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Coal lobby counters claim that renewables are cheaper with 'imposed costs' study

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Coal lobby counters claim that renewables are cheaper with 'imposed costs' study

Supporters of coal-fired power plants released a new report making the case that existing power resources can more cheaply generate power than new resources such as wind and solar, contradicting other recent reports suggesting much of the U.S. coal-fired generation fleet is uneconomic.

The American Coalition for Clean Coal Energy partnered with the conservative Institute for Energy Research to release a study examining a levelized cost of electricity that includes factors such as "imposed costs" of wind and solar generation, costs of operating existing generation sources and the cost of building and operating new plants. A press release from the organization said this provides a more accurate picture of the operating costs of wind, solar, coal, gas, nuclear and hydroelectric sources.

"This new study is unique because it provides an apples-to-apples comparison of existing and new electricity sources," said Michelle Bloodworth, president and CEO of the American Coalition for Clean Coal Energy. "The study shows that policymakers should carefully consider levelized costs when decisions are being made to retire coal-fired power plants because replacing them with gas, wind or solar could be a bad economic decision."

The report concludes the average levelized cost of electricity from existing coal, combined-cycle natural gas, nuclear and hydroelectric resources are $41/MWh, $36/MWh, $33/MWh and $38/MWh, respectively. That is half of the cost the authors calculated for new wind resources at $90/MWh or photovoltaic solar resources at $88.70/MWh with imposed costs included. The report defines an "imposed cost" as the increase in the levelized cost of dispatchable resources such as coal and natural gas plants that is caused by wind and solar resources reducing the utilization rates of the rest of the fleet.

"Low natural gas prices and subsidies, mandates and private purchase agreements for wind and solar generation (not additional demand or strictly cost considerations) have become the driving forces for most new construction, and for the premature retirement of existing dispatchable resources which are crucial for maintaining dispatchable generating capacity sufficient to meet system peak demand," the report concludes. "We find that, in general, absent external non-economic pressures, the most cost-effective generating option is not to replace existing resources."

The study contradicts reports like a recent study by Energy Innovation and Vibrant Clean Energy that found that about 74% of the existing coal fleet could be replaced by wind and solar resources and result in immediate savings for customers. That report, the authors acknowledged, did not consider lost capital, retirement costs or an analysis of reliability.

Another recent report from Carbon Tracker claims that it costs more to run about 35% of the world's coal power plants than it would to build new renewable generation instead. That figure could climb to as high as 96% by 2030 for existing and planned coal facilities, according to the authors of the report.

The International Renewable Energy Agency suggested in a May report that up to 40% of the existing coal fleet could be outcompeted by new renewable energy deployment in 2020.

"Falling and very low costs of electricity for solar photovoltaic and onshore wind, as well as the cost reductions for concentrating solar power and offshore wind to 2020 and beyond, mean that renewable power is becoming the competitive backbone of the global energy sector transformation," the agency concluded. "These costs declines and the advances in the ability to securely operate the grid with high shares of variable renewables are not only decarbonizing the electricity sector, but are unlocking low-cost decarbonization in the end-use sectors in conjunction with increased electrification."