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Rising water stress risk threatens US coal plants, largely clustered in 5 states

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The coal-fired Scherer power plant in Georgia is the largest in the U.S. and in an area projected to face increased water stress by 2030. The multiple owners of the plants recently announced they would close one of the plant's generating units.
Source: PRNewsfoto/Georgia Power

Many of the nation's coal-fired power plants, often heavy consumers of water resources, are in areas projected to soon face water stress due to climate change.


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Part 1: Climate impact on water supplies puts squeeze on hydropower
Part 2: Climate change poses big water risks for nuclear, fossil-fueled plants
Part 3: Rising water stress risk threatens US coal plants, largely clustered in 5 states.

Based on an analysis of data from S&P Global Market Intelligence and the World Resources Institute, power generators in Texas, Indiana, Illinois, Wyoming and Michigan operate about 37.1 GW of coal-fired generation capacity in areas projected to face medium-high to extremely high water stress — when humanity's competition for water exceeds nature's ability to replenish it — due to climate change in 2030.

Those five states are home to more than one-third of the 98.2 GW of coal capacity analyzed that falls into those upper-risk categories.

Thus, an aging coal-fired fleet already retiring en masse due to the economic challenges of competing with renewable energy and natural gas-fired generation may come under even more intense pressure due to competition for limited water resources.

Earlier this year, Tri-State Generation and Transmission Association Inc. CEO Duane Highley announced the company would be closing its remaining coal-fired power plants in New Mexico and Colorado as the company shifts to using more renewable energy.

"I'll say it presents an enormous opportunity for all of us, as we think about it," Highley said. "When you look at a typical coal facility, it uses an enormous volume of water, and the fact that that will be liberated and available for other reuse is going to be significant."

About 98.2 GW, or 44.6%, of the operating coal-fired capacity in the Lower 48 is in regions expected to face medium-high to extremely high water stress by the end of the decade . Of the 25.1 GW of coal-fired plants that have regulatory approval to retire, about 62% is in areas projected to face medium-high to extremely high water stress in 2030.

Many U.S. coal-fired plants are already struggling to compete with other forms of generation. As water becomes scarce, disputes around the resource are likely to increasingly factor into energy infrastructure decision-making, said Joe Smyth, a research and communications manager with the Energy Policy Institute who authored a July report examining coal and water conflicts in the American West.

"This is just one more sort of factor that may help push them to make those decisions in favor of closing coal plants and pursue renewables," Smyth said.

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Texas

Texas hosts 11.4 GW of coal-fired coal capacity in areas expected to face medium-high to extremely high water stress levels by 2030.

Southwestern Public Service Co., an Xcel Energy Inc. subsidiary, plans to close its 1,067-MW coal-fired Tolk power plant in Texas by the end of 2032, more than a decade earlier than originally intended because the plant will lack the water needed to continue to operate. In 2019, the company began to reduce its operations at Tolk to minimum load to conserve water and said it plans to continue to do so through 2020. The power plant is expected to be idled during off-peak months starting in 2021 through its retirement.

Concerns about water sourcing also played into the decision to suspend the development of a 1,200-MW coal-fired power plant planned by White Stallion Energy LLC.

Vistra Corp. owns two Texas plants the Water Resources Institute identified as being in areas of either medium-high or extremely high water stress by 2030. Vistra Director of Corporate Affairs Meranda Cohn said water conservation is a key area of focus for the company, and in many cases, Vistra's operations capture water in large reservoirs when it is plentiful.

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"Due to our plant design, with efficiencies and conservation measures in place, we do not see water scarcity as a risk to our Texas coal and natural gas plants," Cohn said in an email.

Cohn added that Vistra's new development efforts focus on renewables and battery energy storage, which do not require any water. The company already plans to retire most of its coal plants before 2030, Cohn noted.

"Importantly, all of these plants have retired or will retire due to poor economics and/or environmental and regulatory challenges, but water scarcity has not been a determining factor," Cohn said.

