Utilities Closed Nearly 30 Coal Plants In 2017 Because Of Economics. Here Are The 6 Most Important
- Dec 21, 2017 3:00 pm GMTJul 7, 2018 10:24 pm GMT
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Utility coal power closures driven by market economics were a regular occurrence throughout 2017. While President Donald Trump’s “Energy Dominance” agenda gave the false impression that federal efforts could revive coal, 27 coal-fired plantstotaling 22 gigawatts (GW) of capacity were announced for early closure or conversion in 2017 – roughly one every 15 days since Trump’s election.
U.S. electricity generation economics have completely reversed. Building new coal is more expensive than building new renewable energy across the U.S. and in many parts of the country, keeping existing coal plants open is more expensive than building new wind turbines (and solar, in some places). From 2007 to 2016, 531 coal units representing 55.6 GW of capacity were retired across the U.S., at an increasingly rapid pace.
The coal plants announced for early closure in 2017 are younger in age and larger in size than ever before, and utilities are replacing shuttered capacity with clean energy. The reasons why utilities are choosing to close coal plants are just as informative as how they’re choosing to replace them. Six specific closures show why this trend will continue into 2018 despite Trump’s bluster.
Public Service Company of New Mexico Decides To Go Coal-Free
New Mexico’s largest utility, Public Service Company of New Mexico (PNM), released its 2017-2023 integrated resource plan (IRP) in April to examine future scenarios and determine which power mix could meet its expected demand at lowest cost. The results were surprising for a utility that served its 510,000 customers with 56% coal in its total generation portfolio in 2015: PNM’s best option for low-cost and reliable power was to start retiring coal in 2022, completely end coal generation by 2031, and replace it with solar energy, natural gas, and energy storage, along with expanded transmission to cheap wind power in eastern New Mexico.
PNM estimates that by 2035 its most cost-effective portfolio would be composed of nearly 36% renewables and 33% natural gas, up from 11% and 6% respectively in 2017. PNM cites improved grid flexibility under this approach, compared to an alternative portfolio which continues burning coal, where customers would be exposed to higher costs and the utility would risk declining revenue as it ran its coal plants less and less. PNM also began studying the benefits of joining the Western Energy Imbalance Market, which has generated nearly $200 million in savings to utilities and customers since late 2014, to help enable its shift to a coal-free future.
We Energies Closes 1.2 GW Prairie Plains, Will Build Wisconsin’s Largest Solar Array
We Energies is Wisconsin’s largest utility, with more than 2.2 million customers, and coal supplied 50.6% of its total generation capacity in 2015. This November, the utility decided to close its 1.2 GW Pleasant Prairie coal plant in early 2018, despite having only been in operation since 1985 and undergoing $325 million on pollution controls in recent years. The plant routinely operated at reduced capacity in recent years, and did not operate at all for three months this spring.
Under the closure, We Energies will replace part of the plant’s generation capacity with Wisconsin’s largest solar array, a 350 megawatt (MW) plant expected to go online by 2020. For comparison, the state had 25 MW installed capacity at the end of 2016 and its largest planned array will have a 100 MW capacity. For We Energies, solar makes more sense than coal. “We are looking for a clean, reliable energy future for our customers,” said a company spokeswoman.
Luminant Shutters 4.1 GW Worth of “Economically Challenged” Texas Coal Plants
In early October, competitive power provider Luminant, which operates nearly 18 GW of Texas generation, announced it would close the 1.8 GW Monticello Power Plant by January 2018 due to ERCOT’s “unprecedented low power price environment.” A week later, Luminant announced it would close two “economically challenged” coal plants with 2.3 GW capacity due to low wholesale power prices, abundant renewables, and low natural gas prices. All told, within a week, Luminant decided to close 4.1 GW installed coal capacity – roughly 12% of Texas’ total coal power capacity.
Luminant’s closures significantly underscore the economic reality facing coal in Texas’ wholesale power market, where consumers have saved billionsby shifting to clean energy and coal closures occur without threatening grid reliability. 2016 researchclassified two of the Luminant plants as at risk of closing and emblematic of how coal power was “unlikely to recover in the face of rising competition from other energy sources.” ERCOT says installed Texas wind capacity could pass 21 GW by the end of 2017, forecasts 14-27 GW of solar will be added statewide by 2030, and approved the three closures after determining they would not impact grid reliability.
Ameren to Retire Half Its Missouri Coal Fleet for $1 Billion New Renewables
Missouri’s largest utility, Ameren Missouri, announced in late September it would invest $1 billion in 700 MW of new wind capacity and 100 MW new solar by 2020 while closing half its coal fleet as part of an initiative to cut carbon emissions 80% by 2050. Coal power currently makes up 5.3 GW of Ameren’s 10.2 GW generation capacity, and the utility only has 11 MW total renewables capacity today. “We expect this tremendous growth in wind generation to provide great value to our customers, who will save money on energy costs,” said CEO Michael Moehn.
Ameren’s plans recognize clean power can save customers money without risking grid reliability. The utility’s carbon cutting initiative also includes using energy efficiency to reduce demand by 570,000 megawatt-hours within three years and expanding customer-connected microgrids.
Xcel Continues Closing Colorado Coal on “Fundamental Economics” of Renewables
In late August Xcel Energy, which relies on coal for 46% of its Colorado power supply, announced it would close two units of the Comanche Generation Station totaling 660 MW of capacity by 2025. Xcel will replace that generation with up to $2.5 billion investment in 1 GW of wind and 700 MW of solar, along with other resources. This trend is not new for Xcel – the utility has closed multiple Colorado coal plants totaling 1.1 GW since 2011 – but what is new is that these closures happened for economic reasons, not environmental.
“It is really about the economics,” said Xcel President David Eves. “From the company’s perspective, this plan is a response to our customers.” In 2016 financial modeling showed that building new wind was cheaper than operating existing coal power in Colorado and 6,000 gigawatt-hours of coal generation could be replaced with 2 GW of wind at less cost to consumers without threatening reliability. In addition, financial tools proposed in 2017 would allow utilities to retire uneconomic coal power in Colorado and generate millions in dedicated transitional funding for communities affected by the closures.
One Of America’s Biggest Polluters Could Close Two Decades Early
In September, a consortium of utilities edged closer to closing Montana’s 2.2 GW Colstrip Power Plant – one of America’s biggest greenhouse gas emitters – by 2027, nearly two decades earlier than the plant’s owners estimated just five years ago. Unlike most other coal plant closures announced in 2017, Colstrip’s looming closure results from customer demand in primary plant owner Puget Sound Energy’s (PSE) Oregon and Washington State service territory.
Natural gas and renewable energy are expected to make up for the closed generation capacity, and PSE would dedicate $10 million to help the affected community transition through Colstrip’s closure, both with just a .9% rate increase to cover costs. State regulators subsequently approved PSE’s plan to end its financial involvement in Colstrip in December.
Consumer Benefits Accelerate Apace of Coal Closures
In every corner of America – even conservative states without pro-renewable policies – utilities are choosing clean energy because closing coal saves customers money, improves their bottom line, and boosts grid flexibility. Presidential rhetoric can’t trump market economics – coal-fired plant closures will continue in 2018.
By Silvio Marcacci, Communications Director at Energy Innovation, where he leads all public relations and communications efforts.