Pennsylvania's Largest Coal Plant to Close amid Shift to Gas

In the latest sign of the shift to gas power from coal in the USA, the Homer City Generating Station in Pennsylvania will close by July, the USA Energy Information Administration (EIA) said, citing the plant’s owner.

The 1,888-megawatt (MW) Homer City coal power plant is set to shut down after 54 years of providing power to Pennsylvania and New York. The plant was built near coal reserves and included what was then a high-capacity transmission line to service areas in western New York and eastern Pennsylvania, the EIA said in a news release. For 30 years, the plant operated almost continuously, achieving a utilization rate, called a capacity factor, of near 90 percent, according to the news release.

“Homer City based its decision on several factors including the low price of natural gas, a dramatic spike in the cost of its ongoing coal supply, unseasonably warm winters and increasingly stringent environmental regulations,” Homer City Generation CEO William Wexler said in a written statement earlier obtained by the Allegheny Front.

Homer City said new emissions limits imposed by the Environmental Protection Agency to comply with federal Clean Air Act limits on nitrogen oxides set an “excessive economic and operational burden” for the plant, according to the statement.

The EIA said that new emissions standards for power plants under the Clean Air Act required the plant to install FGD scrubbers on Unit 3 in 2001 and on Units 1 and 2 in 2014. Pollution control upgrades in 2014 cost the plant owners a reported $750 million, according to the news release.

Shift to Gas

Recently, coal plants have struggled to effectively compete in USA power markets against newer, more efficient, natural gas-fired, combined-cycle power plants, the EIA said.  As new natural gas-fired plants were built, the Homer City plant was dispatched more intermittently for load following instead of for base load, the agency said. The Homer City plant was operated at an annual capacity factor of 82 percent in 2005. The capacity factor dropped to 20 percent in 2022, contributing to the decision to retire the plant, according to the EIA.

The EIA said that the Homer City plant sold for $1.8 billion in 1999, at the time when Pennsylvania was deregulating its electricity market. In that period, coal-fired generation accounted for about 53 percent of the USA’s power supply, while natural gas only accounted for about 12 percent. Since then, those roles have nearly reversed, according to the agency: natural gas is now the source of 40 percent of the electricity in the country, while coal has dropped to 20 percent. In Pennsylvania, the same trend is happening, where the state saw coal-fired generation fall from 57 percent in 2001 to 12 percent in 2021, compared to the jump in gas-fired generation from two percent in 2001 to 52 percent in 2021, the agency said.

Natural gas production has grown significantly in Pennsylvania over the past two decades, rising from 0.1 trillion cubic feet (Tcf) in 2001 to 7.6 Tcf in 2021, the EIA said. Pennsylvania’s gas output is second only to Texas in the USA, the agency said.

Pennsylvania sits on top of the Marcellus shale, and the portions of the Marcellus under Pennsylvania and West Virginia constitute the largest natural gas field in the USA, the EIA said. Although natural gas has been produced in the Marcellus for a long time, production from the Marcellus became much more economical after fracking and horizontal drilling were developed. According to the agency, the first Marcellus shale natural gas well using these techniques was drilled in Pennsylvania in 2004. As natural gas output in Pennsylvania was rising, coal production was declining, falling 40 percent from 74.1 million tons in 2001 to 42.5 million tons in 2021, according to the agency.

Increased production in Pennsylvania and elsewhere in the USA made natural gas abundant and relatively cheap. With access to inexpensive natural gas, utilities and power plant operators began to close aging coal-fired power plants in Pennsylvania, many of which were built in the 1970s and 1980s, and to replace them with new natural gas-fired combined-cycle plants, the EIA said. Modern combined-cycle plants are more efficient than the typical coal-fired power plant and don’t have the same costs to comply with emissions regulations, it explained. As coal plants in Pennsylvania were retired and the remaining coal plants were used less, the share of Pennsylvania’s generation supplied by coal dropped, the agency said.

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