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WV needs to prepare for further coal decline

January 11, 2019

While people and politicians like to talk about transforming the electricity grid from fossil fuels to renewable, the fact is that natural gas is the source of choice for new generation. Two reports published this week by S&P Global Market Intelligence, a business-focused news service, document that.

The first report said the amount of gasfired generating capacity added in the United States last year nearly doubled the amount added the year before.

“New gas-fired capacity in 2018 totaled 18,550 megawatts, nearly three-fourths of the 24,808 MW added from all sources. The additions more than offset the 16,900 MW of capacity, mostly coal-fired, that was retired last year. In 2017, gas-fired capacity additions totaled 9,837 MW, about half the 19,367 MW that were added,” said the article written by Stephanie Tsao.

More than half the new generation was added in the PJM Interconnection region, Tsao said. PJM is the regional grid operator for the area from New Jersey and Pennsylvania through West Virginia, Ohio and the eastern half of Kentucky.

It should be no surprise that gas is taking over the power generation business in this region given the development of the Marcellus and Utica shales.

The second story, written by Ashleigh Cotting, said 16,900 MW of U.S. power generation capacity was retired in 2018. That exceeded the 11,569 MW retired in 2017.

Coal-fired capacity made up nearly 70 percent of the capacity retired in 2018, despite efforts by the Trump administration to ease regulations on emissions from coal-fired plants. Gas-fired resources made up another 22.4 percent of retirements, at 3,789 MW.

The amount of coal-fired capacity retired in 2018 more than doubled the amount from the year before, when about 5,000 MW were shut down, Cotting said.

There’s a caveat in all this. Not all coalfired capacity is used at any given time, so the amount of power actually generated by coal could be less than capacity. The amount of capacity retired does, however, show that less power is being produced by coal — not that this is a surprise.

The coal-fired capacity that is being retired is not being replaced by coal. According to data from the U.S. Energy Information Administration, only three coal-fired power plants are being planned in the U.S. There are small ones in Alaska and Wyoming and a utility-sized one in Georgia. None would use the bituminous coal mined in West Virginia.

Looking into the future, the existing coal fleet is aging. In West Virginia, the newest coal-fired plant is the Longview Power plant in Monongalia. It’s a merchant plant, meaning it is not owned by a utility but instead sells its power on the wholesale market. It began operating in December 2011. The newest before that was Mountaineer in Mason County, which started up in September 1980.

Even the newest coal-burning plants have finite life spans. Many in West Virginia will near the end of their planned lives within the next 25 years. Their owners will have to decide whether the upgrades to keep them in business is worth the investment. There will be economic considerations, and there will be political ones.

Unless the economic, environmental or political climate changes, coal is on its way out as a source of electricity. West Virginia has a window for addressing what its life will be like when the market for power plant coal is gone. Maybe exporting coal to nations that are building coal-fired plants will help. Maybe not.

This could be the biggest threat facing West Virginia’s economy in this generation. The markets are speaking. If our political leaders are listening, they aren’t acting like it.

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