Dirty Coal is Getting Priced Out and in the West, Shut Down.

The economics of energy are changing. It’s good news for our health and the planet that it’s cheaper for utilities to buy clean energy -- renewables and efficiency -- than fossil fuels to generate electricity for our homes and businesses.

NRDC’s recent analysis of the under-reported role of energy efficiency – doing more with the same amount of energy or less --has been making a lot of headway: energy efficiency is the most important source of “fuel,” and there are still huge opportunities to save. But that’s not all! The costs of renewable energy are plummeting, too.  Contracts for wind and solar power are coming in at record low prices, with huge potential benefits. Recent bids accepted by utilities for large-scale wind and solar purchases are at historic lows. In fact, utilities in Colorado and New Mexico are buying renewable energy because it’s cheaper than fossil fuel. 

This is a key development worth underscoring: these utilities are required to buy a specific amount of renewable energy under state law, but they are purchasing more than required in order to reduce their use of fossil fuels, because it will save their customers money. 

At the same time, the costs of dirty energy are climbing. In fact, a number of recent reports indicate that dirty energy is a bad investment -- for customers and utilities. The fact that few utilities are willing to invest in new coal plants is old news: over 150 coal plants proposed in the early 2000s were cancelled because the economics didn’t work. New analysis indicates the nation’s aging coal fleet is more expensive than cleaner energy sources.   

In the West, states and utilities have been phasing out coal power for some time in order to avoid paying the cost of increasing maintenance and clean-up. California, Washington, and Oregon all have laws prohibiting new long-term investments in dirty energy: using logic that should be familiar to anyone who has ever owned an old car -- at some point, an old clunker is too expensive to keep up.  These laws don’t prohibit the use of coal, they just require that the climate pollution be controlled before further investments are allowed.  In other words: don’t give the car a new paint job unless you can be sure it can drive. 

Western utilities are abandoning dirty power plants:

Utilities in Washington, Oregon, and California have taken money off the table at a number of major coal power plants across the West in recent years, opting to retire part or all of large coal plants, because clean energy is cheaper. They include:

  • Navajo Generating Station in Arizona  
  • San Juan Generating Station in New Mexico
  • Four Corners power plant in New Mexico
  • The Intermountain power project in Utah
  • Boardman power plant in Oregon
  • Centralia power plant in Washington
  • Reid Gardner in Nevada

And with the loss of California investment in coal, utilities in other states have followed suit. In Nevada, NV Energy supported legislation this year that required exit from Navajo Generating Station and Reid Gardner.  In New Mexico, the governor and Public Service Company of New Mexico supported the partial retirement of San Juan Generating Station.  In Colorado, the Clean Energy and Jobs Act required the replacement of coal with gas and significant renewable energy investments.  In Utah, Rocky Mountain Power has announced it will retire the Carbon Power Plant and the municipal utilities that own the Intermountain Project are coming to terms with the end of an era of selling coal to California.

Emissions limits are coming

With clean energy already beating dirty coal, the Environmental Protection Agency has announced it will, finally, begin regulating climate pollution from power plants. (Electric power plants emit about 2.4 billion tons of carbon dioxide (CO2) each year, or roughly 40 percent of the nation's total emissions.) The agency rolled out the standard for new plants last month: the rule, like the laws in California, Washington, and Oregon, doesn’t pick fuels, it simply requires emissions limits using current technology, such as carbon capture and storage (CCS). EPA expects to release a rule for existing plants in June of 2014. NRDC’s analysis suggests that significant reductions can be made at low cost through increased cost-effective investment in clean energy: in many states, that is already underway. 

Still, some utilities seem committed to throw good money after bad, doubling down on dirty energy rather than investing in more efficiency and renewables.  EPA’s regulations will have to be strong to ensure meaningful reductions in harmful climate pollution. EPA will have to stand up to the fossil fuel industry. Even if dirty energy doesn’t make economic sense, its backers still have a lot of money and political power to spend to preserve the status quo.  

EPA is hosting 11 listening sessions around the country on the rule, beginning this week in New York City and Atlanta. In the next few weeks EPA officials also will be holding sessions in Denver and Seattle.  They need to hear from all of us that transitioning away from dirty energy makes sense for our health, for our kids, and for our wallets.