It’s tempting to immediately file this one in the “We Hate it When We’re Right” folder, but there are a few wrinkles to the story. The Tennessee Valley Authority, a federal corporation which operates energy facilities and other land management operations across multiple states, has announced that they will be closing eight coal fired power plants. They will seek to reduce coal sourced energy to 20% of their total capacity and the plants in question will be closed in Alabama and Kentucky. (The latter plants faced some headwinds as Mitch McConnell fought to stop them from closing, but the TVA overruled him.) So what caused this?
The decision was prompted by a combination of environmental requirements, the age of the plants, competition from natural gas and declining electricity consumption in the TVA’s service area…
The pressures on the TVA are the same as those throughout the utility industry. The recent surge in shale gas production has pushed down the price of natural gas, and many utilities around the country are switching to natural gas. Electricity use nationwide has hit a plateau, according to Energy Information Administration figures.
While there were multiple factors leading to this decision, the one at the top of the list was the raft of new environmental regulations. It’s true that most of these plants would have eventually either closed or undergone conversion to natural gas anyway, but only at the end of their projected service life. But they are currently under the gun to install new pollution control scrubbers or shut down. The TVA spokesman cited looming concerns from two other forthcoming environmental rules regarding coal ash and a carbon standard among their concerns. The cost was determined too prohibitive in light of demand, so the plants will close and the jobs will largely be lost.
But to be fair, it is still worth noting that these plants were also the victims of other factors. Natural gas is cheap – and getting cheaper – with no worries about the available domestic supply of the resource for the coming generation. It’s a cleaner source of energy as measured in federal standards, so there’s less pressure from Uncle Sam to operate them. Conversion – or simply demolishing coal plants and building new natural gas plants – is frequently viewed as the best option.
The more curious part of this formula is that demand has dropped in the TVA service area. In specific, they cited a company which enriched uranium for commercial nuclear power plants – consuming huge amounts of electricity in the process – shutting down. But even beyond that one large consumer, the TVA cited a “plateau” in electricity demand over the last four or five years with no projections for an increase in the immediate future. I’d be curious to find out what factors led to that.