Coal consumption in the U.S. during 2018 is on track to fall to 691 million short tons (MMst), a 4% decline from 2017 and the lowest level since 1979.

The Energy Department's Energy Information Administration (EIA) said that U.S. coal consumption has been falling since its peak in 2007. EIA forecasts that 2018 coal consumption will be 437 MMst (44%) lower than 2007 levels, mainly driven by declines in coal use in the electric power sector.

The electric power sector is the nation’s largest consumer of coal, accounting for 93% of total U.S. coal consumption between 2007 and 2018. The decline in coal consumption since 2007 is the result of both the retirements of coal-fired power plants and decreases in the capacity factors, or utilization, of coal plants as increased competition from natural gas and renewable sources have reduced coal’s market share.

Coal strip mine operation in Wyoming. Source: Bureau of Land ManagementCoal strip mine operation in Wyoming. Source: Bureau of Land ManagementIn 2007, coal-fired capacity in the United States totaled 313 gigawatts (GW) across 1,470 generators. By the end of 2017, 529 of those generators, with a total capacity of 55 GW, had retired. Through September, 11 GW of coal-fired generating capacity has retired and another 3 GW are expected to retire in the final three months of the year.

If these plants retire as planned, EIA said that 2018 will be the second-highest year for coal retirements. Another 4 GW of capacity is slated to retire by the end of 2019.

A single, relatively small, new coal-fired generator with a capacity of 17 MW is expected to come online in the U.S. by the end of 2019.

In November, Indiana utility NIPSCO said it would phase out its use of coal to generate electricity over the next 10 years. It plans to replace the roughly 1,800 MW of generating capacity with solar and wind energy resources combined with battery energy storage.

Source: EIASource: EIAThe utility said that the timeline to retire the generating units is faster than indicated in its last integrated resource plan, and that energy markets now offer “more competitive and cost-effective options” for customers.

Natural Gas Price

Indeed, one of the main drivers of coal retirements is the price of coal relative to natural gas. Natural gas prices have stayed relatively low since domestic natural gas production began to grow in 2007. This period of sustained, low natural gas prices has kept the cost of generating electricity with natural gas competitive with generation from coal. Other factors such as the age of generators, changes in regional electricity demand and increased competition from renewables have led to decreasing coal capacity.

Source: EIASource: EIAIn early December, Duke Energy said that a two-unit, 1,640 MW combined-cycle natural gas power plant in Citrus County, Florida, had entered service. The new station replaces two 1960s-era coal-fired units and a nuclear plant.

Environmental concerns have also played a role in coal retirements, EIA said. Coal retirements were highest in 2015, driven in part by stricter emissions standards required by the Mercury and Air Toxics Standards (MATS) rule. Instead of investing in emissions control technologies, many smaller power plants that operated at lower capacity factors were retired before the new standards were implemented. Some plants applied for and received one-year extensions, which contributed to retirements in 2016.