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Is coal power headed for a downsizing in US?

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Entitled "Growth From Subtraction: Impact of EPA Rules on Power Markets," the 86-page study sees positive long-term outcomes for investors as big utility companies are forced by 2016 to shed older, inefficient equipment. Yet the study notes that the "EPA rules simply accelerate an inevitable market tightening by 4-5 years" as coal, which for decades has been the low-cost fuel for producing electricity, takes a back seat to natural gas.

Small, old coal plants at high risk of closure

Coal power, with about 340,000 megawatts of generating capacity, today produces about half of US electricity. After expected emissions upgrades, the coal fleet will continue to have plants, producing about 103,000 megawatts, that are still "lacking any major emission controls," the study says. The oldest, smallest coal plants with few emissions controls make up an "at-risk" (of closure) portion that account for about 20 percent of total US coal-fired generating capacity, or 69,000 megawatts.

The cost to cut sulfur dioxide (SO2), nitrogen oxides (NOx), and mercury emissions could run $50 billion to $70 billion, not counting the oldest plants. Upgrading those would cost another $80 billion to $110 billion. It's that last chunk of change that may mean hundreds of power plants get boarded up – and new gas turbines and wind farms and other lower-cost power-fuel options get built instead, the report authors say.

Utility industry executives are keenly aware of this scenario, even if the public generally is not, said Jim Owen, a spokesman for the Edison Electric Institute, a Washington trade group that represents investor-owned utilities. (Investor-owned utilities supply about 70 percent of US electric power.)

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