New PacifiCorp plan slows coal plant closures, adds lots of wind and solar
- Oct 4, 2019 11:48 am GMT
After a protracted back and forth with stakeholders over the past 16 months, PacifiCorp released a plan Thursday to retire five of its 24 coal units by 2025 and to replace them with thousands of megawatts of wind and solar generation and hundreds of megawatts of battery storage.
It’s not the more aggressive coal retirement schedule that ratepayer advocates expected and environmental groups had pushed for, possibly presaging a noisy series of meetings this fall as the company seeks state regulators’ go-ahead on the plan.
PacifiCorp and other utilities are required to update their long-term resource plans every two years, looking two decades into the future to project customer demand and the most cost-effective mix of resources to meet it.
The further out those projections go, the hazier they get because of changing technology, regulations and market conditions. So the key bit in the plan released Thursday is the utility’s five-year action plan, chosen from among dozens of options ranked on their cost and reliability. The company is seeking state regulators’ “acknowledgement” of the plan this fall. That’s not a pre-approval, but gives the utility greater assurance that it will be able to recover the underlying costs through rates.
The cost of the company’s plan isn’t specified, but Rick Link, PacifiCorp’s vice president of resource planning and acquisitions, said the cost of wind resources it plans to add by 2025 will exceed $2 billion, and a 400-mile transmission line would cost $1.8 billion.
The impact on rates, he said, is unpredictable because it’s unclear how much of the power the company will buy from third parties or get from resources it builds and owns. He added, however, that the company was pursuing the low-cost option among its many alternatives.
The Portland-based utility has been under increasing pressure over the last decade to transition its aging and dirty energy generation fleet -- nearly 60 percent of its capacity is still coal-fired -- to a cleaner and more economical mix of resources. Oregon passed legislation in 2016, for instance, that prohibits utilities from including coal plants in their rates beyond 2030, and increased the state’s renewable energy mandate to 50% by 2040. Washington lawmakers also just passed a law to transition that state to 100% clean energy by 2045. Assigning resource costs among customers in its six-state territory is complicated by those varying energy mandates.
Legislators in Wyoming, meanwhile, have been throwing out roadblocks to early coal retirements to preserve jobs and the communities that depend on the plants and mining operations. Wyoming lawmakers passed a bill this spring requiring utilities to seek buyers for any coal plants they plan to close, then continue to buy back the power they produce.
Many of those plants are expensive to operate because of high coal costs, required environmental retrofits and eventual clean-up costs. The company’s own modeling shows that closing some of them early would save ratepayers money. The ongoing debate is over how many units and how much it would save.
The update unveiled Thursday includes the retirement of three coal units by 2025, in addition to two the company had already slated for early closure or conversion to gas in that timeframe. Backfilling that capacity will require a huge buildout of renewable energy sources, including the addition of 3,500 megawatts of Wyoming wind farms by 2025, as well as 3,000 megawatts of new solar spread among four states. The solar investments will be accompanied by nearly 600 megawatts of battery storage to help ensure grid stability as it adds so many resources that have variable output. Early action on those renewables, the company said, will allow it to take advantage of federal tax credits that make the cost of energy produced significantly cheaper. The utility is also planning a new 400-mile transmission line between Wyoming and northern Utah.
Longer term, the company plans to shut 16 of its 24 coals units by 2030 and 20 of the units by the end of 2038. The retirements will reduce coal-fueled generation capacity by nearly 2,800 MW by 2030 and by nearly 4,500 MW by 2038, the company said. The later closures will be backfilled by even more wind, solar and battery storage.
The company shared its latest plan with an overflow crowd of stakeholders at a meeting near the company’s Lloyd Center headquarters. Ratepayer advocates and environmental groups said the plan marked a substantial change in PacifiCorp’s approach to its coal fleet, but they were still frustrated with changing modeling results that resulted in the near-term closure of fewer coals units.
“It’s a significant backtrack on what they were planning to do,” said Bob Jenks, executive director of the Citizens’ Utility Board of Oregon, a ratepayer advocacy group. He said an analysis released last month had two portfolios that performed better and had more coal unit retirements up front. He also said the new preferred portfolio appears to cut back on programs in which the company works with customers to shave demand during peak periods, reducing the need for new resources.
Christopher Thomas, a senior representative for the Sierra Club’s Beyond Coal Campaign, said that PacifiCorp for the first time had taken a deep look at the economics of its coal fleet and acknowledged that many are uneconomical to operate.
Still, he said, “it feels like PacifiCorp has backed off and is slow walking some of the retirements. We think there are some additional coal retirements that could be picked as part of a low-cost, low-polluting portfolio for ratepayers. Unfortunately, we can’t know until we check their math.
“We certainly hope the Oregon Public Utility Commission gives this a hard look.”
PacifiCorp has twice delayed the release of its resource plan this year and executives said Thursday that it was not surprising that the projected closure dates and related costs continue to change.
Company officials said if they retire too many coal plants too soon, it will increase the cost of maintaining system reliability and could lead to PacifiCorp having too few energy resources in the mid 2020s. Regional analyses show many utilities around the west could face similar concerns during that period because of accelerated coal retirements and the rapid addition of systems that rely on intermittent resources, such as wind and solar. The impact on wholesale power costs and availability is an open question.
Link said Thursday that many of the coal units that would remain will operate at lower capacity -- and lower emissions -- serving as backup units that ramp up when its supply of renewable energy is low. He also said the company had begun working with communities that will be affected by plant closures to develop alternative economic development plans and retrain workers.
The new plan, Link said, “allows us to continue to deliver the reliable and low-cost energy our customers need as we embark on a phased and well-managed coal transition that minimizes impacts to our thermal operations workforce and communities.”
(c)2019 The Oregonian (Portland, Ore.)
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