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Members of D.A. Davidson & Co.

US power generators set for another big year in coal plant closures in 2020

"U.S. coal consumption is likely to decline sharply again in 2020,


...At 13,703 MW, 2019 marks the highest level of annual coal capacity retirements in the U.S. since 2015, a new S&P Global Market Intelligence analysis of federal data shows. The amount of coal capacity planned for retirement in 2020 is expected to exceed the amount retired in each of 2014, 2016 and 2017. 


...Morgan Stanley & Co. LLC forecast in a December 2019 report that about 70,000 MW to as much as 190,000 MW of coal-fired generation is "economically at risk" from the deployment of a "second wave of renewables" in the U.S.


..."[W]e believe that carbon-heavy utilities that have not historically led the pack in clean energy deployment will accelerate their earnings growth by pursuing a 'virtuous cycle': shutting down expensive coal plants and investing in cheap renewables," the analysts wrote. 


...High levels of coal capacity retirements marked both 2018 and 2019, while 2015 remains the peak year for coal plant retirements so far. That year, the U.S. Environmental Protection Agency put mercury emissions standards into effect, and many utilities opted to retire older coal plants rather than retrofit new pollution controls. 


..."Retirement of this generation is going to be needed anyway. Most of these coal plants we're talking about are going on 60-plus years old. They're becoming obsolete, and they're not economic," Morgan said in November 2019. "I think any business that is a capital-intensive business, whether it's airlines or chemicals or refining or whatever, have to replace their hardware at some point in time. The question is going to be, what kind of hardware are we going to replace it with? I think it's going to be renewables." 


...Moody's Investors Service projected coal could make up as little as 11% of U.S. power generation by 2030 based on scheduled and likely coal retirements alone. Similarly, Morgan Stanley projected under a base-case scenario that coal-fired electricity will decline from 27% of the total U.S. power mix in 2018 to just 8% by 2030. 


If lawmakers roll out policies to limit carbon dioxide emissions, coal plant retirements could even outpace analysts' current projections."


(US power generators set for another big year in coal plant closures in 2020 dated 01/13/20 by Anna Duquiatan, Taylor Kuykendall, Darren Sweeney, and Liz Thomas via S&P Global)


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