Coal disappears in the heartland as renewables get cheaper
Coal has long been the fuel of choice in the Midwest. But two utility announcements this week highlight the change underfoot in the heartland: Coal is in retreat, and renewables are stepping in to fill the void.
In Indiana, Northern Indiana Public Service Co. (NIPSCO) said it plans to close its coal fleet within the next decade and replace much of the power with renewables. Next door in Ohio, American Electric Power Co. (AEP) released a plan to move forward with 900 megawatts of wind and solar, nearly doubling the capacity now installed in the Buckeye State.
In both cases, the power companies said the adoption of renewables can save consumers money.
The announcements have significant climate implications. While coal has seen its stature in the Midwest reduced in recent years, the region remains disproportionately reliant on the fuel. The shift toward renewables also promises to deliver carbon reductions at a time when President Trump is dismantling environmental regulations in Washington.
“What is striking to me is these are not policy-driven requests to procure renewable energy. Instead, these decisions are being driven by economics, where the utility is saying renewable energy is the least-cost and less-risk option to customers,” said Ben Inskeep, an analyst who tracks the power sector at EQ Research. “What is also notable is utilities are not just requesting permission to swap out their coal plants with natural gas. They’re going straight to renewables.”
NIPSCO’s plan, which is subject to the approval of state regulators, marks a shift for Indiana, one of America’s most coal-reliant states. Only Texas and Illinois burn more of the black mineral, according to federal figures. In NIPSCO’s case, coal accounted for 90 percent of its generation as recently as 2010, though the utility has moved to close some of its fleet in recent years (Climatewire, Feb. 21, 2017).
In moving to close its coal fleet, the NiSource Inc. subsidiary follows in the footsteps of its Midwestern counterparts. DTE Energy Co. and Consumers Energy in Michigan, WEC Energy Group Inc. and Alliant Energy Corp. in Wisconsin, and AEP in Ohio all have plans to reduce carbon emissions 80 percent by 2050, largely by retiring coal plants.
Yet even against that backdrop, NIPSCO’s plan stands out. Where most of its regional peers expect a gradual transition away from coal over several decades, NIPSCO plans to close the last of its five coal units, Michigan City 12, in 2028. The other four would be retired by 2023.
The move makes the Indiana power company the latest utility to conclude that it’s cheaper to install renewables than to continue running coal plants. Xcel Energy Inc. came to a similar conclusion in Colorado earlier this year. Like Xcel, NIPSCO issued a request for proposal from all energy sources. Of the roughly 1,800 MW of coal capacity NIPSCO needs to replace, 1,500 MW will come from solar and storage and 150 MW will come from wind.
“This creates a vision for the future that is better for our customers and it’s consistent with our goal to transition to the best cost, cleanest electric supply mix available while maintaining reliability, diversity and flexibility for technology and market changes,” NIPSCO President Violet Sistovaris said in a statement.
She added, “Retiring our aging coal fleet sooner will cost substantially less compared to our original plans for extending retirements over a longer duration.”
In Ohio, AEP’s announcement stems from a 2015 settlement with environmental groups that called for an increase in renewable generation in exchange for financial support for some of the utility’s coal plants. The Columbus-based power company has since sold off most of its Ohio coal fleet and written off the value of its remaining facilities.
The company’s renewable proposal is a shot in the arm to the Buckeye State’s wind and solar industries, which have seen growth hampered in recent years by legislative debates in Columbus over Ohio’s renewable portfolio standard and a stringent setback requirement for wind facilities.
The proposal calls for 400 MW of new solar, more than doubling the 182 MW of solar capacity installed in the state today. The plan also calls for 500 MW of new wind capacity, nearly equaling the 600 MW now in place.
“The state of Ohio is the No. 1 state in the country for coal plant retirements. The other side of that is it has been very slow in renewable adoption due to the legislative debates,” said Dan Sawmiller, Ohio energy policy director at the Natural Resources Defense Council. “This begins to change that.”
The moves provide a boost to U.S. carbon-cutting efforts. The power sector is responsible for the vast majority of America’s emissions reductions in recent years, and its importance has only grown as transportation emissions continue to slowly climb.
Many greens feared that Trump’s decision to replace the Clean Power Plan with a weaker carbon cap would halt emissions reductions in the states that still boast considerable coal fleets.
Yet the regulatory rollbacks in Washington have been blunted by the combination of cheap natural gas prices, falling renewable costs and flat power demand.
A recent study by researchers at Carnegie Mellon University underscores the climate impact of coal plant retirements in regions like the Midwest. Between 2001 and 2017, the swath of the country including Ohio and Indiana saw the carbon intensity of its power grid decrease by a third.
“These are reductions that a policymaker would have dreamed of getting back in 2001, when coal was 50-some-odd percent of the mix,” said Constantine Samaras, an associate professor of civil and environmental engineering at Carnegie Mellon University. This week’s announcements are likely the result of the companies’ accountants “just running the numbers,” he added.