December 12, 2018 Read More →

As PacifiCorp and other analyses point to more coal shutdowns, replacement questions rise

Utility Dive:

The economics of coal took another hard hit in Oregon on Dec. 3.

A report to the Oregon Public Utilities Commission (OPUC) from PacifiCorp confirmed that the bulk of its coal units cost more to run than to close and replace. The analysis joins a host of other analyses finding, among other things, that despite White House efforts to support coal, consumption is decreasing and the fuel is no longer a cost-effective option.

But while closing coal plants early could save money, it would result in capacity shortfalls. Pacificorp sees addressing that challenge as a next step in the process and industry analysts have a number of ideas on how to do so, such as securitization.

PacifiCorp’s analysis marks the first time the utility “has publicly revealed its data showing early coal plant retirements could bring hundreds of millions of dollars in net benefits to customers,” Stanford University Precourt Energy Institute Research Scholar and Rocky Mountain Institute Principal Uday Varadarajan told Utility Dive.

“This more complete analysis can now be made public, with the caveat that reliability challenges, especially for the impacts of closing multiple units, still need to be explored.”

The utility conducted the review of its coal fleet based on direction from the Oregon Public Utilities Commission at the end of last year, and in September, a Washington Superior Court judge allowed the utility to retain privacy of that data.

“Our earlier data could have been taken out of context or misunderstood, and incomplete information could have affected markets,” PacifiCorp Vice President Rick Link told Utility Dive. “This more complete analysis can now be made public, with the caveat that reliability challenges, especially for the impacts of closing multiple units, still need to be explored.”

PacifiCorp’s analysis not only provides critical economic justification for the growing transition away from coal, but also addresses legitimate questions of reliability costs and modeling that more utilities may be able to take example from as coal retirements continue.

Over 133 GW of U.S. coal capacity has been shuttered or is scheduled to be shuttered since 2010. More retirement announcements expected in 2019 and 2020 will leave an estimated 150 GW of operating coal generation, according to the Sierra Club.

Between 14 and 16 GW of coal-fired generation are predicted to retire in 2018, more than doubling last year’s 7 GW, according to reports from Bloomberg New Energy Finance, S&P Global and the Institute for Energy Economics and Financial Analysis.

As PacifiCorp and other analyses point to more coal shutdowns, replacement questions rise

Posted in: IEEFA In the News

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