A recording of our October 24, 2017 webinar with UCS report authors is posted here.
The past decade or so has seen a dramatic shift away from coal for producing electricity in the United States. According to a new analysis by the Union of Concerned Scientists (UCS), that trend is set to continue.
The analysis identified 51 gigawatts (GW) of coal-fired generating capacity that is slated to retire or convert to another fuel (mostly natural gas) through 2030. And it found that an additional 57 GW (or 20 percent of the coal capacity that was operating at the end of 2016) is uneconomic compared to existing natural gas. Strikingly, most of those uneconomic coal units are located in the Southeast.
A surprising number of coal plants in our region are also uneconomic compared to new wind power, or even solar energy. And new developments in the wind industry, such as high-voltage transmission lines, could make wind even more accessible than the report assumes.
What the Study Evaluated
UCS conducted a three-part analysis on the transition away from coal-fired electricity: (1) a look at what happened to the nation’s coal-fired generating units between 2008 and 2016; (2) an evaluation of the economic viability of the current coal fleet using an updated “economic stress test”; and (3) an assessment of the demographics of communities living near coal plants. The results of that second portion, the economic stress test, should serve as a wake-up call for the Southeast.
The analysis evaluates the economic competitiveness of the coal generators in the 2016 operational coal fleet compared to current resource alternatives. The economic stress test essentially asks one question: Does a given coal unit produce power at a cost that is competitive with current alternatives? If the answer is no—meaning that it is more expensive to produce electricity from that coal unit than it is to produce electricity from a competing source—then it is considered uneconomic.
The base running costs in $/megawatt-hour (MWh) for each coal unit are compared to several competitive energy resources: existing natural gas combined-cycle (NGCC) plants,* new NGCC plants, new wind power facilities, and new utility-scale solar photovoltaic (PV) systems.
Based on the report from UCS, approximately 8.1 gigawatts of existing coal-fired power plants in the Southeast may be uneconomic compared to new wind energy resources. Those coal-fired power plants generated approximately 22 million megawatt hours in 2016. By SACE’s calculation, if utilities would replace that power with renewable energy (for example, wind power or solar power at $40 per megawatt hour), the region would save about $94 million annually.
Importantly, the UCS analysis represents a conservative estimate for the economic competitiveness of wind and solar resources, because it assumes that the new renewable resources would be built in the same geographic area as the existing coal fired generating units. However, that does not account for the possibility of importing electricity from wind resources in the Plains or solar resources elsewhere in the state or region. Assuming new wind or solar power resources at $40/MWh, we calculate that the total capacity of uneconomic coal units in the Southeast rises from 8.1 GW (according to UCS) to 15.2 GW, and the savings from replacing all these units with wind or solar would rise to over $230 million annually.
Can Southeastern states really get renewable energy at $40 per megawatt hour, or just four cents per kilowatt hour? New reports from Lawrence Berkeley National Lab and the National Renewable Energy Lab show wind power and solar power prices are at some of their lowest levels, and are continuing to drop. In some parts of the country, wind power prices have reached below $20/MWh (2 cents per kilowatt hour) and utility-scale solar power prices have likely hit $30/MWh (3 cents per kilowatt hour).
Over the past few years, wind turbine technology has advanced significantly. Longer blades with taller turbines have increased wind farm power generation, and drastically reduced costs. The Southeast already buys over 3,000 megawatts of wind power. Most of that wind power is imported from nearby states using existing transmission lines. New high-voltage direct current (HVDC) transmission projects would deliver up to 6,000 megawatts of new wind power, from the windiest regions of the country, directly to the Southeast at exceptionally low prices. Major HVDC projects like the Plains and Eastern Clean Line, and the Pattern Energy Southern Cross, are viable options.
With advanced turbine technology, wind farm development within the Southeast is also now a reality. North Carolina recently installed its first 208 megawatt wind farm, and the power is sold to Amazon Web Services. With so many wind energy opportunities, it’s no wonder so many older coal-fired power plants are economically uncompetitive.
Like wind energy, solar power prices have similarly plummeted. As a result, the Southeast solar market has grown from just a few hundred megawatts, to now over 5,000 megawatts of solar power capacity installed, in just five years. There are several more gigawatts of solar power capacity on the way.
Nationally, Georgia has the third most un-economic coal-fired units, which are producing 29% of its overall electricity. Despite 17 units retiring or being converted to natural gas since 2008, the state still has 15 that fail the stress test. That’s all the remaining units not already slated for retirement. All are owned by the state’s biggest utility, Southern Company subsidiary Georgia Power.
