Navigant Research Blog

Transition Away from Coal-Fired Power Plants Keeps Building

— June 29, 2015

The transition away from coal-fired power plants continues among a number of U.S. utilities both in an effort to comply with carbon reduction standards and for cost-cutting reasons. In the last few months alone, several thousand megawatts of coal-generated capacity have been taken offline. The trend is similar in other industrialized countries, with a key exception.

In the United States, Columbus, Ohio-based American Electric Power (AEP) has ceased generation at 10 of its coal-fired plants across five states. Operations were halted in May at coal units in Indiana, Ohio, Kentucky, Virginia, and West Virginia; combined, these units generated more than 5,500 MW. AEP intends to close two more of its coal-fired plants in 2016 in Oklahoma and Texas. Similarly, PacifiCorp, the Berkshire Hathaway-controlled utility operating in several Western states, shut down two coal units at its Utah Carbon Plant (172 MW) in April. Also, the company laid out plans to take nearly 3,000 MW of capacity offline by 2029. As part of PacifiCorp’s long-term resource plans, the company expects to add more renewable energy resources, further reduce its use of coal, and meet most of its expected generation needs with increased energy efficiency over the next decade.

Though no recent plant shutdowns have taken place in North Carolina, Duke Energy did announce that its controversial Asheville plant (which was part of a recent federal criminal settlement related to groundwater contamination) would shift from coal to natural gas and solar generation over the next 4–5 years. A new 650 MW plant would replace the 376 MW coal-fired facility and would significantly reduce emissions, the company said. In Arizona, Salt River Project officials have agreed to buy the Los Angeles Department of Water and Power’s portion of the coal-fired Navajo Generating Station plant as a next step in the eventual closure of one of the three generators in order to comply with U.S. Environmental Protection Agency (EPA) regulations. Overall, the U.S. Energy Information Administration expects the proposed federal Clean Power Plan could lead to about 90 GW of coal-fired generation being removed by 2040 under one scenario, which would be more than double the amount taken offline if no new carbon standards were in place.

A Global Trend

This trend away from coal is playing out in most other major industrialized countries as well, with one exception. Canada and the United Kingdom have implemented policies for phasing out coal. In France, Italy, and Germany, the markets for coal are weak, according to E3G, a European public interest non-profit organization that conducted research for Oxfam on the topic among the G7 countries. For instance, France has shut down seven units in 2015 and is now down to a total of four. Japan is the exception; plans in the country call for an increase in coal-fired electricity generation in part due to the Fukushima Daiichi disaster, which led to the shutdown of nuclear power plants that made up 30% of Japan’s energy supply, with coal filling the gap for now.

With the exception of Japan, the shift away from coal-fired plants is underway in leading nations, though not fast enough nor in the way environmental groups like the Sierra Club and others would like. Nonetheless, the direction away from coal seems clear.

 

 

New Transmission Replaces Retiring Coal Plants

— December 23, 2014

In my drive across the country last summer, two unexpected features of the landscape stood out.  First, driving across Nevada and Utah, the silhouette of coal power plants frequently loomed on the horizon.  Second, the sweeping vistas almost anyplace across the western half of the United States now almost always include electric transmission towers and power lines. The recent U.S. Environmental Protection Agency (EPA) Clean Power Plan (CPP) will certainly change that landscape, as aging coal generation plants are retired and dismantled. Driving between Green River and Provo, Utah, I passed through a beautiful canyon and within a few hundred yards of the Price Canyon coal-fired plant, which is scheduled for retirement due to age, EPA compliance regulations, and a constrained location.

If the EPA plan is implemented as currently written, there will be an increase in transmission planning and spending as the transmission grid is reconfigured to address coal generation plant retirements and new transmission capacity is required to deliver wind and solar resources to utilities in other parts of the country.

Out of the West

In previous Navigant Research blogs, I have discussed the development of a north-south transmission highway between the northern Midwest wind farms and the population centers in Nebraska, Kansas, and Texas.  However, coal plant retirements across the lower Midwest, East Coast, and southeastern U.S. will have a serious impact on electric reliability across those regions, according to the North American Electric Reliability Corporation (NERC). Forward-thinking electric transmission companies are anticipating this and are now building new west-to-east transmission to deliver wind power from the High Plains to population centers in the Midwest and Southeast that will be hit hard by the retirements.

In November, the Rock Island Clean Line LLC filed petitions with the Iowa Utilities Board to obtain new electric transmission line franchises.  Rock Island plans to construct, maintain, and operate an electric transmission line across 16 Iowa counties.  The project is an approximately 500-mile overhead, high-voltage direct current (DC) transmission line that will deliver 3,500 MW of wind energy generation from northwest Iowa to cities in Illinois and other eastern states.

When you look at the distribution of existing coal-fired generation plans across the United States, it’s easy to imagine where additional new transmission lines will be needed. The map below shows the distribution of the coal generation fleet across the United States.

Coal Power Plant Locations and Size, United States: September 2014

(Source: Energy Velocity Maps)

Perhaps another transmission superhighway, using ultra-high-voltage alternating current and high-voltage DC transmission lines to move energy from the High Plains to the Midwest and Southeast, will take shape in the coming years.

