Coal-fire power plants have served their purpose
One of the points we touched on a few weeks ago when we published a report on the declining role of coal-fired electricity plants in Texas is that they aren’t nearly the baseload workhorses they used to be.
Our report, “Fundamental Changes in Energy Markets Are Undermining the Financial Viability of Coal-Fired Power Plants in Texas,” examined seven aging plants, all of which we think will very likely be retired, perhaps sooner than later.
We explained broadly and in detail how these plants – which include Martin Lake Power Plant – are emblematic of a fading industry for a host of reasons rooted in market shifts driven by the rise of natural gas and renewables, both of which have gotten so inexpensive that they have become go-to sources for power generation.
Contrary to what many coal-industry executives say, it’s mostly a matter of economics. Coal does not have a regulation problem so much as it has a market-competition problem. Other technologies and fuels are increasingly able to produce electricity at lower cost, and this is a trend that has legs, nationally and in Texas. It is not likely to end.
Our report looked specifically at the performance of four merchant generators (those that produce electricity and sell it into competitive unregulated markets) – the Big Brown, Martin Lake (just west of Tyler) and Monticello plants owned by EFH’s Luminant subsidiary, and the Coleto Creek plant owned by Dynegy. It also analyzed three coal-fired plants owned by public power utilities or power agencies-the Fayette Power Project, Gibbons Creek, and J.K. Spruce Unit 1.
We noted that the seven plants have a total of 8,100 megawatts of capacity and account for a little more than 40 percent of the total coal-fired capacity in ERCOT. They serve as proxies, in other words, for the Texas coal-fired generation market – and indeed proxies for much of the industry nationally.
These plants’ days are numbered, to put it bluntly, simply because they can no longer compete. They are – for the most part – really just shadows of their former selves in terms of their capacity factors, which is to say their actual output versus their potential output.