Indiana

Indiana has roughly 8.6 GW of coal-fired power plant capacity operating in areas facing potentially high water stress levels. According to the U.S. Energy Information Administration, the state consumed more coal than any other in the U.S. except for Texas, using the fuel to generate about 59% of its net electricity generation.

A 2019 report from the Indiana Climate Change Impacts Assessment led by researchers at Purdue University warned that power plants taking in water from rivers and streams to use in plant cooling towers may have to reduce their power generation as climate change increases the temperature of local water sources. Drier summers, another symptom of climate change, can also drive limited water availability, hampering the coal fleet's ability to operate.

Transporting coal is also often done by barge, and too much or too little water can hamper efforts to move or use the fuel. In 2019, record levels of flooding in the Mississippi stymied river transport for months, and too little water could pose similar risks in some areas.

Illinois

In Illinois, companies operate 6.0 GW of coal-fired power plant capacity in areas susceptible to higher water stress. In 2012, Edison International had to temporarily shut down one of its Illinois coal-fired generators during peak summer heat because the water in the cooling pond was too hot.

"You have a situation where we've designed our energy system with this sweet spot of water in mind, where water has to be Goldilocks water," Michael Webber, a professor in energy resources at the University of Texas at Austin and chief science and technology officer at Engie SA, said in an interview. "It's got to be just the right amount of just the right temperature. It can't be too hot or too cold, too abundant, or too scarce. Otherwise, you have problems."

Illinois also illustrates another widespread issue with coal-fired generation as water scarcity becomes a broader concern. A 2018 report by environmental groups, including the Sierra Club and Earthjustice, found that 90% of Illinois' coal-fired power plants reporting data had contaminated groundwater with unsafe levels of one or more toxic pollutants.

Wyoming

Wyoming, the home of the largest coal mines in the country, has 5.7 GW of coal-fired capacity operating in places facing extremely high water stress by 2030.

The Jim Bridger and Naughton coal plants, owned primarily by Berkshire Hathaway Inc., are the largest two industrial consumers of surface water in Wyoming, said Lance Kaufman, the principal economist of Bardwell Consulting Ltd., in April testimony to the Wyoming Public Service Commission. The closure of Jim Bridger and Naughton would unlock water resources with a potential annual value of $293 million for industrial uses or $12 million for agricultural uses, Kaufman estimated.

At the Laramie River Station, Basin Electric Power Cooperative had to buy well water from local farmers and ranchers to keep the plant running for several years between 2004 and 2010, leading to increased operating costs before water levels in the area recovered. Utilities typically pass such increased costs on to customers.

Michigan

A Michigan Climate Assessment produced by researchers at Eastern Michigan University in 2020 warned that climate change increases the risk of flooding, drought, water quality degradation and other concerns in the state. "Unfortunately, climate change effects, inevitably altering important freshwater systems, will likely exacerbate these," the report said.

Three coal-fired power plants sized 300 MW or larger in Michigan operate in areas expected to see high or extremely high water stress levels. The primary owners of those plants, DTE Energy Co. and CMS Energy Corp., have made plans to close a large swath of their coal fleets in the coming years. DTE noted in its 2019 water report to the CDP, formerly the Climate Disclosure Project, that the move would reduce its water-related risks.

A grim outlook

While some coal-fired plants use less water than others, many of the technologies that reduce water usage come with trade-offs, including increased air pollution or reduced power plant efficiency. Fossil fuel companies often push the development of carbon capture and storage technology as a climate solution, but that also generally increases costs and water requirements.

In a market where coal already struggles to compete against natural gas and renewable energy, utilities are largely looking at other sources of energy for new projects.

Randall Atkins, executive chairman of coal producer Ramaco Resources Inc., said in a recent interview that such technology might work overseas and offer export opportunities down the road.

"I'm just not sure that, in the United States, our utility companies will respond to the technology advances and make the investments necessary to really be able to use coal in a greener manner for power consumption," Atkins said.