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TVA continues to contemplate coal retirements

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TVA continues to contemplate coal retirements

SNL Image

The coal-fired Paradise power plant in Muhlenberg County, Ky., which TVA is studying for a possible retirement.
Source: Tennessee Valley Authority

The Tennessee Valley Authority is moving closer to deciding whether to retire at least two coal units and is weighing lower load scenarios against U.S. efforts to support coal as it plans for the next two decades.

The TVA is preparing to release a draft of its integrated resource plan, or IRP, which will detail the vision for its generation portfolio from 2019 through 2039. The federal power provider has outlined flexibility, diversity and inclusion of distributed energy resources as overarching priorities to dictate long-term strategy in a half-dozen outlooks the TVA thinks could come to fruition.

Over the past year, TVA executives and officials have also focused on the trend of flat to decreasing demand. This development comes as several TVA coal units near the end of their useful lives and over half its nuclear units approach the expiration of their operating licenses.

The coal units named for a retirement study are the 950-MW Bull Run coal unit in Anderson County, Tenn., which came online in 1967, and the 1,150-MW Paradise coal unit 3, which started up in 1970. TVA President and CEO Bill Johnson has said the facilities are low-efficiency, high-cost assets.

While utilities contemplate the possible benefits of the U.S. Environmental Protection Agency's proposed Affordable Clean Energy rule, TVA project manager Hunter Hydas suggested that such initiatives across the Trump administration could just be a temporary remedy.

"Investing in aging coal assets may have positive returns under current conditions, but what happens if load declines or if new environmental regulations drive significant compliance costs?" Hydas said during a Sept. 10 webinar to update stakeholders on the IRP process.

Hydas noted that every scenario in the TVA's 2015 IRP predicted increasing energy demand, all within the same relative range regardless of sector, economic or regulatory variations. Now, as the power provider prepares its 2019 IRP, all but one scenario sees a decrease in demand, the exception being a population increase in the Tennessee Valley.

One possible model shows that in 2025, the TVA could start seeing a gradual load decline, with capacity continuing to slightly rise. "The top three options" to address the gap between supply and demand "are retirement of existing resources," Hydas said, with those three fuel sources being nuclear, coal and gas. Retirements and generation replacements are both more economic than maintaining ongoing costs, he added.

Jane Elliott, senior manager of resource strategy, said the TVA is "certainly" considering whether to incorporate the concept of fuel security into its IRP and is still determining how to define this aspect of resiliency.

The U.S. Department of Energy in September 2017 asked the Federal Energy Regulatory Commission to issue a regulation that would financially reward coal plants that stored 90 days of fuel on-site. The proposal was opposed by a diverse coalition, including former FERC commissioners, and the body rejected the measure in January.

Electric vehicles and their charging infrastructure are included in the current IRP, though they are not a major focus of this edition, Hydas said.

When asked whether the TVA could join a regional transmission organization or create its own, Hydas said all IRP scenarios assume current market structures, which means any RTO involvement would be outside the scope of current planning.

The TVA is slated to publish its draft IRP in February 2019, followed by a series of public meetings in April 2019 and a vote by the TVA board in summer 2019.