As the need for electricity to power the nation’s digital economy grows, coal is no longer playing a primary role, and that’s problematic, because it undergirds the electric grid and is the most reliable source of energy.
Without coal plants that supply base-load power on demand, large parts of the United States, from the mountain states to the mid-Atlantic and southeast, will become more vulnerable to power shortages and increases in electricity costs. With the loss of more than 600 coal units in less than 10 years, coal’s share of the nation’s electricity generating capacity has dropped from almost half in 2007 to 30 percent today, and it’s expected to fall even further.
Rapid decline in the number of coal plants and commensurate growth in natural gas and wind and solar power will result in a loss of fuel diversity. A study by IHS Markit warns that the U.S. is “moving away from the cost-effective mix of fuels and technologies and toward a less reliable, less resilient, and less efficient diversity” energy portfolio and, if nothing is done about it, the cost of electricity would increase by $114 billion per year, the average retail price of electricity would increase by 27 percent, and a loss of reliability could increase electricity outages, resulting in added costs of $75 billion per outage hour.
A sense of urgency is evident in a recent appeal by senior executives at four large utilities for changes in the electricity system that would enable some coal and nuclear power plants to continue operating. Wholesale electricity markets, the utility executives said, need to place a value on the production of large quantities of electricity by coal and nuclear plants around the clock, safely and reliably, when needed. Coal and nuclear plants contribute the fuel and technology diversity that is one of the bedrock characteristics of a reliable and resilient electric sector, the executives said.
With coal, that is just the beginning. Coal has shown the ability to provide additional power during national emergencies. When polar vortexes pushed the grid to its limit during periods of bitter cold, coal plants played a key role in providing resiliency. In contrast, wind and solar power were of no use in meeting demand where it was needed the most. On the peak day of winter demand during the polar vortex in 2018, almost half of the natural gas capacity in the PJM Interconnection covering the midwest and mid-Atlantic could not supply power from natural gas, with 30 percent offline and 20 percent burning oil instead of gas.
The National Energy Technology Laboratory determined that during last year’s unusually cold weather (called a “bomb cyclone”) PJM would have experienced “interconnect-wide blackouts” if coal plants had not been available to meet the increased need for electricity.
Coal, long viewed through the lens of carbonization, has shown the value of its reliability. Sound policies would help preserve the coal fleet. Federal tax subsidies for renewables and state renewable portfolio standards give other electricity sources a significant advantage over coal. In wholesale markets, subsidies for other electricity sources suppress energy prices and make coal-fuel generation less competitive.
Nevertheless, coal’s benefits are reaching electricity consumers and have fewer negative consequences than most other forms of energy. On average, developing new generating capacity with natural gas or renewables is more expensive than continuing to use existing coal generation. A study by IHS Markit shows that the levelized cost of existing coal generation is $40 per megawatt hour, much less than the levelized cost of a new combined cycle natural gas plant at $68 per MWh or new renewables at $82 per MWh.
Unfortunately, in most markets around the country, electricity is still tilted in favor of natural gas and renewables. Policymakers, in other words, need to take another look at coal.
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- On March 18, 2019