Can I get an encore, do you want more (coal gen)?
US coal plants are delaying retirement, extending domestic coal demand
With the title of this article, I reveal my status as an aging Millennial whose college heyday coincided with the release of Jay-Z’s Black Album. But it’s a fitting headline for the trend of coal plants playing one more act now that data center buildout is running at a blistering pace and power demand growth is back. And it’s better than the favorite coal-industry-Baby-Boomer headline from Mark Twain: “The reports of my death are greatly exaggerated.”
Only ~3 GW of US coal-fired capacity will retire in 2024, the lowest in years (see chart below from S&P).
The slowdown in coal retirements is being driven by growth in power demand that’s appearing for the first time in a decade or more, and the number one driver of that growth is data centers. And, while data centers are the the biggest source of power demand growth, there are several other positive trends leading to greater power demand and a subsequent call on coal-fired generation. Electrified homes and offices and electrified transit are also adding to power demand growth, as shown in the chart below.
Forecasts of power demand growth and the contribution from data centers varies widely. Sources don’t even agree on how much data centers currently contribute to US power demand, let alone how much they’ll boost it. The Electric Power Research Institute (EPRI) forecast that data centers would make up 9% of US power demand by 2030. Other sources think data centers are already using that much energy.
But growth in power demand promises to be brisk. The Goldman forecast for 2.4% annual growth from 2022-2030 is pretty conservative as it’s probably a bit stale. Grid Strategies, a consultancy whose views I respect, pegs power demand growth from 2025-2030 at 4.7%/year, nearly double the Goldman estimate and way above almost zero growth over the last decade. I’d put demand growth closer to the Grid Strategies estimate.
The bottom line is that with power demand growth rising, interconnection queues slowing and making it harder to get new power capacity online, and the 120 GW (!) of coal plant retirements over the last decade, existing coal plants are sorely needed for grid reliability. A chart of the massive capacity of coal plants retired in the last decade is shown below. That’s probably around 40% of the coal plants that existed a decade ago.
So, here’s what I’m tracking in terms of announced coal plant extensions in 2024. The table below shows the coal plant that is extending its life, the new retirement date, and the primary coal suppliers. Each one of these announcements is driven in part by data center power demand. If you add it all up, the announcements affect almost 12 GW of coal capacity.