Volume 89 Issue 38 | pp. 22-23
Issue Date: September 19, 2011

Changes Ahead For Old Power Plants

Coal-fired electrical power plants face an uncertain future
Department: Government & Policy
Keywords: coal, coal-fired power plants, EPA
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Retirement
Dominion Virginia Power will close its 58-year-old, 638-MW Chesapeake Energy Center in response to upcoming regulations, which requires the coal-fired plant to install pollution control equipment.
Credit: Dominion Virginia Power
The coal-fired Chesapeake Energy Center in Chesapeake, Va. The power plant will likely close by 2016. Two of the four units are expected to be shut down by 2015 and the remaining two units likely would be shut down a year later.
 
Retirement
Dominion Virginia Power will close its 58-year-old, 638-MW Chesapeake Energy Center in response to upcoming regulations, which requires the coal-fired plant to install pollution control equipment.
Credit: Dominion Virginia Power
[+]Enlarge
Domination
Coal is the main source of electricity in the U.S.SOURCE: U.S. Energy Information Administration, Form EIA-923, “Power Plant Operations Report”
Electricity generation in 2009 = 3.95 trillion kWh
 
Domination
Coal is the main source of electricity in the U.S.SOURCE: U.S. Energy Information Administration, Form EIA-923, “Power Plant Operations Report”

More than half of U.S. electricity comes from power generators that are more than three decades old, according to a recent report by the Energy Information Administration (EIA), a part of the Department of Energy. These generators include a mix of elderly hydropower dams, nuclear power plants, and coal-fired power plants.

Of this mix, coal-fired power plants are among the most important and the oldest, EIA underscores, noting that some coal units top out at 50-plus years old.

Along with age, these power plants face a new challenge in the form of several health and environmental regulations that the Environmental Protection Agency intends to promulgate over the next 18 months. Most of these regulations have been argued about for years and even decades, and as in the past, they are being hotly challenged by some folks in industry and many in Congress. Others—environmental groups and non-coal-based utilities—say it is about time EPA acts.

Over the years, power from these older coal units has driven the nation’s industrial growth. And coal units remain critical to the U.S.’s future—generating nearly half of the nation’s electricity. Of this capacity, about one-third comes from old, inefficient, polluting coal-fired power plants.

But EPA is implementing eight regulations that could have a profound impact on electricity generation and on these old power plants. The regulations include five rules that affect utility air emissions by limiting nitrogen oxides, particulates, sulfur dioxide, and mercury in addition to other hazardous air pollutants. Two of the regulations would affect water use, and one would change coal ash disposal practices. What would have been the ninth and one of the most controversial, a requirement to reduce ozone emissions, was taken off the table by President Barack Obama earlier this month (C&EN, Sept. 12, page 7).

The costs of implementing these regulations could reach some $12 billion per year, according to a recent analysis by the Congressional Research Service (CRS), which examined the implications of the regulations and the utility industry’s reaction. CRS conducts analysis and research for congressional committees and members.

While implementation costs may be high, they fall far below monetized health benefits, according to EPA. The most expensive proposed regulation, the mercury and air toxics provision, is estimated to cost $10 billion a year, but it would result in some 17,000 fewer premature deaths, 4,300 fewer cases of chronic bronchitis, an 11,000-person drop in nonfatal heart attacks, and 120,000 fewer asthma attacks among children. EPA estimates the benefit of this provision to outweigh costs by five to 13 times. Its analyses held positive benefits for other provisions as well.

In its analysis, EIA found the regulations would hit hardest at several hundred power plants that are more than 30 years old and lack basic pollution control devices, such as air emissions scrubbers to remove particulates and sulfur dioxide. It is unclear what utilities might do if the regulations are enacted.

The utilities could lay out the money, make the changes, and keep the old units running. They could take them out of service and shift to natural-gas-fired power plants, renewable energy sources, or greater reliance on efficiency to replace the lost capacity. Or the utilities may find compliance to be cheaper and easier than they now claim, which has proven to be the case during other regulatory battles.

CRS notes that many of the regulations have been in planning for decades, and despite industry opposition, many owners of newer coal-fired plants have already made changes that will comply with some of the regulations. Owners of most pre-1970s plants, however, have not.

Despite having choices, large utility owners have pointed to the costs and time needed to make such changes and have warned that if EPA moves ahead with the regulations the reliability of the overall U.S. electric system could be threatened.

Edison Electric Institute (EEI), an association of investor-owned electric utilities, concluded that EPA regulations would cause the unplanned retirement of 17 to 59 gigawatts of coal-fired electric capacity, about 5 to 19% of total U.S. coal-fired electric capacity, which is 316 GW. They want the regulations to be delayed or modified to avoid the loss of this capacity.