 

Will Coal Plant Retirements and Fracking Threaten Electric Reliability?

— December 17, 2014

The implications of the rapid retirement of much of the U.S. coal generation fleet are just coming to light, and transmission operators and generation utilities are actively discussing and planning on contingencies that could cause a real threat to reliability and availability in many regions across the nation.  (The issues around retiring and decommissioning coal plants were discussed in Navigant Research’s research brief, Coal Plant Decommissioning.)  Compounding the threat of coal generation plant retirements is a short-term shortage of coal in many regions of the nation.

The U.S. Environmental Protection Agency (EPA) announced its proposed Clean Power Plan (CPP) rule in June 2014.  It’s expected that the final rule will be announced in June 2015.  The CPP targets CO2 emissions by existing fossil-fueled electric generation and sets targeted reductions for each state.  The plan, as currently proposed, mandates 30% reductions in carbon emissions by 2030 from 2005 levels.

The proposed plan also gives each state flexibility to develop its own approach as to how it will meet the targets, including retiring problematic coal and other fossil fuel generation, adding renewables, such as wind or solar generation, or increasing levels of demand response and energy efficiency programs, which the recent EPA mandates may accelerate.

Time to Plan

Most people do not understand the issues that will arise in the Midwest and the southeastern United States as a result of coal generation plant retirements.  The North American Electric Reliability Corporation (NERC) discusses the implications at length in a recent paper on the impact of generation plant retirements based on the CPP.  NERC concludes the paper by suggesting that states immediately start operational and planning scenario studies, addressing resource adequacy, transmission adequacy, dynamic stability, and  economic and reliability impacts.  This must be done to demonstrate reliability and to ensure that plans of action are technically achievable within the stated time requirements.  “States that largely rely on fossil-fuel resources might need to make significant changes to their power systems to meet the EPA’s target for carbon reductions while maintaining system reliability,” the NERC authors conclude.

Supplies Down

In the near term, another related reliability threat is looming: the availability of coal to fuel the generation plants operating today.  Having formed a new trade group called the Western Coal Traffic League, Midwestern utilities are frustrated because their normal coal supplies from western U.S. coal producers have kept utilities from rebuilding stockpiles burned during last year’s cold winter. Compounding the effect, record harvests, economic growth, and growing oil shipments from the country’s booming oil fracking industry in in the upper Midwest are constraining the rail system.

The effective implementation of the CPP, along with tight supplies of coal, will make for an interesting winter in many parts of the United States.

 

Finally, Germany Makes Progress on Coal

— November 2, 2014

For critics who scoff that Europe’s carbon emission reduction goals are unachievable, Germany has become Exhibit No. 1.  Since Chancellor Angela Merkel decreed in the wake of the Fukushima Daiichi nuclear accident that Germany would phase out its nuclear power industry, coal use in Germany has been on the rise, and the country’s carbon emissions have remained stubbornly high.

Now it appears that tide may be turning.  According to AG Energiebilanzen (“Working Group on Energy Balances”), an energy research firm, total energy consumption in Germany is projected to fall by 5% in 2014, compared to 2013, to the lowest level since the fall of the Berlin Wall.  Coal consumption for the year is expected to be down more than 9%.

Those declines are due mostly to the mild winter in 2013-2014, but clean energy is expanding as well: Renewable energy use grew by 1.6% over the first 9 months of 2014, compared to the previous year.

The Brown Stuff

Germany’s coal use carries particular importance not only because it is Europe’s biggest economy, but also because Germany burns mostly lignite or “brown coal,” the dirtiest form of coal, and because Germany’s green energy program, known as the Energiewende, is among the most ambitious in the world.  While renewable energy production has expanded rapidly in Germany – accounting, at times, for 100% of the country’s power demand and forcing utilities to pay customers to consume electricity from conventional power plants – the nuclear phase-out has led to a rise in the burning of coal for baseload power supply.

Now, the government is at least considering shutting down coal plants.  German minister Rainer Baake of the Green Party told reporters in late October that the government could come up with a plan as early as December to eliminate coal-fired capacity and boost energy efficiency programs.  Earlier Der Spiegel reported that the government wants to eliminate as much as 10 GW of coal capacity.  A decision will likely not come until next year.

Please Exit

Getting rid of coal is critical if Germany is to reach its target of cutting greenhouse gas emissions 40% compared to 1990 levels by 2020.  The environment ministry has said that if current trends continue, the country will fall short of that goal by 5 to 8 percentage points.

Meanwhile Swedish energy giant Vattenfall, one of Europe’s largest operators of power plants, said it will seek to sell off its coal-fired plants in Germany.  Vattenfall’s coal operations in Germany produce some 60 million tons of carbon dioxide (CO2) a year – more than Sweden’s total CO2 emissions.

Like a drunk uncle at a wedding, Germany’s coal industry is an embarrassing and unwelcome guest that everyone would like to usher to the exit.  Getting it out the door, though, remains a tough task.

 

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