We’ve got a lot of coal plants set to close in America. Based upon whose estimates you look at, we could see 19 and 35 gigawatts of coal plant closures over the next 5-8 years. That could mean a turnover of around 5 percent of our total electricity generation fleet by 2020.
Before you start blaming the Environmental Protection Agency for its over-regulation, consider this: Analysts say that a large portion of those coal plants would retire without new EPA air pollution rules. That’s because our coal fleet is pretty old — the median age of U.S. facilities is 46 years. At the same time, the cost of coal is increasing while the cost of natural gas remains very low, thus encouraging companies to phase out coal plants in favor of natural gas.
Along with the dubious claims that the shift away from coal is a result of “EPA overreach,” one of the frustrating things about the reaction to U.S. coal plant closures is the lack of imagination about what comes next. Some people assume it’s either/or: either you maintain a fleet of old coal plants or you compromise the integrity of the electric grid. It’s a silly fallacy that completely ignores all the other technologies that could take the place of these coal plants — options like baseload and peaking renewables, efficiency, and better grid management tools.
And it doesn’t have to be anything too fancy. A new report out from The American Council for an Energy Efficient Economy (ACEEE) shows how simple approaches to energy efficiency can make up for the fleet of coal plants that will soon be taken offline.
According to ACEEEE, combined heat and power — a process that uses excess heat from electricity generation for air-conditioning or water heating, or uses excess heat to generate electricity — could make up for 100 percent of coal plant closures in certain states:
These conversations [around coal plants closures] have largely ignored an alternative that could meet future demand needs, reduce emissions, and save consumers money: energy efficiency. Energy efficiency offers benefits in addition to its low costs, however. It reduces overall emissions; can be deployed quickly compared to other forms of generation; reduces peak demand, minimizing the need for peaking plants; and reduces the general stress on vulnerable parts of the distribution system.
So instead of cause for alarm, these retirements can be looked at as a unique opportunity to replace what were already old, comparatively inefficient, and dirty electricity generation assets with cleaner, more cost-effective resources. Well-considered in energy efficiency resources like CHP can help utilities meet future demand while reducing overall emissions and costs borne by consumers as well as society at large.
A typical new natural gas-powered CHP system can generate electricity at a cost of 6 cents/kWh, while the cost of new natural gas-powered traditional generation or nuclear-powered generation can range from 6.9 to 11.3 cents/kWh. CHP is not only more cost-effective than traditional centralized generation, but it is also cleaner and more efficient, squeezing more useful energy out of every unit of fuel. CHP can generate electricity and thermal energy at efficiencies of up to 85 percent, while the average electric generation efficiency of U.S. power plants is about 33 percent.
The report looked at 12 key states facing a substantial number of coal plant retirements. While CHP can’t fill in the entire gap in every state (the feasible penetration in states ranges from 2 percent to 100 percent), the detailed assessment of potential shows a massive resource sitting in front of us — 56 GW worth.
These CHP plants, which could be integrated into manufacturing facilities, commercial buildings, or existing power plants, already make up nearly 9 percent of America’s electricity portfolio. They can be run on coal, biogas, natural gas, and a variety of other renewable fuels. It’s a cheap resource available today that we already know how to integrate.
There are some substantial barriers, of course. The major problem is that increasing efficiency may mean less revenues for utilities integrating these projects. In order to spur more activity, utilities may need to be compensated for investing in efficiency, rather than compensated for every unit of electricity they sell. Another barrier is the lack of attention paid to CHP in state-level renewable energy and efficiency targets. By establishing firm targets, states can put in place a legal framework for utilities to make these investments.
The Obama Administration clearly understands the important role that CHP can play in the transition of our electric grid. Last month, the White House announced a goal of 40 GW of CHP over the next 10 years — a target that could bring between $40 and $80 billion of investment in the technology. The Executive Order directs federal agencies to integrate promotion policies and to provide technical assistance for utilities and industrial companies looking to develop projects.
Common sense solutions like CHP are a major economic opportunity for America. Instead of complaining and pointing fingers about the closure of old, dirty coal plants, we should be looking forward and thinking creatively about how we make the transition to a cleaner, more efficient electricity system. For a country that takes such pride in innovation, it’s baffling that this doesn’t get more serious discussion in policy circles.
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Fine, but in Washington state there is little need for CHP. What we have is 2 aluminum smelters and 4 carbon fiber plants, all of which require massive amounts of electricity and just electricity. Oh yes, there are also the 4 server farms in just Quincy alone; I think there is another in the Columbia gorge on the Oregon side. And of course computers require just electricity.
All of the above generate lotsa waste heat. Perhaps someday soon a new generation of thermoelectric devices will recapture some small fraction of it.
Good post. But Lacey, you’ve got to watch your grammar. *whose
Thanks for the catch.
