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Another U.S. Coal Plant to Shutter. Will Renewables and Efficiency Fill the Gap?

By Stephen Lacey  

"Another U.S. Coal Plant to Shutter. Will Renewables and Efficiency Fill the Gap?"

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“We’re estimating that we are avoiding $3 billion of retrofits for a 33-year-old coal plant,” said CPS Chief Executive Doyle Beneby. “We’ve chosen to invest those dollars today in clean sources that are affordable.”

(Chart source: Calpine with data from Energy Velocity and M.J Bradley & Associates)

A municipal utility in Texas said this week that it plans to shut down an 871-MW coal plant within the next 7 years to avoid spending $3 billion for pollution controls. The Deely plant, operated by CPS Energy, has been running for more than 30 years – making it a candidate for environmental upgrades to comply with pending federal standards for mercury and air toxics.

Rather than invest in a new coal plant, however, the company plans on making up for the production loss by investing in 780 MW of energy efficiency capacity and 1,500 MW of renewable energy, including 44 MW of contracts from solar PV plants. Sierra Club issued a statement this week celebrating the planned closure, saying that solar “will replace that dirty electricity and bring clean energy jobs to Texas.”

Sort of. From a Reuters story:

The utility on Monday also announced a 25-year agreement to purchase 200 megawatts of power from the Summit Texas Clean Energy coal-fired plant under development near Odessa.

Construction is expected to begin by early 2012 on Summit’s 400-megawatt integrated gasification combined cycle (IGCC) plant which is designed to capture 90 percent of its carbon dioxide emissions.

Beneby said CPS will replace the Deely output with electricity from the Summit plant, along with additional renewable power and the potential purchase of an existing gas-fired power plant.

The announced closure of the two-unit CPS Energy plant marks the 189th and 190th generators that are set to be retired in the coming years. Recently AEP said it may close up to 6 GW of coal plants and replace those plants with natural gas. These planned retirements mark a major turn-over for the generation mix in the U.S., which is transitioning old coal plants out of the mix and bringing in new natural gas and renewable resources. But how much of that will be new coal?

Figures from a 2010 National Energy Technology Laboratory report show that the future of new coal plants is uncertain in the U.S.

(Chart Source: NETL with data from Ventyx)

What will fill in the gap? The contracts from CPS Energy are likely a good indicator of how that gap will be filled: Some efficiency, a mix of renewables, a good amount of natural gas, and, potentially, some cleaner coal electricity from new plants (if they get built.) According to data from the solar industry, the dropping costs of solar PV make the resource competitive with new coal plants that will be built over the next 8 years. These are solar PV plants in areas with high solar resources, not everywhere in the country. If that’s the case, solar and other renewables will likely make up a larger portion of new contracts.

(Chart Source: SunPower and Solaria with data from Lazard and DOE)

So how much of that will be natural gas? Probably a lot. Independent power producers like Calpine that are invested heavily in natural gas say the resource can easily take the place of new coal. With coal prices rising due to increased exports to China and a glut of shale gas keeping natural keeping natural gas prices low, coal plants are looking like the least attractive option.

(Chart Source: Calpine with data from NYMEX)

Many people in the renewables business are concerned that low natural gas prices will push renewable energy out of the market. But as the above figures show, an increased build-out of natural gas plants will raise the price, making renewable energy more competitive with natural gas plants. As Analyst Sam Jaffe of IDC Energy Insights told Climate Progress in a recent story, an increase in natural gas “should be welcomed” by the renewable energy industry:

If a lot of new NG power plants arrive, then the price will go up, thereby making RE more competitive with NG. Meanwhile, the construction of those new NG plants will cause old coal plants to shut down. RE has a lot of trouble competing with old coal plants that have already been paid for. In five to ten years time, RE will easily compete with NG plants. In the meantime, we’re spewing less carbon for every kWh produced by gas (as opposed to coal).

 

Below are the earlier comments from the Facebook commenting system:

Bill Katakis

Love it that General Electric is building the biggest U.S. solar pv plant, and believes that solar pv will be cheaper than coal in 3-5 years. They’ve spent half a billion to buy smart appliance/grid companies, and see solar innovation as the key reason why it will be cheaper than coal. Solar advances in the lab continue to leapfrog each other in performance, and engineers are bringing those innovations to the mass production lines.

June 24 at 12:26am

Rick Barnes VanLandingham III

Shut down ALL the coal plants! Kill king coal!

June 24 at 1:39pm

Richard Hench

Very good. Market forces are bringing about a necessary change in energy production.

· June 23 at 8:02pm

Mike Roddy

Has everyone forgotten about the Howarth study, which raises the possibility that gas could be just as GHG intensive as coal? Howarth was attacked by a hastily written paper soon after his study appeared, and the media and utilities appear to have said “Whew. Now we can burn gas after all.” This has to be investigated in depth.

June 22 at 9:36pm

janumakonda

Very Interesting post. Yes. Renewables , Energy Efficiency and conservation are the answers.

Dr.A.Jagadeesh Nellore(AP), India.
Wind Energy Expert.
E-mail: anumakonda.jagadeesh@gmail​.com

June 22 at 9:32pm

James Newberry

If renewable supply will be less costly on a LCOE basis (even in our distorted “market”) than burning lithosphere materials within a relative few years, and much less than half the investment lifetime of infrastructure built for decades of use, why do state regulators allow the most costly option? It seems more like some kind of fractured racket.

June 22 at 1:47pm

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