47GW of U.S. Coal Capacity to be Uneconomic by 2024

Morgan Stanley & Co. LLC sees a $64 billion spending opportunity on top of double-digit earnings accretion for more than a dozen utilities that decide to retire uneconomic coal plants and replace them with cheaper renewables by 2025.

“We compared the costs of operating each coal plant against our state-by-state forecasts of renewables costs across 13 stocks and identified [47,000 MW] of coal capacity that will become more expensive than renewables by 2024,” Morgan Stanley analysts wrote in a recent research report. “We estimate this represents a capex opportunity of [$64 billion] and earnings accretion for the stocks we cover of up to 14% in 2025.”

The report, “The Second Wave of Clean Energy — Part II: Who Can Ride the Wave?” follows a December 2019 report in which the research firm forecast that about 70,000 MW to as much as 190,000 MW of coal-fired generation is “economically at risk” from the deployment of a “second wave of renewables” in the U.S. The research firm said these projections exclude about 24,000 MW of coal generation already set to shut down.

“We think that the economics make sense that the utilities in general should be pursuing this just because it seems to benefit everybody,” Morgan Stanley analyst Stephen Byrd said in a Feb. 11 phone interview. “It benefits shareholders, customers and the planet.”

Ameren Corp., American Electric Power Co. Inc., Duke Energy Corp. and Pinnacle West Capital Corp. are seen as best positioned to take advantage of a second wave of clean energy.