Coal Plants Close with Little Impact on Grid Reliability

Notwithstanding many verbal endorsements from the Trump administration and several preliminary regulatory actions (e.g., a pullback on EPA’s Clean Power Plan and the Agency’s proposed deregulatory amendments to the Obama EPA’s 2016 Coal Combustion Residuals rule), coal-fired energy is not experiencing a renaissance in the United States.

Coal Plant

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The most striking evidence of this was the retirement in early 2018 of three Luminant coal plants in Texas. The plants were old and big, each with over 1,000megawatt (MW) capacity and a collective capacity of 4,273 MW. That accounts for 4 percent of total generating capacity in the operating grid of the Electric Reliability Council of Texas ((ERCOT), the grid operator for most of the state) and a stunning 20 percent of all Texas’s coal-fired capacity, reports the U.S. Energy Information Administration (EIA). Perhaps even more surprising is that the retirements appear to be having an insignificant impact on energy reliability in the state.

Record Heat

Retirements in ERCOT’s grid may legally occur only with ERCOT’s approval. In late 2017 when Luminant proposed the retirements, the grid operator appeared to be untroubled by the prospect despite predicting record high temperatures this summer. ERCOT says it forecasts a summer peak load of 72,756 MW, which, if reached, would be a record as well.

According to ERCOT and the EIA, the Luminant retirements have dropped ERCOT’s summer reserve margin from its “reference” 13.75 percent to 11 percent. While this indicates a smaller cushion of resources to meet summer peak demand, ERCOT announced in April 2018 that it expects to have sufficient generation to meet customer demand this summer. The 11 percent reserve is also nearly two points higher than an earlier prediction that changed after 500 MW became available when mothballed generators were scheduled to be put back online.

The EIA noted that high temperatures in May prompted ERCOT to issue several operating condition notices. “However, the grid operator maintained grid reliability without needing to take any further emergency procedure steps,” said the EIA.

Economically Challenged

In announcing the three retirements—Big Brown, Sandow, and Monticello—Luminant said the plants were economically challenged in the competitive ERCOT market.

“Sustained low wholesale power prices, an oversupplied renewable generation market, and low natural gas prices, along with other factors, have contributed to this decision,” said Luminant.

Emissions Avoided

The Sierra Club welcomed the retirements, pointing out that the Big Brown plant was the nation’s largest source of sulfur dioxide in 2016 and one of the nation’s largest sources of mercury. In 2016, the three Luminant coal plants together emitted a total of 166 million pounds (lb) of sulfur dioxide, 24 million lb of nitrogen oxide, and 21 million tons of carbon dioxide, said the Sierra Club.

“Despite clean energy’s rapid growth in Texas and the profound change in how Texas is powered, companies like Luminant, Dynegy, and NRG and communities like San Antonio and Austin are still collectively burning more coal in Texas than in any other state in the country,” added the Sierra Club.

Jobs Lost

Luminant’s three retirements resulted in the loss of about 850 jobs.

“The Big Brown team has made tremendous operational adjustments to remain viable given the challenging market conditions,” announced Luminant, in conjunction with that plant’s retirement. “However, despite these best efforts, the economics of operating Big Brown do not make it a sustainable option for our fleet.”

EIA’s discussion of closures of coal-fired power plants in Texas is here.

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