taipower's related sectors will continue to evaluate suitable locations for the use of wood pellets, the company added. The plan to convert the 500MW coal-fired unit was in March pushed back to up to 2030 . The coal-fired unit was part of two units decommissioned in late 2023. The plant has a nameplate capacity of 4.3GW. The unit was planned to be converted by 2025, but this was subsequently delayed to 2027. Taiwan has already decided to stop building new coal-fired power plants by 2025 and build a zero-carbon fuel supply system, according to Taiwan's Pathway to Net Zero Emissions in 2050 report. Taiwan currently generates over 40pc of its electricity from coal, with its coal-fired power plants generating 119.9TWh out of a total 281.4TWh in 2023, according to data from Taiwan's energy bureau. The country imported 58.9mn t of thermal coal last year, down by 6.9pc from 2022. Taiwan imported 4.99mn t of thermal coal in May , little changed from a year earlier but up from 4.91mn t in April, preliminary data released by Taiwanese customs last month show. Taiwan bought 22.7mn t of imported thermal coal between January-May, slipping from 23mn t a year earlier. By Andrew Jones Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Generic Hero Banner

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more