TVA Releases Final Integrated Resource Plan

George Cavros | March 4, 2011 | Press Releases

Knoxville, Tenn. (March 4, 2011) — The Southern Alliance for Clean Energy congratulates TVA on setting a new direction for its operations and the region’s environment with the release of its final 20-year plan. SACE calls on the TVA board of directors to adopt the plan with a focus on the recommendations that offer both a win for TVA’s customers and a win for progress toward reducing TVA’s environmental impacts.

“For many years, SACE has pressed TVA to reform its energy and environmental policies with an across-the-board analysis, including meaningful public participation,” said SACE Executive Director Dr. Stephen A. Smith. “Now, key decisions by the TVA board and senior management will determine how beneficial these reform efforts will actually be.”

The final plan leaves the board of directors with four choices, including:

1. The amount of coal-fired generation to idle by 2017. The IRP demonstrates that TVA can safely idle at least 4,700 MW of old coal plant generation, and customers will feel little impact on rates. In fact, TVA’s analysis suggests possible financial savings at this level. In contrast, the lowest level of idling considered by TVA is not the “conservative” choice – idling on the lower end of the recommended spectrum actually would put TVA customers at financial risk.

2. How much to invest in energy efficiency. The highest recommended level of energy efficiency resources in TVA’s plan, 14,400 GWh, is conclusively demonstrated to be the most financially attractive to TVA customers. The IRP shows no evidence in favor of any lower level of efficiency.

3. Whether to pursue additional nuclear generation. Adding two new nuclear units at Bellefonte between 2018 and 2022 remains a risky choice. TVA failed to consider strong levels of energy efficiency and renewable energy in the 2020-2030 timeframe as a possible alternative to building these costly plants.

4. How heavily to rely on renewable energy. The plan shows the shortcomings of TVA’s renewable energy expertise. The range of additional renewable energy even considered for the next two decades is less than TVA has added in the past two years.
In each of these four areas, the TVA board of directors now has a clear opportunity to direct its staff to think big and build toward a better environmental and energy future for the region.

“The board of directors now must decide how to refine this plan. The staff is offering ranges of action – the plan provides plenty of evidence that the highest levels of coal retirements, energy efficiency and renewable energy are the best choices and will make this plan as strong as it can be,” notes Dr. Smith. “The IRP results show that TVA is capable of targeting the upper bounds of these ranges with little difference in cost or risk to its customers.”

“The board of directors also has the opportunity to point out where it would like its staff to improve in preparation for the next resource plan. Quite simply, the plan’s evaluation of the 2020s is not as strong as its evaluation of the current decade,” explained Dr. Smith. “The board has the option to direct its staff to build expertise in renewable energy and evaluate how much further the region can go in eliminating energy waste for the 2020s. With those further steps, the TVA board will be able to reconsider its intentions for the Bellefonte nuclear expansion, and put even more coal plant retirements on the table.” Background
TVA released its Integrated Resource Plan, TVA’s Environmental and Energy Future, for final EPA review today. The IRP serves as a 20-year roadmap and provides direction for the agency’s leadership. The final IRP will be presented to TVA’s board of directors for approval on April 14. This is the first IRP TVA has conducted in over 15 years, although the agency has committed to undertaking IRPs every five years moving forward. SACE Executive Director Dr. Stephen A. Smith served as one of 15 members of TVA’s IRP Stakeholder Review Group, which has been meeting regularly with TVA for 18 months to develop the plan.

The IRP’s recommended strategy as presented to the board will consist of a range of options in several key areas of TVA operation. The strategy calls for :

1. Idling between 2,400 and 4,700 MW of generation at old coal plants by 2017;

2. Increasing between 11,400 and 14,400 GWh of energy efficiency by 2020;

3. Adding new nuclear generation at the Bellefonte facility between 2018 and 2022;

4. Adding between 1,600 and 2,500 MW of renewable energy by 2030.
Coal Plant Idling
The board’s willingness to commit to a high level of coal idling may be most critical to the future of the Valley. “The financial, environmental and human health costs of keeping these outdated coal plants running is extraordinary,” stated Dr. Smith. “The more MW of coal we can take offline and replace with cleaner energy efficiency, renewable generation and even natural gas, the better it’s going to be for the Valley. We strongly encourage the TVA board to retire at least 4,700 MW of these old, dirty, and inefficient coal plants.” Renewable Energy
Renewable energy, however, is one area where the IRP falls woefully short. The 1,600 to 2,500 MW range recommended by the IRP includes the more than 1,600 MW of wind power for which TVA has already contracted. “In essence, that range should read from zero to 900 MW, not 1,600 to 2,500,” Smith noted. “The fact that the nation’s largest public utility might plan to largely ignore the economic development and environmental benefits of renewable energy resources over the next 20 years is ridiculous. It’s a clear indication of the steep learning curve that TVA still needs to climb regarding these important resources.” Energy Efficiency
Energy efficiency fared better, but the range presented by the IRP’s recommended planning strategy still falls short of what TVA could cost-effectively achieve. The shortcomings regarding efficiency are less a result of a flawed planning process than of TVA staff’s unwillingness to rely on energy efficiency as a resource on par with traditional generation resources. “Utilities across the nation are avoiding costly new generation by aggressively committing to energy efficiency,” states Dr. Smith. “TVA hasn’t built the institutional knowledge to feel comfortable relying on this resource. This shortcoming may end up costing ratepayers more in the long run.” Nuclear Power
This increased cost will likely come in the form of unnecessary investments in additional nuclear reactors. “Watts Bar Unit 2 is scheduled to come online in 2013, but beyond that, TVA’s nuclear future is far from certain,” states Dr. Smith. “While everyone at TVA seems determined to get Bellefonte Unit 1 built by 2020 or earlier, there is still a lot of uncertainty about whether the Valley will actually need Bellefonte in 2024 or beyond. There is a strong argument to be made that a combination of less-expensive resources, especially higher levels of efficiency, could delay, or even make completely unnecessary, the construction of Bellefonte. That would save ratepayers billions of dollars and provide significant economic benefits to TVA.”

Despite these shortcomings, however, SACE is pleased to have been a part of the IRP process. TVA’s staff deserves credit for conducting a thorough evaluation of their options and incorporating significant input from stakeholders throughout the process. In all, SACE believes the process will lead to a healthier Tennessee Valley, but that key improvements to the process are necessary in order to maximize the benefits. Dr. Smith concludes, “We look forward to working with the TVA board of directors and staff to address the issues we have identified and put TVA on a path toward national leadership in our emerging clean energy future.”Click here to download our fact sheet on TVA’s Environmental and Energy Future.Click here for more information on the IRP process from TVA. # # # Southern Alliance for Clean Energy is a nonprofit organization that promotes responsible energy choices that create global warming solutions and ensure clean, safe, and healthy communities throughout the

1 These ranges include projects to which TVA has already committed, including Watts Bar Nuclear Unit 2, the idling of 1,000 MW of coal generation announced earlier this year, and the contracts for 1,625 MW of out-of-Valley wind generation.
2 “GWh” stands for gigawatt hours, a measure of actual generation, as opposed to MW, which is a measure of capacity.