UTAH FOUNDATION REPORT: Coal keeps Utah’s energy costs down, but production is declining
A new research report from the Utah Foundation shows the landscape of the state’s coal industry is changing. Utah produced only about half as much coal in 2015 as it did in 2001, the report said.
Still, more than two-thirds of Utah’s electric power is produced in coal-fired power plants. The legacy of coal in Utah’s energy mix has helped to keep electricity prices low, according to the foundation.
Key findings from the report include:
• Coal production has been declining in Utah for years. In 2015, production was just over half of what was produced in 2001.
• States with a greater proportion of coal power in their mix of electricity generation tend to have lower electricity prices
• Utah is fifth-highest in the nation for percentage of coal-fueled electricity in its mix of electricity generation.
• The cost of electricity from natural gas, wind and solar is now typically lower than operating, maintaining and upgrading coal-fueled resources.
• Natural gas electricity production surpassed coal nationally in 2015. Utah is trending that direction with the recent closure of one electricity plant and possible timelines for ceasing coal-fueled operations at two others.
“Electricity production uses the lion’s share of coal in Utah and the nation,” said Shawn Teigen, author of the report. “As electricity generation continues to shift from coal to natural gas and renewables, we’ll continue to see downward pressures on coal production. This is going to keep nerves on edge for those rural Utah communities that rely heavily on coal production and coal-fueled electricity generation.”
The report, “Utah’s Coal Counties Part I: Coal Energy, Production and the Future,” is the first of three that will examine the role coal plays in the economy of Utah’s rural counties. The reports will include historical data about the state’s coal industry as well as projections for the future of mining and other industries tied to Utah’s coal resources.
Part II of the report will explore coal mine jobs and the economic benefit and Part III will look at the communities in Utah supported by the industry.
Most coal consumption in the United States is for electricity generation, said the report. However, coal-fueled electricity’s share of the total has been decreasing. This is due in large part to the availability of low-cost natural gas, stringent environmental regulations that affect coal-fueled power plants, and favorable tax treatment for renewable technologies. Coal-fueled power plants have been closing and others are reducing their total output. As a result, coal production is also decreasing.
Utah is one of only six states that gets more than two-thirds of its electricity from coal. However, this may change given that natural gas, wind and solar projects are cheaper to develop and maintain than coal projects.
In fact, coal projects that are retiring across the country are not typically being replaced by other coal projects, but with natural gas and renewables. Utah is following that trend. For instance, the Intermountain Generating Station’s coal-fueled turbines in Millard County may be retired by 2025 when the company completes construction of its natural gas turbines.
These trends are not likely to reverse under the current presidential administration, even given the likely unwinding of the previous administration’s environmental and climate change measures which put a burden on coal-fueled power plants. Nonetheless, demand for coal may increase in the short term with an expected increase in natural gas prices.
Utah Foundation is a non-partisan public policy research group. Founded in 1945, the foundation publishes research on a range of topics, including natural resource issues, taxation, public school funding, healthcare and many others.