Coal-fired plant clos­ings in­creas­ing

Re­search shows the plants' cost is the big­gest fac­tor in their de­cline

Tulsa World - - Work&money - By Jack Money

OK­LA­HOMA CITY — It isn't get­ting any eas­ier for the op­er­a­tors of coal-fired power gen­er­at­ing sta­tions to make a liv­ing.

The In­sti­tute for En­ergy Eco­nom­ics and Fi­nan­cial Anal­y­sis, an or­ga­ni­za­tion that con­ducts re­search on fi­nan­cial and eco­nomic is­sues re­lated to en­ergy and the en­vi­ron­ment, is­sued a re­port in Oc­to­ber that states coal-fired power ca­pac­ity re­tire­ments are hap­pen­ing at a record rate this year.

The re­port states the in­sti­tute ex­pects a to­tal of 15.4 gi­gawatts of coal-fired ca­pac­ity will close this year through the re­tire­ment of 44 units at 22 plants in more than a dozen states, best­ing the pre­vi­ous record of 14.7 gi­gawatts that was re­tired in 2015.

It also notes an ad­di­tional 21.4 gi­gawatts of U.S. coal-fired ca­pac­ity is set to close dur­ing the next six years, and re­port adds that it ex­pects that num­ber to sig­nif­i­cantly in­crease, given that fully two-thirds of this year's re­tire­ments were only an­nounced last year.

Cost, the in­sti­tute says, is the big­gest force be­hind coal's de­cline, given that re­new­ables and nat­u­ral gas-fired gen­er­a­tion are be­com­ing cheaper and more flex­i­ble.

Ok­la­homa Gas & Elec­tric Co. is among util­i­ties with coal plants that are be­ing af­fected by to­day's eco­nom­ics.

OG&E, for ex­am­ple, is work­ing to con­vert two of its coal­fired gen­er­a­tors at its Musko­gee power sta­tion to run on nat­u­ral gas in­stead.

The com­pany also spent a $500 mil­lion to in­stall coal scrub­bers at its Sooner gen­er­at­ing sta­tion near Red Rock, with plans to keep us­ing those

well into the fu­ture. It also re­cently asked for new pro­pos­als from power gen­er­a­tors to meet its other needs, and, cit­ing af­ford­abil­ity is­sues, cut a long-time con­tract with an in­de­pen­dent coal-fired gen­er­a­tion fa­cil­ity owned by AES Shady Point in LeFlore County.

Still, the util­ity's top ex­ec­u­tive doesn't see coal go­ing any­where as a power source any­time soon, es­pe­cially in this part of the na­tion.

OGE En­ergy CEO Sean Trauschke said OG&E's coal units are more eco­nom­i­cal than its nat­u­ral gas-fired gen­er­at­ing units, as long as nat­u­ral gas is trad­ing for less than $3 a thou­sand cu­bic feet.

Trauschke said that in part is be­cause plant op­er­a­tors in the Great Plains gen­er­ally have ac­cess to clean-burn­ing coal that is af­ford­able to ship.

He said in­creased re­tire­ments aren't sur­pris­ing, not­ing much of to­day's fleet is decades old. While he ex­pects some com­pa­nies may be de­cid­ing to re­tire older units so they can build new power plants, Trauschke said OG&E tak­ing a dif­fer­ent tact.

Trauschke said the util­ity's costs are 29 per­cent be­low the na­tional aver­age, and said he ex­pects that ad­van­tage to widen, go­ing for­ward. The util­ity will con­tinue to use coal as long as it is af­ford­able for its cus­tomers.

“My view is, I want to make in­vest­ments that keep the eco­nom­ics where we have a com­pet­i­tive ad­van­tage in Ok­la­homa and Arkansas,” he said.

“Our job is eco­nomic devel­op­ment. When we can at­tract in­dus­tries to our ser­vice ter­ri­tory, our economies and com­mu­ni­ties grow, al­low­ing us to spread our costs to more peo­ple and to make that com­pet­i­tive ad­van­tage even wider.”

THE OK­LA­HOMAN FILE

The AES Shady Point LLC coal plant is lo­cated in LeFlore County.

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