Electric utilities across the country, and in Alabama, are using significantly less coal than they were just a decade ago thanks to environmental regulations and the low cost of natural gas.
But representatives from Alabama Power, which provides electrical service to about two thirds of the state, say that coal will remain an important part of the company’s fuel mix even though many coal units have been shuttered or converted to run on natural gas.
John Kelley, Alabama Power’s director of forecasting and resource planning, said that coal currently makes up about 50 percent of the company’s fuel mix, down from almost 80 percent in the late 1990s.
“While natural gas will constitute a larger share of our fuel mix going forward, we expect coal to remain a significant part of our diverse supply of energy sources for many years to come,” Kelley said in an email.
As for the coal that Alabama Power uses, about 60 percent of it comes from the Powder River basin of Wyoming, according to company spokesman Michael Sznajderman. Another 15 percent is imported, primarily from Colombia, and about 15 percent comes from Alabama coal mines. The Illinois Basin provides roughly 10 percent.
The natural gas used by Alabama Power is purchased system-wide by its parent group Southern Company — which also owns Georgia Power, Mississippi Power, and Gulf Power — so Sznajderman said a specific breakdown was not immediately available, but he said most of the natural gas comes either from the Texas/Oklahoma region or offshore in the Gulf of Mexico.
Some of the easiest transitions from coal to natural gas may already be complete. The company is down from 23 coal-fired units to just 10, but Kelley said the 10 remaining coal-fired units are significantly larger than the ones that have been retired or converted to natural gas.
If the company were to retire or convert these larger units, it would be a bigger bet that the price of natural gas will stay lower than the cost of coal, including environmental compliance or pollution control costs.
The Clean Power Plan, which has been stayed pending review by the court system, could force utilities to clamp down further on air emissions. Alabama Power said last year that a new set of regulations on coal combustion residuals or coal ash will likely force them to close the wet coal ash ponds along rivers, though a timeline has not been disclosed.
Kelley said Alabama Power is planning to issue a request for proposals for renewable energy projects this year, and does plan to add some renewables to the mix over time. Those are likely to be smaller investments since the company believes it already has enough capacity to meet its needs for several more years.
Alabama Power’s Integrated Resource Plan from 2013 says the company does not expect a need for new large-scale generation until 2030. An updated version of that triennial planning document is expected by the end of this year.
Or as Kelley put it, renewable projects would be intended “to fill gaps where renewables are cost-effective or to meet the specific needs of specific customers.”
The situation could change, however.
“Of course, additional changes in environmental regulations targeting coal, significant increases in the price of natural gas or other fuels or technologies – or price decreases – as well as other factors could result in adjustments to these plans,” Kelley said.
“At all times, we are looking at the most efficient and the most cost-effective ways to meet the energy needs of our customers.”
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- On May 12, 2016