Many Coal Plants in the Southeast STILL Ripe for Retirement

Guest Blog | December 16, 2013 | Coal, Energy Policy

The Union of Concerned Scientists(UCS) recently released an update to their existing report that identifies many coal units in the Southeast as “Ripe for Retirement.”   UCS re-analyzed the economics of operating coal units compared to the costs of other forms of generation using more recent 2011 data, updating a November 2012 UCS report.  UCS’ new findings are presented in a blog series and the full report can be downloaded here.  By updating its data, UCS was able to determine whether or not uneconomic units identified in its 2012 report remained uneconomic in different market scenarios. Both natural gas and wind energy have become more competitive since UCS released its 2012 report, increasing the amount of coal plants that are ripe for retirement.

Many of the dirty, uneconomic coal units identified in the new analysis are located in our own Southeastern backyards.  UCS’ economic analysis serves as a strong signal that renewable energy can compete in the same market with fossil-fuel based energy sources in the Southeast.  Below, we take a closer look at where these units are located and why these Southeastern utilities would be better off retiring these units, rather than investing in their continued operation.

Alabama Power, the second-largest subsidiary of Southern Company, operates numerous coal units that are uneconomic when compared to the cost of operating other generation sources, such as existing natural gas plants.  Renewable energy sources, like wind farms, are also more economic than many of Alabama Power’s coal-fired generation units.  All of the units at Alabama Power’s Gorgas, Barry, Greene County and Gadsden plants (14 units total) are more expensive to operate that an existing natural gas plant and/or a new wind generation facility that takes advantage of the wind energy Production Tax Credit.

These 14 units represent almost 4,000 MW of coal capacity and emitted almost 12 million tons of carbon dioxide (CO2) into the atmosphere in 2012.  Recently, Alabama has become a hotbed for wind energy activity – with at least four wind farms proposed in the state.  We are hopeful that Southern Company will begin to invest more heavily in wind energy and de-invest in its uneconomic coal-fired power plants. 

Georgia Power, Southern Company’s largest subsidiary, also operates a significant amount of coal-units that are ripe for retirement.  All of the units at Georgia Power’s McIntosh, Mitchell, Bowen and Hammond plants are uneconomic when compared to natural gas and wind powered generation as well as the 2 units that have not been announced for retirement at Plant Yates (Units 6 and 7) – a total of 12 units that represent 5,600 MWs of coal-fired generation capacity.  These plants emitted more than 14 million tons of CO2 in 2012 alone!  Georgia Power recently announced plans to retire about 2000 MWs of coal-fired generation and develop more solar powered generation.  This announcement was surely a step in the right direction, but, as the UCS report shows, there are still more uneconomic, dirty coal-fired units in Georgia Power’s fleet that are ripe for retirement.

Gulf Power, also a Southern Company subsidiary, operates the Lansing Smith plant in the Florida panhandle.  Lansing Smith is a smaller coal plant (340 MW), lacks updated air pollution controls and emitted almost 1 million tons of CO2 in 2012.  In both the 2012 UCS report and the report update, operating the Lansing Smith plant is uneconomic.  In order to comply with stricter air pollution emission standards and upcoming carbon emission regulations, Gulf Power would need to invest significantly to keep the Lansing Smith plant operational.  It is in the best interests of Gulf Power’s shareholders and ratepayers to retire the Lansing Smith plant and spend its money developing more solar and wind power.

The Tennessee Valley Authority has made significant steps towards reducing its reliance on coal-fired power, recently announcing retirement of 3,308 MWs of coal capacity from 3 plants and an “aspirational goal” of 20% reliance on coal-fired power.  However, this 20% coal capacity will likely involve the continued operation of some coal-units that no longer represent the lowest-cost generation choice.

For example, all 3 units at TVA’s Allen plant in Memphis and 7 out of the 9 units at it’s Kingston plant in East TN are uneconomic compared to existing natural gas plants. Additionally, resuming operation of the remaining 2 units at TVA’s John Sevier plant, which are currently idled, would be more expensive than generating power at an existing natural gas plant – like the recently built 880 MW John Sevier combined cycle natural gas plant. 

Renewable energy is becoming increasingly competitive and utilities that realize this fact sooner rather than later will be the true leaders in a clean, energy economy.  As TVA continues to reduce its reliance on coal, we hope that it will reevaluate the economics of its coal fleet and begin to invest more heavily in cheaper, cleaner forms of energy.

UCS’s new report also ranks major national utilities according to how many uneconomic coal units each utility operates.  Not surprisingly, Southern Company and the Tennessee Valley Authority, as well as Duke Energy, make up the top three utilities on UCS’s list.  We will continue to work with our allies and communities within the Southeast to push our utilities to embrace a cheaper, cleaner energy economy.

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