How Cheap Is Coal?

Guest Blog | September 4, 2012 | Coal, Energy Efficiency, Energy Policy, Utilities

Remember when coal was king? Just a few years ago the consensus was that coal was cheap and abundant and would remain that way for the foreseeable future. Today, though, coal prices are increasing and becoming more volatile.

Perhaps more important to us here in the Valley, TVA’s existing fleet of coal plants will soon need extensive and costly renovations in order to meet new federal pollution control standards.

Meanwhile, natural gas prices are downenergy efficiency is growing, and renewable energy is a wise investment. We here in the Tennessee Valley are faced with an important choice.

A recently released study may shed some light on that choice. The study takes a look at what it will cost TVA to continue to produce electricity from coal if new federal requirements are met and compares those costs to the cost of investing in energy efficiency.

Synapse Energy Economics, Inc., at the request of the Sierra Club’s Beyond Coal campaign, took a look at the costs TVA will face in order to bring their existing coal plants into compliance with the new federal standards. According to their study, “TVA Coal in Crisis: Using Energy Efficiency to Replace TVA’s Highly Non-Economic Coal Units,” it’s going to cost a lot.

The study’s authors have determined that in order to bring their entire fleet of coal plants into compliance with all the new federal rules TVA will have to spend $12 billion.

That’s a lot of money, true, but what is the alternative? The Synapse study took a look at how much it would cost to replace some of this coal capacity with energy conservation. They relied on a study recently performed by Global Energy Partners on the energy efficiency potential in the Valley. The GEP study, “TVA Energy Efficiency Potential,”  found that the “high achievable” rate for energy efficiency in the Valley would provide savings of over 1% annually. This would give us a reduction in needed generation capacity of 1590 megawatts by 2015 – enough to replace a typical coal plant. According to the Beyond Coal study, “This level of savings would be sufficient to completely replace, for example, the 1,200 MW Gallatin plant, saving an estimated $1.8 billion in retrofit capital costs over the next decade, and ultimately saving consumers at least $2.7 billion between 2012 and 2032.”

Southeastern Utilities Energy Efficiency Program Impacts, 2011

The Beyond Coal study went on to look at what that would mean for your utility bill. If the costs to clean up Gallatin, for example, were added to your bill you might see an increase of as much as $2.50 per month in your utility bill. If the energy efficiency option is pursued the study predicts a decrease in your utility bill of up to $1.00 per month. That’s a $3.50 monthly savings on your bill if TVA pursues the efficiency option instead of the coal plant retrofit.

How realistic is the energy efficiency opportunity? Very! As we found recently, TVA is already ramping up its energy efficiency programs to significant levels, at an attractive cost. In fact, in just two years  TVA has doubled its energy efficiency savings from 0.13% to 0.27%.

So, which would you rather do: pay more for coal or save money with modern, clean and healthy energy efficiency? You decide. Then let your electric company know.


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