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Coal-Fired Power Plant Retirements in the United States

In: Environmental and Energy Policy and the Economy, volume 3

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  • Rebecca J. Davis
  • J. Scott Holladay
  • Charles Sims

Abstract

We summarize the history of US coal-fired plant retirements over the past decade, describe planned future retirements, and forecast the remaining operating life for every operating coal-fired generator at each plant. Nearly one-third of the coal fleet retired during the 2010s and a quarter of the remaining capacity has announced plans to retire. We summarize the technology and location trends that are correlated with the observed retirements. We then describe a theoretical model of the retirement decision coal generator owners face. We use retirements from the past decade to quantify the relationships in the model for retired generators. Our model predicts that three-quarters of coal generation capacity will retire in the next 20 years, with most of that retirement concentrated in the next 5 years. Policy has limited ability to affect retirement times. A $20 per megawatt-hour electricity subsidy extends the average life of a generator by 6 years. A $51 per ton carbon tax brings forward retirement dates by about 2 years. In all scenarios, a handful of electricity generators remain on the grid beyond our forecast horizon.
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Suggested Citation

  • Rebecca J. Davis & J. Scott Holladay & Charles Sims, 2021. "Coal-Fired Power Plant Retirements in the United States," NBER Chapters, in: Environmental and Energy Policy and the Economy, volume 3, pages 4-36, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:14582
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • H4 - Public Economics - - Publicly Provided Goods

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