Power Plant Coal Stockpiles Fall To Lowest Levels Since 1978: EIA
December 8, 2021
by Peter Maloney
December 8, 2021
Coal stockpiles at electric power plants are at their lowest levels since 1978, according to the Energy Information Administration (EIA).
Stockpiled coal dropped to 80 million metric tons in September, their lowest level since March 1978 when stockpiles hit 77 million metric tons, according to EIA data.
The federal agency attributed the decline to two factors: less coal is needed as coal plants continue to retire and increased generation by coal plants over the summer reduced coal inventories.
In 2019, Moody’s Investors Service projected that utility demand for coal would decline significantly between 2020 and 2030, reducing coal-fired generation to as little as 11 percent of overall U.S. power generation, down from 27 percent in 2018.
Last summer, Moody’s predicted coal company earnings would fall by 50 percent in 2020 because of weak fundamentals and the effects the COVID-19 economic slowdown. The ratings agency also predicted a 25 percent drop in thermal coal production in 2020.
Coal plant operators typically stockpile more coal than they can burn in a month. Generating plants consume the most coal during the summer and winter months, causing stockpiles to drop to their lowest levels in the spring and fall and prompting generators to build back their reserves. However, physical delivery constraints in the supply chain can limit how quickly coal generators can increase their stockpiles, the EIA noted.
Nonetheless, coal stockpiles at generating plants, as measured by the “days to burn” metric, remain within recent historic parameters, the EIA said. “Because of less coal consumption as well as coal capacity retirements over the past three years, the days of burn of U.S. coal remain within the typical range, even though total stocks are low,” the EIA said.
For bituminous coal plants, which are mostly in the eastern United States, the average number of days of burn was 88 days in September, a slight increase from the 86 days of burn recorded by the EIA in August. The average number of days of burn for subbituminous units, which are mostly in the western United States, was 82 days in September 2021, the EIA noted.
The EIA, noting the long-term trend of declining coal consumption, also said many U.S. coal mines have begun to close. That trend, combined with supply chain disruptions, has created some concerns about the ability of coal-fired generators to replenish stockpiles to last through the winter.
Grid operators are, however, closely monitoring coal inventories. As an example, the EIA cited temporary changes taken by the PJM Interconnection regarding minimum inventory requirements to provide more flexibility for coal-fired generators.