Coal-fired power capacity and generation in the US have experienced dramatic declines over the last 20 years due to increasing competitive pressure from economic forces and other factors. From 2005 to December 2022, the US coal-fired fleet capacity decreased from 321 GW to 219 GW, and annual generation from coal-fired assets fell from 1,886 TWh to 665 TWh.

In a new report prepared for the Center for Applied Environmental Law and Policy, Brattle economists review the recent history of changes in the US coal generation fleet and explain factors contributing to the decrease in coal-fired generation capacity over the past 20 years. While attributing coal plant retirements to a single driver is challenging, the report identifies key factors that were common contributors to historical and currently announced retirements of coal plants. These factors include decreases in natural gas prices, lower costs to build and operate renewable and storage resources, low growth in electricity consumption, increased costs to operate and maintain coal plants, and federal and state regulations and policies.

The authors also summarize the current state of market fundamentals and regulations affecting the economics of coal plants in the US as well as their near- and medium-term outlook. Notably, the authors explain that provisions in the recently passed Inflation Reduction Act (IRA) that increase the economic attractiveness of clean energy resources have prompted some coal plant owners to re-examine the options for their coal fleet. Using data from planning documents released after the IRA passage, the authors document that after incorporating the IRA incentives in their planning, some coal plant owners find that it is now more economic to retire their coal plants and replace them with clean energy resources.

The full report, “A Review of Coal-Fired Electricity Generation in the US,” is available below. The report is authored by Principal Dr. Metin Celebi, Senior Associate Dr. Long Lam, and Research Analysts Jadon Grove and Natalie Northrup.

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