Category Archives: Coal

Trump Coal Obsession
 Largely Irrelevant
 To Electric Utility CEOs

The Trump administration’s obsession with the coal industry has driven many of its early energy and environmental policy initiatives—with the Energy Department’s thinly veiled baseload power plant review just the latest in a string of efforts to buttress the troubled sector. But none of these policies are going to change coal’s central problem: The utility industry, far and away its largest customer, is steadily moving away from the black rock. This transition won’t happen overnight, but the direction is clear, as a close review of recent utility executive statements and company publications clearly demonstrates.

Consider the message delivered by Allen Leverett, president and CEO of Milwaukee-based WEC Energy Group, in the company’s latest annual report:

                “I also believe that some form of carbon emission regulation is ultimately inevitable. As the regulation of carbon emissions takes shape, our plan is to work with our industry partners, environmental groups and the state of Wisconsin to reduce carbon dioxide emissions by approximately 40 percent below 2005 levels by 2030.

                “In 2016, about half of the electricity we delivered to our customers was derived from low- or no-carbon sources such as natural gas, nuclear fuel, wind farms and hydroelectric facilities. However, we want to continue to make progress in this area. Relatively flat electricity demand growth, coupled with natural gas and coal economics, has driven us to re-evaluate our generation portfolio. Taken as a group, I want any changes that we make to reduce costs, preserve fuel diversity and keep us on a path to reducing our carbon emissions.”

In other words, there will be no new coal generation in the WEC fleet, and the company’s reliance on the fuel, currently around 50 percent of its needs, is going to drop. In particular, the company has plans to build new natural gas-fired generation in the Upper Peninsula of Michigan and close its five-unit, 359 megawatt Presque Isle facility there, which now burns roughly 1.2 million tons of coal annually according to the company, whose two electric utility subsidiaries serve more than 1.5 million customers in Wisconsin and the UP of Michigan.

Or consider the comments made by Lynn Good, chairman, president and CEO of Duke Energy, during the Charlotte, N.C.-based company’s annual meeting earlier this month:

                “By retiring coal plants and bringing on more natural gas and renewables, we have already reduced our carbon emissions by nearly 30 percent since 2005. Today, we are among the top five companies in terms of renewable capacity, and we are committed to doing more.

                “We have set a new goal to reduce our carbon emissions by 40 percent from the 2005 level by 2030.”

Continue reading Trump Coal Obsession
 Largely Irrelevant
 To Electric Utility CEOs

Energy Secretary Perry
 Badly Misses Mark
 In Grid Study Memo

Energy Secretary Rick Perry clearly has bought into the fact-challenged approach to governing perfected by President Trump and now practiced almost daily by White House spokesman Sean Spicer: In a speech last week to the National Coal Council, Perry told the group that one of key problems from the Obama administration’s energy policies is “that we’re seeing this decreased diversity in our nation’s electric generation mix.”

Unfortunately for Perry, the fact is that the nation’s electric generation mix actually is much more diverse today than it was eight years ago. According to data from EIA, the independent statistics arm of his new agency (the same one, of course, that he forgot he wanted to eliminate back in the 2012 presidential campaign), the U.S. grid is demonstrably, provably and irrefutably more diverse now, as the chart below demonstrates.

Coal’s share of the market, as everyone knows, has fallen, dropping from roughly 50 percent of the total in 2008 to just under a third today. In its place, the amount of gas generation has shot up, and now accounts for about a third of the nation’s generation total as well. The rest of coal’s lost market share has been gobbled up by the wind and solar industries, with nuclear largely unchanged. Objectively, a system where two sources account for roughly 33 percent of the total, a third 20 percent and a fourth 15 percent is significantly more diverse than one with a single resource accounting for almost 50 percent of the total, and the next two at roughly 20 percent each.

Secretary Perry may not like the changes, but to say that something is not what it is, indeed, to say that it is the opposite of what it is, borders on the irresponsible. Worse, the secretary is using this and a number of other questionable assumptions as the basis for a department study looking into issues surrounding the “long-term reliability of the electric grid.”

