More than 260 coal-fired power plants have closed since 2010 due to onerous regulations imposed by the Obama administration, state renewable energy mandates, federal renewable energy subsidies, and competition from natural gas power plants. Science, economics and new political realities say these closures need to stop before America’s electricity supply is dangerously compromised.
Some knee-jerk opponents of coal argue low natural gas prices and low construction costs for natural gas-fired power plants mean more coal plants should be prematurely closed to make way for additional natural gas plants. However, they ignore the advantages of lower long-term fuel costs for coal and the low capital cost of retrofitting older coal plants to burn cleaner and more efficiently.
Fuel-price forecasts published by the Energy Information Administration show the cost of natural gas delivered to the utility sector for electricity generation is projected to rise by 2.1 percent per year (in real 2016 dollars), whereas coal prices are projected to increase by just 0.3 percent per year.
These data indicate coal will be the lower-cost fuel, with natural gas hitting costs of approximately $5 per million British thermal units (MMBTU) by 2026. Coal will be slightly more than $2 per MMBTU. By 2050, natural gas will be 2.6 times more expensive than coal, on an MMBTU basis. Although combined cycle natural gas plants are more efficient than the coal-fired power plants currently in operation, the lower fuel costs offset these differences.
What about air quality? According to a study published by the Institute for Energy Research, existing coal-fired power plants can be upgraded to reduce emissions of sulfur dioxide, nitrogen oxides and other pollutants to levels that fall below all clean air regulations for just $781 per kilowatt (2015 dollars). In contrast, building new combined cycle natural gas costs $978 per kilowatt, according to EIA.
If retaining coal-powered generation costs less and is just as environmentally friendly as natural gas, why are investor-owned utilities shutting down perfectly good coal-fired power plants? The principal reason is most utilities are guaranteed a rate of return on investment, meaning the more they spend, the more they earn. They almost always profit from building natural gas plants and industrial wind and solar plants — even when it means higher prices and less reliable energy for their customers.
Renewable energy plays an important role in this, too. The federal government massively subsidizes wind and solar power, and it does so at a rate that’s many times higher than fossil fuels on a per-kilowatt-of-power-generated basis. This allows wind and solar power producers to charge less, or even nothing at all, for their power. Coal-powered plants can’t compete against this scheme because wind and solar are intermittent power sources, coal or natural gas plants are still needed to provide base-load power generation at night, on cloudy days, and when the wind isn’t blowing.
A third reason coal plants are being prematurely closed is because of Obama-era regulations, such as the Clean Power Plan, which the Trump administration is repealing or revising. Public utility commissions and investor-owned utilities are proceeding as if Hillary Clinton had won the presidential election, not Donald Trump. Many of these regulations are “zombie regulations,” still being enforced even though they have been suspended or repealed. State regulators and lawmakers haven’t received the memo: Obama’s “war on coal” is over.
Critics of coal claim the switch from coal to natural gas and renewables isn’t causing electricity prices to rise, but that’s not correct, either. Average electricity prices rose 51 percent during the period 2000 to 2016, and by 12.5 percent from 2007 to 2016, despite the fact natural gas prices have fallen from approximately $9 per MMBTU in 2008 to approximately $2.67 per MMBTU today. Electricity prices should be falling, not rising, thanks to falling coal and natural gas prices. Much of this increase is due to the premature closure of well-functioning coal plants.
The integration of renewable energy into the power grid could also have deadly consequences. Gordon van Welie, president and CEO of ISO New England Inc., recently told E&E News that New England is highly likely to experience rolling blackouts during the next seven years. Blackouts in the winter can lead to deaths from hypothermia. According to Time magazine, a blackout lasting just 25 hours in New York during the summer of 1977 resulted in arsonists setting more than 1,000 fires and looters ransacking 1,600 stores.
These factors suggest the United States should avoid prematurely retiring coal-fired power plants or foregoing retrofits of existing coal plants in favor of constructing new gas plants. The war on coal is over, and for very good reasons. Consumers pay for and deserve affordable and reliable electricity, not rolling blackouts delivered by politicians and overpaid utility bureaucrats trying to appeal to environmental extremists.