Speaking of Wa state, some of the new wind electrical power turbines recently had to shut down because the grid could not carry both the hydro current from the Columbia and the new wind power. Better grid and transmission lines are needed.
ACEEE’s report is a single technology response to reduction in grid capacity. It is not so simple as the article suggests. There are many assumptions in such a projection that should be made more transparent. With mention of the Analysis Group report, there are other competitive options to retired capacity e.g., demand response (DR) as in the PJM forward capacity market (FCM). But DR options depend on market structures. PJM has a FCM in which DR competes directly with capacity. Other markets (notably MISO)lag in DR development despite 2005 Federal law placing DR on equal footing (in FERC jurisdictional markets, about half the US). Further CHP itself has market barriers across most markets (regulated or “organized” (FERC jursidicitonal)). Ironically, deregulated ERCOT (not in FERC jurisdiction) has low barriers and great CHP penetration, but no FCM for DR like PJM. MISO (with FERC jurisdiction) is very slow to develop to competitive markets in which CHP or DR can develop. Looks like MISO on whole (locations differ) is in large excess capacity, so don’t look for robust CHP or DR soon there, except in a few locations (capacity short, gas convenient, thermal load). While site issues appear to be set aside in the ACEEE report, so are capacity options (DR) and the many market barriers that exist to all of them (EE/DR/CHP/WHR). Further, simple adjustment of regulated utility returns to make the 40GW CHP by 2020 solution come true, brushes both market and environmental realities aside. The ACEEE report should be viewed in context of market and regulatory (economic and environmental) barriers. To get there, we need to get eyes wide open. The Executive Order may help do this if the industrial CHP/WHR user is solicited and heard against the balkanized electricity market and the environmental regulatory challenges we now have.
Critical to remove market barriers to all these forms of clean energy. Indeed, electricity markets and regulations are complex, thorny beasts.
So which knots should we untangle first?
Goodness I sent a more complex description of German CHP via another mail to you and Joe Romm.
CHP is SOP in Germany and has been since the earliest days of P.G.. The oldest still existing CHP unit is in Linderhof Castle built by Ludwig II of Bavaria. It used a coal fired steam piston engine to generate direct current with a Siemens Schuckert D.C. generator (invented only 3 years prior to that.) with the power going to pointer telegraph lines- (connecting the Kind to Munich) and to carbon arc lighting in several rooms and the theater for Wagnerian operas. The heat from the power plant was also used to heat the building.
Today, shallow geothermic heat pumps, vacuum solar, and supplementary CHP systems are mandated in all new German buildings. (SMART GRID coordinated.) Another law subsidizes replacing gas or oil heating with MART GRID cordinating power heat, hot water units.
(The build out potential there is enormous.)
One system, VW – Lichtblick Utilities, installs gas fired VW-golf engines driving 20 KW generators in multi-family dwellings.
providing heat- hot water, and back up baseline power for wind and solar. SMART GRID coordinated.
I won´t get into the financial structure- the 1st traunch build out- is for 100.000 units each generating 20 KW.- i.e. 20.000.000 KWh. The Vaillant System uses japanese tech- small Honda engines- driving Sony generators- for single family units.
The Whispergen system- uses Stirling motors driving generators. The Buderous system uses fuel cells – and use heat exhauts to heat the building. (Mandatd on new buidlings- subsidized on old ones. Plenty of room to build out- because there are 10 million heatig oil units that have to be displaced- mostly by tri-systems- shallow geothermal- solar vacuum- and CHP- behind it.)
Munich has Europe´s longest and most intensively connected long distance heat hot water grid. Central power was coal and then converted to run nat gas back in the 60s. Space is tight, so it is upgrading with a génerator upgrade to A +++ and putting in big efficient fuel cell units under the Rankine cycle steam generators- for a fuel crell- ranking cycle combined cycle operation. (Plants can be upgraded.) Power plant south ws converted from coal – feeding the CHP long distance heat hot water, to a GaS GE Gas turbine- steam turbine system with a generator and inverter upgrade on the Rankine cycle- as the 65% efficient combined cycle GaS is hooked up to long distance CHP (combined heat power) the full efficiency is close to 100%. Power plant north is also hooked up to the long distance heat hot water CHP system. It uses a sewage sludge methane recapture unit- pumping the gas and the sludge- to a dual furnace high temperature – garbage incineratin plant- (sewage and garbage as power) while also feeding into the CHP long distance heat-hot water system.
That is being complemented by four medium sized dry hot rock geothermal power plants also feeding the buld long distance heat hot water CHP lines. Most Geramn ooiwer plants in large citeis are hooked up to long distance heat hot water systems. Munich´s efficient sy<stems currently save over 5 million barrels of heating oil p.a.. As the Munich expereience shows, even a coal fired plant can be conerted to combined cycle GaS operatoin and hooked up to long distance CHP-