Continue reading Energy Secretary Perry
 Badly Misses Mark
 In Grid Study Memo

Vanishing Demand,
 Not Trump Coal Crusade
 Is Real Issue For Utilities

It’s planning time in the electric utility industry, and a raft of new reports make two points abundantly clear:

  • Efforts to “save” the coal industry are bound to founder since utilities, as a group coal’s largest customer by far, have moved on and are planning a cleaner future in which the black rock’s current share of the electricity market, in the low 30 percent range, is as high as it’s ever going to get.
  • Vanishingly small increases in demand (and the occasional outlook for declines) will be a major issue for the industry in the next 10 years.

In its latest 10-year power plant siting plan, for example, Florida Power & Light pointed out that it was continuing its efforts “to move away from coal-fired generation.” In total, the utility said it planned to take 1,216 MW of coal-fired generation off its system by the first quarter of 2019. (FPL’s site plan can be found here.)

Similarly, in its recently filed 2017 integrated resource plan (IRP), PacifiCorp, the sprawling utility holding company that serves 1.8 million customers in six western states, said its preferred generation portfolio going forward “reflects a cost-conscious transition to a cleaner energy future.” Through 2028, PacifiCorp said it would be able to meet its system-wide power needs through demand side management (DSM), new renewable (primarily wind) generation and short-term purchases on the wholesale market. Looking longer-term, the company said it planned to shutter 3,650 MW of coal-fired capacity by 2036. (PacfiCorp’s IRP and other backup information can be found here.)

Continue reading Vanishing Demand,
 Not Trump Coal Crusade
 Is Real Issue For Utilities

King Coal Still Rules
 In Trump Team’s
 Alternate Reality

“You’re going back to work.”

With that rhetorical flourish, President Trump signed his much-ballyhooed and loftily-titled executive order “to create energy independence.”

The president’s words—directed to a group of coal miners at the signing ceremony—may have made for great TV (and the president certainly has a knack for that), but that’s about it. The coal mining jobs aren’t coming back, and anyone willing to take a factual look at the current trends in the U.S. electric power sector knows that.

The order, essentially the new administration’s effort  to undo any and all climate change-related plans put forward by the Obama administration (the Clean Power Plan in particular), is chock-full of assertions about the U.S. energy industry that are, at best, little more than wishful thinking. Let’s take a look.

Continue reading King Coal Still Rules
 In Trump Team’s
 Alternate Reality

EIA 2017 Outlook
 Shows Energy Transition
 Will Trump Trump

The Energy Information Administration’s Annual Energy Outlook is always chock full of interesting data, and the 2017 version, released uncommonly early last week, is certainly no exception. For its part, EIA highlighted the prospect of the U.S. becoming a net energy exporter in the near future, a far cry from the import-dependent years that drove policymakers crazy in the late 1900s and early 2000s. But from my perspective, the key takeaways can be found in EIA’s analysis of electric sector market shares in a reference case including the outgoing Obama administration’s climate change-fighting Clean Power Plan and a second case assuming the CPP is withdrawn, as the incoming president and his team have said they intend to do.

For starters, regardless of its assumptions, EIA sees no growth going forward for the nuclear power industry. In both its reference case, which incorporates the CPP and should, as a result, favor the construction of non-carbon emitting generation resources, and its no-CPP case, EIA comes up with the same results. Nuclear generation is expected to decline slowly from now through 2040—falling from 797 billion kilowatt-hours in 2016 to 701 billion kwh in 2040 as units are retired (either due to economic or age-related reasons) and no new reactors (save the four currently under construction in Georgia and South Carolina) are brought online.  [Charts showing the generation outlook in both cases are included below; the complete EIA Outlook can be found here.]

Continue reading EIA 2017 Outlook
 Shows Energy Transition
 Will Trump Trump