U.S. Coal System No Longer Cost-Effective

by Guest Contributor Jeff Spross

U.S. Coal
Image Credit: Union of Concerned Scientists.

Originally published on ClimateProgress

Aging and inefficient plants, competing energy sources, and the looming reality of climate change are all catching up with the coal industry.

According to a new report from the Union of Concerned Scientists — updated from 2012 numbers — as much as 17 percent of coal-fired power in the United States is already uncompetitive, just compared to natural gas and using mid-range estimates.

The report looked at the operating costs for current coal plants, which are older and have largely paid off their capital costs, up against natural gas plants that have also paid off their capital costs. The operating costs also included all the necessary upgrades to bring the coal plants in line with pollution and carbon dioxide regulations. That yielded 329 coal units that are economically uncompetitive, or a total of 59 gigawatts of electricity-generating capacity — 17 percent of the 347 gigawatts of coal power throughout the United States.

That number of uneconomic coal units could also get considerably larger depending on what the future holds. If a price of $20 per ton of carbon dioxide emissions were to be put in place, 131 gigawatts would be uncompetitive. If the production tax credit (PTC) for wind energy is preserved, 71 gigawatts of current coal capacity will be uncompetitive by comparison, versus just 22 gigawatts if the PTC is allowed to expire.

Ripe-for-Retirement-2013-Update-Scenario-Summary-Chart-e1386715451611
Image Credit: Union of Concerned Scientists.

The points about the carbon price and the PTC are especially noteworthy. Right now the economic playing field is tilted in favor of fossil fuels, because their price on the market doesn’t factor in the damage done by climate change.

A price on carbon, through either a carbon tax or a cap-and-trade system, would be the most effective correction. (In fact, most analysis suggests the appropriate price for carbon emissions is considerably higher than $20 per ton.) Alternative policies like the PTC or the upcoming carbon dioxide regulations from the Environmental Protection Agency aren’t as efficient as a direct price, but they approach the same effect.

The reasons these plants are being undercut by other sources of energy are myriad. For one thing, they averaged 45 years in age — well past the 30-year life span for most coal plants. That means they’re less advanced, less efficient, and more expensive to operate. As a result, they’re already run less than other plants for purely business reasons, even before factoring in the climate-related concern that, being old and inefficient, they’re also quite dirty.

Seventy percent of the coal plants the UCS identified were missing at least three of the four major technologies used to control coal’s damage to the environment and human health. Upgrading them to cut down on particulate matter, mercury, sulfur dioxide and nitrous oxide emissions would be considerable, not to mention bringing them into line with the EPA’s carbon regulations.

In 2012, the UCS also pointed to reports on the growth of renewable energy and other projections, which showed the U.S. will have 145 gigawatts of excess electricity-generating capacity by 2014, giving the country plenty of wiggle room to retire the identified coal power and shift to cleaner sources. Not to mention that “uncompetitive” means, by definition, that there’s money to be made by replacing those plants with alternatives.

This article, US Coal System No Longer Cost-Effective, is syndicated from Clean Technica and is posted here with permission.

About the Author

Guest ContributorGuest Contributor is many, many people all at once. In other words, we publish a number of guest posts from experts in a large variety of fields. This is our contributor account for those special people. 😀

Wind Energy Blows Michigan Toward 30% Renewables by 2035

by Silvio Marcacci

A new state analysis finds wind energy is blowing Michigan toward its 10% by 2015 renewable portfolio standard (RPS), and could help reach it 30% renewables by 2035 without reliability or affordability concerns.

The report; Readying Michigan to Make Good Energy Decisions: Renewable Energy was released by the governor’s office this week as the state starts to contemplate what its energy future should look like beyond 2015.

Michigan Renewable Portfolio Standard chart via State of Michigan
Michigan Renewable Portfolio Standard chart via State of Michigan

While a ballot initiative to increase Michigan’s RPS to 25% by 2025 was rejected in 2012, this new analysis undercuts many of the arguments used in that election by showing renewable energy costs falling fast while being integrated into the grid.

Wind Energy Gusts Ahead

Michigan’s current RPS was established in 2008 and requires utilities in the state to achieve 10% of electricity sales via renewables through a combination of new generation, renewable energy credits, and energy efficiency measures.

Put simply, the results have been remarkable. The RPS goals are expected to be met by every utility (except for Detroit’s municipal utility, which is winding down service) and has led to 1,400 megawatts (MW) of new renewable energy generation either in operation or under development.

A staggering 94% of this new capacity has been wind energy, with approximately half those turbines owned by independent power producers selling electricity through stable power-purchase agreements, and the state is about to join the elite “gigawatt club” by generating more than a billion watts of electricity from wind power.

Michigan Wind, Affordable And Reliable

But all this green growth has come with an affordable price tag. By the end of 2013, Michigan power consumers will have paid $675 million in renewable energy surcharges, but that rate is falling fast. Surcharge collections are expected to be significantly reduced or even eliminated starting in 2014 because project costs have fallen to the point of being equivalent to fossil fuel generation.

Since the RPS has gone into operation, wind energy has been the lowest-cost source of renewable electricity, falling from over $100/megawatt-hour (MWh) in 2009 to between $50-60/MWh in 2013.

This drop has mainly come from a doubling of wind farm capacity factors due to improved design, from around 20% in 2008 to around 40% today, at the top of national capacity factor averages.

In addition to falling capacity factors, Michigan’s location within two regional grid markets, MISO and PJM Interconnection, has cut costs. The report notes wind integration costs within these large grid areas are lower than costs for projects outside of them, and MISO reports new forecasting technologies help ensure the influx of wind hasn’t caused any reliability problems – in other words, the lights stay on even when the wind doesn’t blow.

Don’t Forget That Green Economic Boost

Adding all this wind energy has also created an economic boom few government officials could have predicted, but one that has helped the state weather the economic downturn. Consumers Energy and DTE Energy, the state’s two largest utilities, report their renewable energy investments have created 2,500 new jobs.

Wind turbine construction image via Shutterstock
Wind turbine construction image via Shutterstock

Indeed, an entire green industry is growing up around Michigan’s RPS. More than 200 companies now operate in the state’s renewable energy supply chain, ranging from manufacturers, suppliers, and service providers, and communities hosting renewable projects have increased revenues from taxes and royalty payments. In fact, wind tourism is even a growing industry!

Turns out creating economic growth can be clean and affordable.

The RPS “has attracted significant investment to the state and driven job growth,” said Steve Frenkel of the Union of Concerned Scientists.

“Meanwhile, renewable energy costs are far lower than originally anticipated and these technologies are performing better than expected.”

Looking Beyond 30% Renewables

Post-2015 RPS negotiations will happen in the state legislature, not at the ballot box where renewable advocates can be outspent by pro-fossil fuel interests, meaning this report’s non-partisan and unbiased analysis could be the starting point for discussion, not slick commercials.

Indeed, Michigan’s next set of targets could aim much higher than just 10% without looking beyond its borders. The report estimates the state has 61 gigawatts of potential renewable energy resources. “From a theoretical technical perspective, it would be possible to meet increased RPS targets of as much as 30% (or perhaps higher) from resources located within the state,” reads the report.

Sounds like a winning argument. After all, what politician wouldn’t want to vote for cleaner air, greener jobs, and more tax revenue?

This article, Wind Energy Blows Michigan Toward 30% Renewables By 2035, is syndicated from Clean Technica and is posted here with permission.

About the Author

Silvio Marcacci is Principal at Marcacci Communications, a full-service clean energy and climate-focused public relations company based in Washington, D.C.

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