Analysis: Illinois Does Not Need the Dynegy-Vistra Fleet
Illinois does not need the Dynegy-Vistra coal plants in Central and Southern Illinois to keep the lights on, according to a new analysis commissioned by NRDC and Sierra Club. The analysis also concludes that replacing these plants with renewables and gas can lower utility bills for Illinoisans and improve public health. The study thus confirms that these coal plants should not be subsidized as they would lock Illinois in a costly coal future without providing additional benefits.
Across the Midwest, states are reaping the benefits of renewable energy and are taking swift measures to move away from coal and towards clean energy. Illinois lawmakers now have a choice: they can either build on the progress that the state is already making towards a cleaner energy sector or lock it into a coal-reliant future and give away millions of Illinoisans’ dollars to a Texas-based energy giant.
Dynegy-Vistra contrived a problem that does not exist
Dynegy-Vistra’s eight coal plants in Central and Southern Illinois (Figure 1) are struggling to remain competitive compared to newer, cleaner resources and failing to produce the profits that Dynegy-Vistra would like.
To save its coal plants, Dynegy-Vistra has contrived a problem that does not exist, arguing that if its coal plants closed, electricity supply in Central and Southern Illinois would be in jeopardy and the likelihood of power outages would significantly increase. That’s simply not true.
The company relied on this fiction to propose legislation in 2017 and 2018, that would force Illinois to commit to purchasing power from its aging and dirty plants for years and pay a premium for it, a move which the Environmental Defense Fund estimates would add $400 million per year to Illinoisans’ utility bills.
Retiring Dynegy-Vistra’s coal plants would lower electricity bills and deliver cleaner air
It is astonishing that Dynegy-Vistra has failed to conduct any modeling or in-depth analysis to support its alarmist claims. In contrast, the new analysis by Vibrant Clean Energy (VCE) has confirmed what consumer and clean energy advocates have repeatedly argued: that the Dynegy-Vistra plants could be reliably replaced with other resources and should not be subsidized.
The analysis relies on a model also utilized by the Midcontinent Independent System Operator (MISO)—the grid operator for the Midwest region—in a number of studies. The aim of the analysis is twofold. First and foremost, it aims to evaluate whether the Dynegy-Vistra plants are necessary to the reliable supply of electricity in Central and Southern Illinois. Second, it further evaluates the impact of the Dynegy-Vistra plant retirements on electricity bills in Illinois by varying the capital and operating cost assumptions for the coal plants in the two main scenarios analyzed. Here’s a summary of the top findings of the report:
The Dynegy-Vistra coal plants can be reliably replaced with cheaper and cleaner resources
Directly refuting Dynegy-Vistra’s claims, the modeling shows that the eight Dynegy-Vistra plants can be retired in the near-term (by 2025) without adversely affecting the reliability of the electricity supply in Illinois. The eight coal plants can be reliably replaced with a mix of cheaper resources- including new solar and wind projects which, in large part, will be driven by the Future Energy Jobs Act - a legislation passed in late 2016 (Figure 2). VCE also found that even in a worst-case scenario, where all eight plants close between 2017 and 2025 and very little wind and solar capacity is added in Central and Southern Illinois, the state can still reliably replace the Dynegy-Vistra plants by importing modest amounts of power from Northern Illinois and reducing its own electricity exports.
Illinoisans will pay lower electricity bills compared to what they pay today
Replacing Dynegy-Vistra’s coal plants with cheaper and cleaner resources would reduce electricity prices for Illinoisans. VCE’s analysis shows that, by 2030, Illinoisans could pay up to $4 less on their monthly utility bill compared to 2017 and save up to $14 billion if the Dynegy-Vistra plants were replaced with wind and solar generation, between 2018 and 2030! (Figure 3)
The Dynegy-Vistra coal plants are, on average, more than 50 years old. They are becoming increasingly inefficient and will require retrofits to keep them running. In contrast, wind and solar farms are not only getting increasingly cheap; they are now the cheapest investment in new capacity in the Midwest. Just ask Ameren Missouri’s CEO who stated that “because of significant advancement in technology, harnessing wind is less expensive than other forms of new generation." And in some cases, it’s even cheaper now to retire an existing plant and replace it with new a wind project.
Public health would significantly improve in Central and Southern Illinois
Half of the Dynegy-Vistra coal plants in Central and Southern Illinois lack crucial emissions controls and are reportedly contributing to serious respiratory problems in nearby communities. A transition to clean energy would significantly improve air quality and public health in throughout Illinois. Now THAT’s a breath of fresh air.
VCE’s analysis shows that particulate matter emissions from the power sector in Illinois are nearly zeroed out by 2030 if Dynegy-Vistra’s plants are allowed to close, while emissions of other harmful pollutants like nitrogen oxides (NOx) and sulfur dioxide (SO2) are reduced by 80 to 90 percent, respectively, by 2030 compared to 2017. These pollutants are known to cause and contribute to severe health impacts, including asthma, cancer, and heart and lung disease. Additionally, carbon dioxide (CO2) emissions are also slashed by 80 percent by 2030, delivering important climate benefits and positioning Illinois well for any future regulations on greenhouse gases.
Renewable deployment can revitalize Central and Southern Illinois
Replacing the aging Dynegy-Vistra plants with renewables can deliver large economic benefits to Central and Southern Illinois, in addition to the electricity bill savings for its customers.
Wind and solar are big job creators and rapidly growing. Illinois can create thousands of jobs for its residents by ramping up investments in renewable projects. In 2016, more than 13,600 Illinoisans were employed in renewable energy generation, and that large workforce reflects the state’s modest investment in renewable energy in 2016. In addition, renewable projects can increase a county’s tax base. Moreover, states that can meet the renewable energy demand of corporations, such as Facebook, General Motors, Anheuser-Bush and other like-minded businesses, have a competitive advantage in attracting them, creating opportunities for new jobs and economic activity. Central and Southern Illinois could and should join its neighbors in attracting this commercial activity.
The future of Illinois’ energy system is at stake, it’s time to move forward
The Illinois General Assembly may consider the massive bailout that Dynegy-Vistra is seeking. The choice, as my colleague likes to put it, is like deciding to buy a 1950’s Studebaker that costs millions of dollars to keep up over its lifetime or a new car with state of the art technology.
The choice is clear and the opportunity too good to pass up, Illinois is on the right track and must keep moving forward.