TVA's proposed combustion turbines in Mississippi would be a significant source of carbon and high social costs. Grid-scale battery storage is easily positioned to support grid integration of more renewables.

Only July 22, 2024, the Tennessee Valley Authority (TVA) issued a Draft Environmental Impact Statement (DEIS) for the New Caledonia Natural Gas Plant, a project to be located in Lowndes County, Mississippi. This was done in accordance with the National Environmental Policy Act (NEPA), which requires federal agencies such as TVA to “consider” the effects of proposed projects on the human and natural environment prior to final decision-making.

The project in question is a peaking dual-fuel (fossil gas and distillate fuel oil) plant consisting of six simple cycle frame combustion turbines totaling approximately 500 MW. The stated purpose of the proposed action is to “support continued load growth within the Tennessee Valley in a way that is consistent with the recommendations in the 2019 Integrated Resource Plan (IRP)… while facilitating the integration of renewables onto the grid, thereby advancing TVA’s decarbonization goals. The 2019 IRP recommended the addition of up to 5,200 MW of CTs by 2028…. The addition of CT units to the fleet was recommended to enhance system flexibility to integrate renewables and distributed resources.” (DEIS, p. 3)

The DEIS assesses only two scenarios: building the peaker plant (the Preferred Alternative) and not building the peaker plant (the No Action Alternative). The DEIS states “The Proposed Action aligns with the 2019 IRP.”

TVA is relying on a document that is more than five years out of date. This is fundamentally inappropriate because the policy, economic, and technological assumptions are no longer even remotely accurate and valid.

Furthermore, TVA is currently in the process of updating its IRP – presumably to be released by the end of this month (September, 2024). TVA should not design a project to meet a resource plan need based on a document that is no longer relevant.

SACE filed comments on September 3, 2024 identifying several additional flaws in the DEIS.

1. Battery Storage Is Not Considered as an Alternative Scenario

The DEIS does not discuss battery storage as an alternative, despite the fact that battery storage would meet the need even better than the Preferred Alternative, the 500 MW peaker. If peaking resources are needed in the region due to real-time load growth and the planned addition of renewables, then battery storage should be evaluated for the site. Batteries are far more nimble than simple cycle combustion turbines, and they can perform stabilizing and supportive functions for the grid far beyond just peak power. Batteries are also a better deal for TVA’s ratepayers because 1) they are not subject to fuel price fluctuations and 2) they are eligible for IRA tax credits and direct payments. Further, a battery storage project at this site could probably be constructed and brought online faster than combustion turbines.

TVA based its characterization of battery storage costs on the 2019 IRP, when grid-scale installations were rare. A lot has changed since that IRP was drafted, as illustrated in this chart of Large Scale Battery Storage Additions in the US between 2012 and 2021.

The Energy Information Agency (EIA) expects battery storage capacity in the US to nearly double this year with 14.3 GW being added to the existing 15.5 GW. Our comments catalog several recent battery projects that will replace fossil generation.

2. The New Caledonia Gas Plant Will Increase CO2 Emissions Significantly

The Federal Energy and Regulatory Commission (FERC) does not have jurisdiction over TVA, but they have developed a metric to evaluate the impact carbon emissions from natural gas infrastructure will have on climate change. FERC has stated that “proposed projects with 100,000 metric tons per year of carbon dioxide equivalents (CO2e) emissions will be deemed to have a significant impact on climate change.” (emphasis added)

The Agency states “The operation of the project would result in a maximum direct increase of 531,728 metric tons of CO2e per year based on an assumed maximum capacity factor of 20 percent…. The predicted actual direct increase is 344,077 metric tons of CO2e per year….” (DEIS, p. iv and p. 29)(emphasis added). The proposed project, while not under FERC jurisdiction, would have 3.5 to more than 5 times the CO2e emissions than what FERC deems will have a significant impact on climate change.

TVA attempts to counter this horrifying fact by stating, without any documentation at all, that the combustion turbine project would reduce greenhouse gas emissions by facilitating the integration of renewable generation. NEPA requires that all documents upon which a DEIS is based be made publicly available, and no such study accompanies this DEIS. Battery storage can accomplish renewables integration without any emissions at all.

3. The New Caledonia Gas Plant Will Have a Social Cost of Greenhouse Gases of Over $1 Billion

The social cost of carbon represents “the economic losses that result from emitting one extra ton of GHGs into the atmosphere at a specific point in time.” (DEIS, p. 34)  The US Environmental Protection Agency describes the social cost of carbon as “a comprehensive estimate of climate change damages and includes changes in net agricultural productivity, human health, property damages from increased flood risk, and changes in energy system costs, such as reduced costs for heating and increased costs for air conditioning.” TVA calculated the social cost of carbon for the range of carbon emissions referenced above. For this gas peaker, with a 30 year lifespan starting in 2025 and using a 2.5% discount rate, the Social Cost of Greenhouse Gases ranges from $818,988,368 to $1,082,809,601.

More than one billion dollars in economic losses, including human health.

Back to the Drawing Board

SACE concludes that TVA did not take the DEIS for the New Caledonia Gas Plant seriously. We recommend that TVA withdraw this DEIS and start over with one that considers grid-scale batteries as the Preferred Alternative. At a minimum, TVA should withdraw this DEIS and draft a new one after the finalization of the upcoming Integrated Resource Plan.