Thursday, December 1, 2011

This Blog Makes News On Grid Reliability: List of 231 Coal Unit Closures Is News

This blog posted on monday, November 28th the EEI list of announced coal unit closings--231 units through 2022--and it turns out that's news that is also relevant to the controversy about whether the EPA air rules endanger grid reliability. The list had been distributed around Washington DC but apparently had not reached media.  Based on the posting, Inside EPA and news outlets reported on the EEI list, the most comprehensive and credible list of announced plant closings, that also stated the primary reasons for the closings.

The EEI list attributes the closings variously to low-gas prices that make some coal units uncompetitive; decreased electricity demand over time; old-age of plants, with a 1921 plant on the list; and tightening environmental rules. It is a good, well-done document that responsibly addresses an important matter.

A total of 48,000 megawatts of generation is on the closing-by-2022 list. How does that compare to total generation?   America has right now 339,000 megawatts of coal units and more than 1,000,000 megawatts of all forms of generation.  The closings represent about 14% of all coal-fired generation and less than 5% of total generation.

Claims that these closings for a variety of reasons over the next 10 years endanger electric reliability are flimsy and not factually supportable.  The further claim that the Wall Street Journal Editorial board or partisan Republicans make nearly everyday that the EPA rules by themselves endanger reliability are shrill, false political attacks on EPA and President Obama.

Here are a few more facts that expose the lack of factual seriousness of claims that the EPA is endangering electricity reliability.

Each year America builds typically 15,000 to 20,000 megawatts of new generation and so could be expected to build around 150,000 megawatts of new generation by 2022.  Obviously, that is well-more than the 48,000 megawatts of announced coal unit closings.

In addition, demand response is growing rapidly, according to the North American Electricity Reliability Council.  NERC reports that demand response alone increased from 30,000 megawatts to 43,000 megawatts just from 2009 to 2010.  In one year, demand response jumped 13,000 megawatts. 

If one just assumes that demand response reaches the equivalent of 10% of peak demand in 2022, demand response approximately will add about 50,000 megawatts by 2022 or enough by itself to compensate for the 48,000 megawatts of coal plant closings.

On top of these points, one can add the oceans of natural gas that are now available, the large excess generation capacity that exists in nearly every part of the country, and the declining growth rates of electricity demand.

For all these reasons, it is certain that both the 48,000 megawatts of announced coal units closings by 2022 and the EPA air rules do not endanger grid reliability.


  1. John: Maybe you missed the story below. To be fair, even MISO has concerns about the implementation schedule for some of EPA's rules. I have heard similar comments from AEP, Luminant, Southern Co. (EEI members), etc. Concerns are being raised by organizations that don't have a political axe to grind. Even NERC, cited above, has expressed concern about the confluence and timing of the various regulations.

    Many of these organizations have cited a likely labor shortage for retrofitting or constructing new plants to replace these that are closing over a concentrated period of time as the real issue.

  2. Owners of old coal plants that have not joined the 60% of coal capacity that have installed modern pollution controls have a commercial ax to grind. Calpine that owns gas generation supports the rule. Not surprising either.

    Bottom line 48,000 megawatts over 11 years is just not a problem. It is about what you would expect over a 11 year period, given equipment that fully depreciates over 40 years.

    The nation right now has about 140,000 megawatts of excess capacity. Or 140,000 mw capacity over and above the 15% reserve margin required.

    Then we build 15,000 to 20,000 mw per year without breaking a sweat. The US has built 70,000 mw in one year.

    Then we have demand response that is increasing rapidly. A 13,000 mw increase last year alone.

    5 grid operators have said that they would like an individual plant reliability safety valve in the final rule. And then said they expected the safety valve to be "rarely if ever needed." MISO is one of the five.

    For sure there is a financial incentive for owners to keep plants running without pollution controls for as long as they can get away with it. The reliability claim has been used in this situation for the 27 years I have been involved with utility regulation. But here the numbers are clear as I have ever seen.

  3. I was very disappointed to see current DEP Secretary Krancer coming out against the new EPA rules. DEP = Department of Environmental Protection, not Department of Electricity Production, right?

    PA has horrible air quality, much of that coming from plants upwind in Ohio. This stance boggles my mind.