Half of All U.S. Coal Plants Would Lose Money Without Regulation
(Bloomberg) -- It’s long been clear that U.S. coal plants are struggling. A study released Monday shows how much -- concluding that barely half earned enough revenue last year to cover their operating expenses.
Power grids may face “massive” upheaval as more uneconomic plants close, according to the report by Bloomberg New Energy Finance. The problem is particularly bad in Florida, Georgia and elsewhere in the Southeast, where the distance from major coal mines drives up prices. The study examined the monthly economic performance of every U.S. coal plant in operation since 2012.
Still, many coal plants manage to shield themselves from economics. About 95 percent of those with operating expenses exceeding revenue operate in regions where regulators set rates, the study found. Instead of allowing market forces to determine their fate, regulators and utilities often keep struggling plants open to ensure stability on their grids.
“We find ourselves awestruck by the resilience of U.S. coal,” wrote William Nelson and Sophia Liu, the report’s authors. “Plants persist even when they cost more to run than replace.”
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