This blog was written by Amelia Shenstone, former Regional Advocacy Director with the Southern Alliance for Clean Energy.

Guest Blog | January 25, 2017 | Coal, Energy Policy

Lakeland, FL leaders now acknowledge that retiring the McIntosh 3 coal-fired power generator is a question of when, not if. Lakeland Electric, which operates the 364MW plant and co-owns it with Orlando Utilities Commission, is poised to lead Florida utilities away from coal and toward cleaner energy choices, but thus far is hesitating. Solar energy, combined with gas or with cutting edge batteries, could shift the balance for this forward-thinking utility.

At the January Utility Committee meeting, Lakeland Electric authorities portrayed a choice between keeping the coal plant running until 2027, or retiring it in 2018 and replacing it with an expensive new gas plant. Discussions have also included the option of buying power from existing gas-fired plants on the grid, or even looking into the fantastical small modular nuclear reactor (“SMRs,” a speculative boondoggle we discuss here). But gas, or at least gas alone, may not be the only feasible option, nor even the cheapest that Lakeland ought to consider when evaluating prospects for replacing coal. Lakeland has already started getting in to the solar market, and soon, solar energy could play more than a bit part in the energy mix.

Lakeland’s McIntosh coal generator is nearing retirement for multiple reasons. It runs less frequently due to competition with cheap natural gas and due to maintenance outages, especially after a big design flaw was discovered last year. Lakeland Electric General Manager Joel Ivey says that “there’s some Band-Aiding going on, I admit.”

An economic report SACE commissioned pointed out in 2015 that power from McIntosh 3 is more expensive than market power; several examples of clean energy also stacked up favorably next to the plant. On top of that, capital costs between 2009 and 2014 ran over $70 million to keep the plant current with modern regulations.

In 2016 Sierra Club hired a hydrogeologist to look at coal ash storage in Florida. He discovered the situation was so dire that Sierra Club immediately brought the issue to Lakeland Electric’s attention, and to the City Commission that functions as its governance board. Sinkholes are disturbingly likely in the area where McIntosh’s coal ash is stored, with indications that one could be forming under the ash pile. If it does, over a million tons of arsenic- and lead-laden coal ash could wash into the Floridan aquifer that provides drinking water to a large portion of Florida.

So far Lakeland Electric’s management has dismissed the coal ash concerns. You can send a petition to the Lakeland management here.

Lakeland Electric and the City Commissioners are sensitive to concerns about carbon pollution, but they say the decision is down to economics: if the price of natural gas remains below a certain point, it makes financial sense to quit coal; if not, they keep the coal plant online. But in today’s market, there are more choices than just coal or gas.

The first option Lakeland ought to examine is pairing gas with large-scale solar. Lakeland might be able to acquire an existing gas-fired generator given recent trends among Florida’s merchant power producers. Whether existing or newly built by Lakeland, sixty to ninety percent of the cost of electricity would be from the cost of fuel. Using solar as a zero-fuel-cost substitute while dialing down the gas generation is a win-win situation (as we pointed out in comments on Duke’s energy plan in 2016). Gas can be ramped up and down much more quickly than coal, so utility system operators see it as a good match with solar power.

Another option that could tip the scales in the near future is solar energy with battery back-up. Solar energy isn’t equivalent with coal because it can’t be turned on and off at will, but energy storage aims to solve that challenge: the sun charges the batteries, then when the sun isn’t shining, the utility can turn the batteries on. The energy industry has viewed storage as a fast-approaching game-changer for the past few years, and it’s now at a turning point.

In December 2016, a Hawaii utility announced a contract for a combined solar-battery system that will deliver power at just 11 cents/kWh. That’s not quite competitive on the mainland, but it’s a 24% drop in cost from a similar system the same utility contracted just a year before. It won’t be long before Lakeland Electric can project the price of solar plus storage and compare it with the costs of maintaining the McIntosh coal burner.

The choice to keep the McIntosh coal plant online was so close — contingent on a small rise in gas prices — and clean energy technology prices are coming down so fast, that the question of the plant’s future is far from settled. We are glad to see the utility management taking careful consideration, and we hope the conversation doesn’t stop here.