TVA COAL PLANT CLOSURES: WILL TREND IMPACT CCS?

Karen Frantz
GHG Monitor
11/22/13

The announcement last week that the Tennessee Valley Authority is planning on closing eight coal-fired units follows a national trend of shuttering coal plants and may be indicative of what is to come in the future, according to some industry experts. TVA said last week that it is planning on closing the units across three plants that represent more than 3,000 megawatts of generating capacity combined, citing lower energy demands, the relatively low price of natural gas and increasingly strict environmental regulations. The units’ retirement also coincides with a shift by TVA toward a generation fleet of which only 20 percent will be coal, down from 52 percent in 2011. The remaining share will be made of up 40 percent nuclear, 20 percent gas and 20 percent a mix of hydro, renewables and energy efficiency. Michael Regan, senior director of state strategic implementation for the Environmental Defense Fund’s Smart Power Program, said that TVA is not alone, with many other coal plants retiring as utilities respond to market pressures and otherwise challenging trends. “A lot of that is due to the market and the demand for energy,” he said. “But a lot of that is also due to replacement options—renewables and energy efficiency, cleaner and more cost-effective alternatives for producing energy. And that is going to have an impact on the amount of coal burned in this country.”

But Laura Sheehan, senior vice president for communications for the American Council on Clean Coal Electricity, said the closures are reflective of a “very hostile approach to coal” from the Environmental Protection Agency. “This is how companies have to wrestle with this as EPA promulgates rules and regulations that make it hard for them to do business,” she said. She pointed to EPA’s proposed regulations that set greenhouse gas emissions limits for new coal-fired plants as an example, saying they “would essentially establish a ban on any future coal plant,” and also noted that EPA is also preparing its rules for existing coal fleets, expected in June 2014. She added that proposed rules for new plants could halt the advancement of carbon capture and storage, which is essentially mandated for new plants under the rule in order to meet the emissions limits, although she said CCS is not at full scale currently. “If you’re not going to build any plants with CCS technology then why would you invest in the technology?” she said.

Regan, though, disagreed, saying that he does think a portion of retiring coal plants will convert to CCS. “I think that is all dependent upon the age of the unit and the actual demand for power within any given jurisdiction,” he said. “Advanced technologies like CCS and others will allow for coal to have a role. It will just have a role in a sandbox that has more than one toy in it. And so I think the realities for the utilities is determining what role coal should play in their fuel mix based on the demand of electricity and the market competition that’s out there in terms of ways to produce energy.”

TVA: EPA Rules, Market Factors Fueled Decision

The director of environmental policy for TVA, John Myers, said the main reasons for the decision were getting the company’s asset conditions up to speed and competitive natural gas prices, although TVA also cited EPA rules such as limits for mercury pollution as an additional factor. Myers added that the expected rules from EPA for existing coal plants did not help form TVA’s decision, although the company is keeping an eye on what happens. “Right now there’s really not a lot that is out there on exactly how EPA is going to handle [Clean Air Act Section] 111(d),” he said. “So we looked at it, but more on a subjective frame.” He said he was uncertain whether a future rule might force the closure of additional coal units. “It has that ability,” he said, but added: “Right now we’re just going to have to see how EPA steps through that rule. It’s a little premature for us to conjecture on this right now.”