Other advocates for electric utility and coal interests agree and are similarly critical of the proposals. They are joined by some members of Congress—particularly House of Representatives Majority Leader Eric I. Cantor, a Republican from the coal state of Virginia—who support a rollback of these proposed regulations. Cantor has promised to make opposition to the regulations a key part of his congressional agenda (C&EN, Sept. 5, page 13).

Some 117 GW of coal-fired capacity comes from the oldest plants that have no air pollution scrubbers installed or under construction, according to EIA. They are likely to be the first candidates for retirement. Generally, many of these are old, poorly performing smaller units that are operated infrequently—when peak power is needed and demand is high. According to EIA, there are nearly 900 or so of them, compared with 400-plus larger coal-fired power plants operating with scrubbers. However, the old ones are important when a jolt of peak electricity is needed.

Most of these older plants began operating between 1940 and 1969, before the enactment of the 1970 Clean Air Act, the first major air pollution law, notes CRS. Through compromise provisions in that act and subsequent amendments, Congress allowed the plants to continue operating well beyond their expected operating lifetimes of 30 years and as they were first designed.

EPA estimates that the impact of its regulations could lead to the retirement of 10 GW of electric capacity, much less than EEI’s guess. In between is a much-cited projection by analysis firm ICF International that about 40 GW could be lost because of shutdowns—a reduction of 1 to 5% of the nation’s total electricity-generating capacity.

Regardless of the exact amount of lost capacity, utilities argue that this will have a significant impact on peak loading adjustments that are needed to meet demand when energy use is high.

CRS presents data showing that these older units are in operation only about 40% of the time, however, and that by shifting among generators, the U.S. has ample reserve capacity through other generation sources to make up for their loss.

Both CRS and EIA add that the future of the older coal plants may be determined more by the availability of cheap and plentiful natural gas than by the new regulations. The transition to gas is likely to continue with or without the regulations, they note.

New coal-powered units are more expensive to build when compared with new natural gas units, EIA notes. And with lower construction and fuel costs, coupled with environmental benefits—natural gas emits virtually no sulfur dioxide and less nitrogen oxides and carbon dioxide than coal—combined-cycle gas plants are an attractive alternative to replace retired old coal-fired plants, EIA says.

From 2000 to 2009, about 190 GW of natural-gas-fired capacity was added by the U.S. electric power sector, EIA says, increasing the nation’s total capacity by 4% by 2009. The natural gas share of generation grew to 23%—the highest level since 1970. This generation share is expected to increase to 25% by 2035, by which time EIA predicts another 135 to 154 GW of natural-gas-fired capacity will be added.

In contrast, EIA projects few new large, centralized coal-fired power plants in the future. But it says coal use would still increase as a result of greater use of existing coal-fired capacity. Its share of total generation would fall, however, as a result of more rapid increases in generation from natural gas and renewables.

While the regulations remain in flux, several utilities have already announced recent plans to shut down old coal-fired power plants. Duke Energy, American Electric Power, Tennessee Valley Authority, Southern Co., Luminant, Progress Energy, and Dominion Virginia Power have announced future retirements of at least 16 GW of capacity. Last year, EIA notes, some 48 power plants with a combined capacity of 12 GW were retired.

Pressure to clean up coal plants also creates opportunities for renewables and other energy alternatives to step in. For instance, the American Council for an Energy-Efficient Economy, a nonprofit organization that advocates industrial efficiency, urges more emphasis on efforts to curb electricity demand. In other words, rather than add more generation, ACEEE wants companies to cut their demand for electricity. In a recent report, ACEEE laid out a proposal that, it says, could result in replacing much of the potentially lost 40 GW through greater use of combined heat and power industrial systems and through recovery and use of wasted heat generated in manufacturing processes.

The ACEEE report, which was strongly endorsed by the American Chemistry Council, a chemical industry trade association, notes it is cheaper and faster to make industrial process changes for energy efficiency than it is to build new power plants.

Welcoming the regulations are environmental groups that are pleased to see the long delay coming to an end. Regulations will close a loophole and provide a spur for cleaner and more efficient generation technologies by setting a floor for acceptable emissions into the future, says Frank O’Donnell, president of Clean Air Watch, an environmental group.

“This fight has literally been going on for more than three decades,” notes O’Donnell. “It goes back to 1970, when the Clean Air Act became law.”

O’Donnell points to an agreement between the Clean Air Act’s advocate at the time, Sen. Edmund Muskie (D-Maine), and its detractor, Sen. Jennings Randolph (D) from the coal state of West Virginia. The compromise resulted in two air pollution standards—one for operating old plants and one for new ones. When the act was amended several times in later years, versions of the compromise stuck and the old plants continued operating without adding modern controls.

The new regulations, O’Donnell says, are a step in the right direction. “Finally after 40 years, we will have some clarity about what the standard of performance should be for old coal-fired power plants.” ◾

 
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