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.