Up to 59 GW of aging US coal plant could be replaced cost-effectively: UCS
Washington (Platts)--14Nov2012/547 am EST/1047 GMT
As much as 59 GW of aging US coal-fired generation -- on top of the 41.2
GW already scheduled for closure -- could cost-effectively be replaced with
natural gas-fired, renewable energy or efficiency options rather than being
retrofitted with pollution controls without impacting the grid, according to
a Union of Concerned Scientist study released Tuesday.
The report, "Ripe for Retirement," identifies 153 to 353 coal-fired
generating units that could be shuttered as "economically uncompetitive" when
compared with other low-emission energy resources. These coal units generate
between 16 to 59 GW and represent 1.7% to 6.3% of the total US electricity
consumed in 2009, according to the study.
Powering up more natural gas-fired units, improving energy efficiency
and using more renewable energy would be cost-effective options to strapping
on expensive air pollution control equipment onto aging plants that are seen
as the largest single source of greenhouse gases in the US, the report said.
UCS lists the top five states with coal units "ripe for retirement" as
Georgia, Florida, Alabama, Tennessee and Michigan and the top five generators
operating these units as Southern Company, the Tennessee Valley Authority,
Duke Energy, American Electric Power and FirstEnergy.
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All these energy companies have made significant progress in scheduling
the shuttering of many coal units they have found to be no longer economically
viable, said Jeff Deyette, a UCS energy analyst and report co-author.
Southern Company has also shifted some generation from coal to natural
gas in recent years and run some gas units more and coal less, he said.
"Every region in the country has the potential to more than replace
retiring coal generation by ramping up underutilized natural gas plants,
increasing renewable energy through existing state policies, and reducing
demand through current energy efficiency programs," Deyette said.
Deyette said the retirement of the aging plants would not be required
all at once and proper planning to remove a total of 100 GW would not impact
grid reliability as there is already "an abundance" of generation given
projections by the North American Electric Reliability Corp. of 145 GW of
excess capacity in 2014. Today's gas-fired fleet of about 220,000 MW is only
operating at 39% of capacity, according to UCS.
The cost of replacing the coal units ranges widely, according to UCS.
Existing gas-fired plants can provide electricity at $50 to $55/MWh while
estimates indicate new gas-fired units would generate at $60 to $80/MWh. The
study projected new wind power at $50 to $70/MWh, with the low-end reflecting
the advantages of a federal production tax credit.
The UCS study did not include a composite price for retrofitted coal
units, noting capacity factors, operations, size, fuel types, heat rates and
other factors varied greatly and were specific to individual plants.
However, a 2011 report by the group showed construction costs for
control equipment to reduce sulfur dioxide and nitrogen oxides -- scrubbers
and SCRs -- ranging from $282 to $508/kW for a 500 MW coal plant or $432 to
$790/kW for a 100 MW coal plant.
Costs for mercury and particulate matter control technology, both
baghouses and activated carbon injection construction, could range from
$150/kW to $161/kW, according to that report.
UCS said it used data submitted by industry to the US Energy Information
Administration and the Environmental Protection Agency to determine its
estimates. UCS' analysis assumed a base case price of $4.88/MMBtu for gas
going forward for both existing and new gas-fired combined cycle plants in
its 59 GW projections. Higher gas prices, closer to $6.10, would reduce coal
capacity retirements to about 35 GW.
The New York Mercantile Exchange's 12-month strip for calendar was about
$3.80/MMBtu for 2013 and $4.10/MMBtu for 2014 on Monday.
UCS researchers said they chose to unveil their study in Baltimore
during the annual meeting of the National Association of Regulatory Utility
Commissioners to underscore the need they see for state regulators to work
with utilities toward decisions to retire coal-fired units rather than
spending money retrofitting the plants at significant costs to ratepayers and
"Regulators should require utility companies to carefully consider
whether ratepayers would be better off by retiring old coal plants and
boosting electricity generation from natural gas and renewable energy sources
like wind," said Steve Frenkel, report co-author and director of UCS' Midwest
office. "Spending billions to upgrade old coal plants may simply be throwing
good money after bad."
Frenkel added that "we're not calling for outright closure for all
generation identified in study," but the group recommends that unit owners
fully analyze the economics of their coal plants and such an analysis likely
will lead to retirement decisions over retrofits.
--Cathy Cash, firstname.lastname@example.org
--Edited by Keiron Greenhalgh, email@example.com