A group of economists at the Brattle Group have just released a report that studies the impact of the Environmental Protection Agency’s (EPA) air regulations on coal fired power plants. The findings predict that between 59,000 and 77,000MW capacity of coal power plants will be forced to retire from operations over the next five years. This is 25,000MW more than predicted back in 2010.
The study found that in order to retrofit and replace the coal power plants that already exist in the US, an investment of $126 to $144 billion would be needed. This investment will be difficult for small companies to acquire, meaning that approximately 80 percent of the coal plants likely to retire will be owned by such small privately owned companies.
Frank Graves, the co-author of the study, said that “our analysis indicates that future coal retirements will be a bit more than double the level announced to date. The impacts will be modest over large areas, but more acute locally, especially for owners of smaller fleets that are predominantly coal-based. Everything else being equal, this amount of retirement will be enough to increase prices in both electric and gas markets for a few years, but we do not envision that impact to be large or persistent enough to alter retirement decisions.”
By July 2012 about 30,000MW of coal plants had decided to close operations by 2015 (nearly 10% of the total US coal power capacity).
By. Charles Kennedy of Oilprice.com
Charles is a writer for Oilprice.com