Study: EPA Regulations May Result In Over 50,000 MW Of Coal Plant Retirements

A new study by The Brattle Group finds that emerging U.S. Environmental Protection Agency (EPA) regulations on air quality and water for coal-fired power plants could result in over 50,000 MW of coal plant retirements and require an investment of up to $180 billion for remaining plants to comply with the likely mandates.

The study, by Brattle economists Metin Celebi and Frank Graves, analyzes the economics of retirement decisions for each coal plant operating in the U.S. under the proposed and emerging EPA air quality and water regulations, taking into account the predicted profitability and cost of replacement power for both regulated and unregulated plants.

The regulations are expected to force coal plants to decide between retiring and installing expensive control equipment to reduce emissions of sulfur dioxide, nitrogen oxide, particulates and hazardous air pollutants such as mercury, as well as cooling towers to reduce the use of cooling water.

Celebi and Graves estimate that 40,000 MW to 55,000 MW of coal capacity (depending on the cost of retrofits) would retire if scrubbers and selective catalytic reduction equipment were to be mandated by 2015 for all coal units. Another 11,000 MW to 12,000 MW could retire if cooling towers are also mandated. This would bring the total retirements to between 50,000 MW and 67,000 MW, or roughly 20% of installed coal plant capacity, according to the study.

Most of the retirements would be merchant plants (47,000 MW to 56,000 MW, or up to three-quarters of the entire merchant coal fleet), with significantly fewer retirements of regulated coal-fired plants. The retirements would be especially large in the Midwest Independent Transmission System Operator, Electric Reliability Council of Texas and PJM areas, representing up to 72% of all coal plants and up to 15% of total installed generating capacity.

SOURCE: The Brattle Group


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