This paper describes the likely causes and magnitudes of feedback eﬀects of coal plant retirements on short- and long-term wholesale electricity prices, investigating these issues through a case study and various sensitivity analyses.
The primary drivers for feedback eﬀects will be the reduced supply for electricity generation and increases in the cost of natural gas due to increased gas demand from replacing the coal retirements. Increased plant operating costs at retroﬁt units also will tend to raise prices, while there could be partially oﬀsetting impacts on the cost of coal. Capacity markets, where they exist, may show a short-term increase due to reduced reserves, then a longer-term reduction due to net CONE changing under higher energy prices.
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