Commentary: Coal plant retirements could devastate power grid resiliency

Matthew Kandrach
Consumer Action for a Strong Economy
Matt Kandrach

There is growing alarm over the loss of America’s baseload sources of electricity. Coal and nuclear power plants are being pushed off the grid by a three-headed monster of heavily-subsidized renewable energy, the legacy effects of overzealous regulation, and a glut of natural gas. 

Since 2010, more than 600 coal-fired generating units in 43 states have retired or announced plans to retire. Nearly 70 Gigawatts of coal capacity (enough to power 50 million homes) has already been retired, and half of the nation’s commercial nuclear fleet is facing financial pressure. 

While wholesale electricity costs have actually fallen in some regions of the country over the past few years, it appears we’re reaching a tipping point where a further loss of coal and nuclear capacity could impose a huge financial burden on consumers. 

A new case study by Energy Ventures Analysis (EVA) examined the potential cost of early retirement for three coal plants operating in the nation’s largest electricity market.

The study found that the cost of retiring these three plants would be 15 times higher than providing support to keep them operating. The costs from premature retirement would exceed $2 billion per year.

Conversely, the annual support needed to keep these plants on the grid would total just $130 million, with net savings to consumers exceeding $1.9 billion annually. 

While EVA’s study examined only three plants in a key market, there are clear warning signs about what further coal retirements will mean to consumers nationwide. 

Failing to preserve baseload power could mean billions of dollars in additional energy costs for consumers, profoundly impacting our economy. Consider that higher gasoline prices have already eaten away 40 percent of the benefits from recent tax cuts. 

Coal plants provide our most resilient source of electricity. Not only do they offer on-site fuel security, but they carry the heaviest burden when energy demand spikes. 

Wind and solar generate power only when conditions are right. Nuclear power plants run full-out, all the time. But they can’t ramp up additional power generation when demand spikes.

Natural gas plants are fantastic at ramping up and down the amount of power they generate, except during periods of peak demand in the winter — the litmus test for resiliency. 

During the bomb cyclone winter storm that raked the east coast this past winter, half of the region’s natural gas plants couldn’t run because heating demand had swallowed gas supplies. Coal plants were far and away the largest source of resiliency when it mattered most. 

As EVA’s study makes clear, the cost of not taking action to preserve our baseload coal power plants is far greater than providing them with needed support.

The U.S. Department of Energy should act now to bring needed balance to electricity markets before consumers bear the full brunt of a reliability and resiliency crisis. 

Matthew Kandrach is President of CASE, Consumer Action for a Strong Economy, a free-market oriented consumer advocacy organization.