Of these, nine are not only uncompetitive with existing natural gas, but also with wind energy: Hammond Steam Generating Station and three out of four units at Bowen Steam Plant, both near Rome in northwest Georgia; McIntosh Steam Plant northwest of Savannah; and one unit at Plant Wansley, west of Newnan near the Alabama border. Georgia Power already purchases 250 megawatts of wind power from Oklahoma.
Plant McIntosh and two of the four units at Hammond are also competitive with solar energy. Georgia Power has been rapidly adding more large-scale solar to its grid; UCS’s results suggest that it will benefit economically by continuing to do so.
North Carolina has the fourth highest amount of power generation coming from sources that are un-economic and may need to be phased out: 24%. The Duke-owned Belews Creek Station near Winston-Salem; Marshall Steam Station near Statesville; and the Mayo and Roxboro Plants north of Durham on the Virginia state line all appear uneconomic compared with natural gas. The newest coal-fired generator in the state, the enormous Unit 6 at the Rogers Energy Complex in Cliffside, is being converted to run flexibly on either coal or gas, while coal-fired Unit 5 was excluded by the UCS analysis because it is being converted to run partially on natural gas, but would also fail the economic stress test compared to natural gas and wind.
The Roxboro Plant is featured as a case study in the report. This currently operating rural coal plant is identified as uneconomic in the UCS analysis. Regardless of whether the plant closes, the experience of residents in Semora, NC illustrates one of the negative impacts of burning coal for electricity: water pollution resulting from the disposal of coal ash. This story highlights the challenges faced by rural environmental justice communities as they try to ensure that ongoing waste disposal and pollution do not pose public health and environmental threats to local residents.
South Carolina has the fifth most generation coming from coal-fired units that failed the stress test. These units accounted for 22% of the power produced in the state in 2016. Every single generator that is not already slated for retirement was found to compare unfavorably with the price of existing natural gas.
Florida has the seventh most generating capacity found uneconomic by UCS’s analysts. Notably, all but one of Florida’s coal-fired generators** failed the stress test, at plants owned by an array of Florida utilities. The coal-fired units at the Big Bend Power Station on Tampa Bay (Tampa Electric), C.D. McIntosh Jr. Power Plant in Lakeland (operated by Lakeland Electric and co-owned with the Orlando Utilities Commission), Crist Generating Plant near Pensacola (Gulf Power), Crystal River Energy Complex on the Gulf coast north of Tampa Bay (Duke Energy), Seminole Generating Station inland of St. Augustine (Seminole Electric Cooperative), and Stanton Energy Center (Orlando Utilities Commission) all failed the stress test, along with one of the two generators at the Northside plant (Jacksonville Electric Authority).
These units collectively only generated 14% of Florida’s power in 2016.
On September 28, after UCS’s analysis was complete but before the report was published, one of the units UCS found to be uneconomic was in fact announced for retirement: Seminole Electric Cooperative plans to close one of its two coal-fired generators within five years.
Two units at Gulf Power’s Crist plant also failed the stress test in comparison to wind and solar power. This plant is part of the Southern Company system, and Gulf Power already purchases low-cost wind energy resources. It is also the last coal plant that will be operated by Gulf Power in Florida. UCS’s results suggest that Gulf may be in a unique position to phase out coal power without adding to Florida’s over-reliance on natural gas.
Alabama generated 11% of its power in 2016 total from uneconomic coal plants and ranked eighth nationally. Of the plants that have not already been announced to retire, all failed the stress test except Plant Miller, the newest and biggest plant. Like Georgia, several of these generators are also uncompetitive with wind: one unit at Plant Barry on Mobile Bay; all three units at Plant Gorgas north of Birmingham; and two out of three units at PowerSouth Energy Co-op’s Lowman plant in the southwest corner of the state.
Alabama Power, a Southern Company subsidiary and operator of all the listed plants except Lowman, already gets 404 MW of power capacity from wind power imported from the plains on existing transmission lines, highlighting the feasibility of wind power purchases.
Combined, wind power and solar power resources are economically viable alternatives to a number of existing coal-fired power plants in the Southeast. Wind power and solar power prices are expected to continue to decline for the foreseeable future, which will increase economic pressure on existing power plants. It is time for Southeastern utilities to seriously evaluate the uncertain costs associated with maintaining coal-fired power plants, especially in light of these exceptionally low cost renewable energy resources.
* For the comparison to existing or new NGCC, UCS assumes that the NGCC unit would run at the same capacity factor as the coal unit under consideration.
** Excluding those that are already announced to retire, as well as Gainesville Regional Utilities’ Deerhaven plant, which is not listed as a coal generator in the database used by UCS.