Coal Stockpiles Onsite at Power Plants Not Getting Used as Coal-Burning Continues to Decline

     Coal’s share in U.S. power generation continues to decline. Low natural gas prices and increased wind and solar availability are the main reasons. Hot spells in the summer and cold snaps in the winter have not been enough to get that coal burned, I remember early in Trump’s first term when Rick Perry was energy secretary and was arguing for increasing the amount of fuel onsite at coal-fired power plants along with the late coal executive Robert Murray. West Virginia’s governor at the time, Jim Justice, was even arguing for an Eastern coal subsidy to aid coal producers. Fast forward about seven years and that is no longer even remotely a concern. Now the problem is there is too much fuel onsite.  

     A new report by the Institute for Energy Economics and Financial Analysis (IEEFA) notes that 138 million tons of coal, equivalent to the expected annual output of Appalachia in 2025, is being stored at power plants while usage rates continue to drop. The stockpile is worth about $6.5 billion. I am not a big fan of IEEFA due to their bias against fossil fuels and I have noted issues in some of their reports. The first graph below from IEEFA with EIA data shows the issue but if you look back to 2019 it does not look quite as bad. However, they are correct when one adds the continuing drop in coal utilization, as shown in the third graph. They point out that only about 1 million tons of coal is being burned per day, about half of what was burned in 2015. The amount of coal produced has dropped as well. Coal was responsible for about 17% of U.S. power generation in 2023 and is expected to be at 15% in 2024 and 2025.

 

     The IEEFA authors ask if that coal will ever be burned in a timely manner, compared to past stock buildups.

“At utilities, the huge stockpiles are not just a storage headache. They’re a financial headache, too—as much as $6.5 billion in unused inventory, based on a $47.22 per ton average cost of coal delivered to power plants (including transportation) from January through September.”

“In the past when coal stockpiles soared, as happened in 2009, 2012, 2016, and again in 2020, power plant owners worked hard to reduce them to a 50-60 day supply, but it took them anywhere from 16 months to almost three years to do it. This time, it appears, may be different. Rarely has so much coal lingered for so long.”

They point out that 90% of thermal coal produced is bought by power plants. Now, with less coal being burned, we are starting to see less coal delivered to power plants. As the following graph shows, those deliveries have steadily decreased since 2008 when more than 80 million tons a month were delivered compared to just 30 million tons a month in 2024. They also estimate that in 2025, another 13 gigawatts (GW) of the remaining 173 GW (about 7.5% of total capacity) will either retire or be converted to gas.

     They note that utility-scale solar has been especially cutting into summer coal burning.

“This year, utility-scale wind and solar will produce more power — 665.8 million megawatt-hours (MWh) — than coal for the first time, which will produce just 641.4 million MWh, according to the EIA’s November Short-Term Energy Outlook.”

“As recently as 2021, coal’s daily share of the electric power supply during the winter was at least 20% for almost all of January and February, including five days with more than 30%. During the spring and summer of 2021, coal’s market share was also above 20% from mid-May all the way into October, and was between 25% and 30% for most of July and August. So far in 2024? From Jan. 26 until Nov. 30, coal didn’t have a single day with a market share topping 20%, and it was less than 15% for almost three months in the spring.”

     Low natural gas prices are also a major factor limiting coal burning. Coal plants are often utilized less than they used to be, simply due to costs compared to natural gas. As long as we can assure reliability with natural gas, including providing adequate infrastructure for delivering that gas via pipelines to power plants, the gas can ensure reliability in extreme weather events. However, there are places where the natural gas systems have not been adequately prepared. In Texas’s ERCOT region, we saw what happened in 2020's winter storm Uri when the natural gas delivery system was revealed to be unprepared, mostly due to a lack of weatherization of wells, pipes, and power plants. We can also point to inadequate pipeline infrastructure in the Northeast in NYISO and New England where the solution has long been to buy foreign LNG and to burn highly polluting fuel oil. The Mystic Power Station was shut down in 2024 but the option to import LNG to the Everett Terminal in Massachusetts is still open.

 

References:

 

Mountains of unused coal causing financial headaches for US power sector: Report. Sharon Udasin. The Hill. December 16, 2024. Mountains of unused coal causing financial headaches for US power sector: Report

Mountain of coal at U.S. power plants a new threat to coal industry. Seth Feaster and Dennis Wamsted. Institute for Energy Economics and Financial Analysis. December 16, 2024. Mountain of coal at U.S. power plants a new threat to coal industry | IEEFA

Short-Term Energy Outlook. STEO. Energy Information Administration, December 2024. steo_full.pdf

New England utility closes import-dependent gas-fired power plant, keeps LNG import option. EIA. Today in Energy. June 24, 2024. New England utility closes import-dependent gas-fired power plant, keeps LNG import option - U.S. Energy Information Administration (EIA)