American power producers over the past two years have accumulated massive amounts of coal that are now sitting idle at their facilities and creating financial and storage problems for utilities and coal miners, according to a report published on Monday by the Institute for Energy Economics and Financial Analysis.
The coal stockpile has reached about 138 million tons, which is roughly the same amount of coal that Appalachia is expected to produce next year.
These huge amounts of coal amount to some $6.5 billion in unused inventory, with the report stating that "no power producer wants that much money idly sitting around. But it has become much harder to burn that coal without losing money."
The report attributes these difficulties to several major factors — including lower natural gas prices and a significant increase in solar and wind generation, which has made coal-fired electricity considerably less competitive. In addition, the report points out that there has been a decline in the occurrence of electricity price spikes during summer heat waves and winter cold snaps.
The cumulative effect of all these factors means that American coal plants now burn a total of only about 1 million tons per day, which is about half as much as they did a decade ago, according to the report. This comes at the same time that coal deliveries have been going down for more than 15 years.
The report warns that given the buildup in coal stockpiles, power providers will, at a certain point, purchase much less from coal producers, especially since it is estimated that due to the U.S. energy transition, an additional 13 gigawatts of the nation's remaining 173 gigawatts of coal-fired capacity will retire by next year.
Brian Freeman ✉
Brian Freeman, a Newsmax writer based in Israel, has more than three decades writing and editing about culture and politics for newspapers, online and television.
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