Energy | Ecotrope

The cost of closing coal plants

Ecotrope | Dec. 13, 2010 6:06 a.m. | Updated: Feb. 19, 2013 1:43 p.m.

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A new report by a market research company looks at the effects of new clean air regulations on coal-fired power plants across the country.

A new report by a market research company looks at the effects of new clean air regulations on coal-fired power plants across the country.

A market researcher released a report today predicting Environmental Protection Agency regulations could cost the industry more than $80 billion and force more coal-fired power plants to close – and that’s without new rules in the works to cut carbon dioxide emissions. FBR Capital Markets also concludes in the report that utilities could actually benefit from the stricter rules, but that consumers will ultimately pay the extra costs of upgrading coal plants to reduce emissions.

Oregon, of course, has its own example of how clean air standards are putting pressure on coal plants to clean up their emissions or close for good. Last week, the Environmental Quality Commission approved a 2020 closure plan for Portland General Electric’s Boardman coal-fired power plant to meet new regional haze regulations. PGE says the cost of electricity will inevitably go up with new emission controls required before 2020 and in replacing the power after the company retires coal.

There are other costs of the plant closure, as well. As The East Oregonian reported, the Mayor of Boardman, union workers at the plant and the local electric co-op are upset about the early Boardman closure, which will cut local jobs and take money from the tax base of Morrow County.

The upshot is a vast improvement in regional haze and air quality, as Boardman is Oregon’s largest single source of air pollution. Long term, eliminating coal-fired power (or at least the resulting carbon dioxide emissions) is a key step in reducing greenhouse gas emissions and curbing climate change.

The cost of upgrading coal plants to meet EPA new standards for nitrous oxide, sulfur dioxide and other haze-causing pollutants, is leading more and more companies across the country to the conclusion that it’s more cost-effective to cut out the coal and replace it with natural gas.

FBR Capital Markets projects up to 70,000 megawatts of coal-fired power will be retired and/or replaced over the next several years. Actual retirements will depend on the cost of natural gas and the severity of new emission reduction rules that could come online between 2011 and 2014.

Even without new carbon dioxide regulations, coal retirements will likely reach 45,000 MW, the report concludes, in addition to the 12,000 MW already announced. (One megawatt powers about 1,000 homes.)

PGE hasn’t decided how it will replace the coal-fired power from Boardman, though the company has promised to consider renewable energy sources, which would help meet the state’s renewable energy portfolio goals.

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