EIA: U.S. coal burn will remain steady in 2016 despite plant retirements

Dive Brief:

The United States will shutter a record number of coal-fired plants this year, but the number will have little impact on 2016 consumption as the remaining plants will pick up the slack, Bloomberg reports.
The U.S. Energy Information Agency (EIA) reports the electric power sector will consumer 773.4 million short tons (MMst) of coal this year, an amount expected to remain stable next year.
EIA said higher gas prices next year will lead to more coal burn, offsetting the retired generation.

Dive Insight:

The United States will shutter 23 GW of coal-fired generation this year, according to Bloomberg. That's a record total, but data from the EIA indicates it will have almost no immediate impact on the country's actual coal consumption.

It's a “popular misconception” Doyle Trading Consultants CEO Ted O'Brien told Bloomberg, that coal is no longer generating most of the United States' power. “One of the biggest things that flies under the radar is the coal plants that survive," he said.

According to EIA, from 2015 to 2016 coal consumption will fall from 773.4 MMst to 773.0 MMst.

This year consumption will fall by 9%, EIA said, largely the result of a 9% drop in electric power sector consumption. Low gas prices, as well as retirements related to the Mercury and Air Toxics Standards (MATS) rule, have played a part there. But gas prices will rise next year, meaning the remaining coal-fired plants will raise outputs.

Despite the somewhat surprsing estimates of 2016 coal burn, there are indications the U.S. is moving away from the fuel. EIA said coal production this year will decline by 92 MMst, with the production declines occuring in all regions (led by the Appalachian region, with a 12% production decline).

Coal prices declined from 2014 to 2015, averaging $2.36/MMBtu versus an anticipated $2.25/MMBtu. EIA said it expects roughly the same price next year, $2.26/MMBtu.

The ongoing trends in coal and gas generation were illustrated this week at a conversation at the annual meeting of state utility regulators in Austin, Texas. During a panel on how to preserve baseload generation under the Clean Power Plan, utility experts and grid operators told the audience that the most efficient coal plants would continue generating through at least 2030, but that EPA regulations and market forces are pushing utilities to redefine their ideas of baseload generation and how to operate the grid reliabily.