In the Midwest: Wind Up. Coal Down.

January 3, 2014

Click to embiggen


At first glance, a new chart from the U.S. Energy Information Administrationsuggests that coal is not just king in the Midwest’s electricity mix, but still reigns with an iron grip.

Look a little closer, however, and there is change in the works, as shown in a growing green strip on the top of the first graph.

About a decade ago, coal supplied nearly 80 percent of electricity in the central United States. The figure is now dipping closer to 60 percent. That is still far higher than the national average, where coal accounts for slightly less than half of all generation.

Like other regions of the U.S., cheap natural gas generation is mostly taking the place of coal. But non-hydro renewables, primarily wind, are also making a significant dent. The low cost of wind and natural gas has begun to make a dent in coal’s dominance and driven down wholesale power prices in the middle of the country, according to the EIA. Coal producers are also seeing smaller dark spreads, which is the difference between the payment coal-fired power plants get for their electricity and the cost of coal.

Wind will continue to increase as transmission constraints are addressed in the region. Gas could also be hitting a temporary wall because of pipeline constraints, Jameson Smith, manager of regulatory studies at the Midwest Independent System Operator, said last year.

To prepare for the retirement of many old coal plants due to coming EPA regulations, MISO is planning to expand demand response offerings in the region. PJM has also invested in transmission in Ohio to ease constraints caused by retiring coal plants. Transmission upgrades and energy efficiency are allowing some coal plants to be retired without affecting reliability.

It is unclear the extent to which wind will kick coal to the sidelines in coming years, but Denmark’s experience suggests there is no limit.

Power Engineering:

PJM has told FirstEnergy (NYSE: FE) it will be able to retire 2,080 MW of coal-fired power generation without affecting grid reliability, according to a report from the Observer-Reporter in Pennsylvania.

PJM said in August FirstEnergy may not be able to shut the Hatfield’s Ferry and Mitchell power plants because of reliability concerns, but further review on the issue indicated there was a very limited need to keep the plants open, according to the report.

Although the retirement of the units will affect the transmission system, the loss of the capacity can be handled by anupgrade to PJM’s transmission system.


16 Responses to “In the Midwest: Wind Up. Coal Down.”

  1. Peter, you continue to educate and inspire. Keep up the good fight in ’14!
    Margot H.

  2. Peter, Thank you so much for that graph. Midwest coal use is high, and wind is making a big dent in it. CSAPR could drive Midwest wind implementation to new highs. It should be, because Midwest coal is making the East smoggy. Wonderful how a graph is worth a thousand words.
    From 2001, wind has increased much more and faster than natural gas. Funny how the graph says, “click to embiggen”.

  3. andrewfez Says:

    Whilst Tennessee will close 8 coal plants. Their demand for electricity dropped 10%. 5% was probably efficiency and 5% was the closure of the uranium enriching operation happening around there.

    It would be nice to see efficiency sweep in and chop 10 or 20% of the bottom off that 2nd graph.

    • andrewfez Says:

      * ‘2nd graph’ as in the rightward embiggen graph.

    • Sure would be nice. With all the hype and defeatism, one wonders if the reduction in coal could be greater than anticipated. That would be a real Christmas present.

      • andrewfez Says:

        Wind will knock it down to 20 to 40% before we start seeing diminishing returns (in the context of lack of storage) so that should be the short term goal in applicable areas. Long term goal should be 3x load overbuild so that it will function more as base load per the U of Delaware model.

        Re Efficiency:

        A recent poster on facebook’s Global Warming Fact of the Day said he was visiting a relative in the south eastern U.S. and all the motels he stopped at still had incandescent bulbs! For every hotel with say 60 bulbs, that’s almost a $2000 loss of profit per year for not using LED. Even Exxon’s latest media campaign is trying to get folks to switch to LED.

        I’m thinking something as simple as campaigning against incandescents in the deep south could close a few coal plants (without me actually getting my pen and envelope out).

  4. Here is a plot of MISO daily wind energy:
    The chart of renewable energy vs natural gas shows the two somewhat near even. Wish I could get more direct MISO data. Weird thing is, MISO predicts natural gas growth even though wind is beating it, and new capacity is dominated by renewable. Given that wind prices are so low, I expect wind could make further inroads. This could be a positive surprise, but PTCs are hurting wind. Maybe CSAPR and a more even subsidy structure would straighten that out.
    US natural gas production peaked in Jan. 2012.
    Shale gas has a ferocious rate of decline:

    • greenman3610 Says:

      that rate of decline is stunning – and I have yet to hear a satisfactory explanation of how it makes long term sense.
      That, plus the impending export of large amounts of gas to Asia and elsewhere tell me, and others, that “cheap” gas
      is an illusory bubble.

  5. Look at MISO wind energy today. Its incredible. 10GW all day long. The big news is, wind is cheaper than natural gas in the Midwest. I give natural gas 5 to 10 years. MISOs projections of electricity mix are wrong. Gas percentage will not increase. It will decline, but not because natural gas production declines. It will decline because the costs of natural gas production are greater than wind energy costs. Ironically, wind will keep both coal and natural gas in the ground for economic reasons alone. We have to catch a break sometimes. If Wind could just cut a break and get a steady PTC. IMO, since all other energy gets subsidies, wind should have one, too. The situation is crazy. None for promising emerging technology, big subsidies for failing mature industries.
    Here is a reference on MISO emerging wind/natural gas. This gives clarity to wind and gas percentages that the chart fails to elucidate.

    Click to access Gas%20and%20Electric%20Coordination_Haagenson.pdf

  6. I wish everyone would read and watch these sources about how the power system works. Its nothing like some imagine. It makes it easier to understand how Denmark could deal with 122% renewables and not need storage. The whole business of storage, reserves, electrical demand curves, is poorly understood even by engineers not specializing in power system distribution, planning, and dispatch. One can know all there is to know about transformers, generators, and hardware and know nothing about the other topics.–Part-3—Loads-Cu/
    All sources require reserves. The reserves are a pool for all sources. The sources will always be a mix, even when they are 100% renewable. Renewables are not all intermittent. Just like now, the future energy mix is composed of renewables that are base load, and renewables that supply peaks. There is really no such thing as reserves for one generator, the total reserves are determined probabilistically from the mix of sources. For many sources, and wind in particular, variability is not the key question that determine reserves. The professionals look at forecast accuracy, that is what determines reserves. If the forecast is better, less reserves are needed. Thats because they plan their power generation a day ahead. The thermal plants startups and peaking plants are planned for the following day. Demand curve show day ahead forecast curves. Reserves are always a hefty fraction of demand like 50% in a healthy grid. If they drop lower, brownouts, and blackouts happen. The more accurately wind is forecast the next day, the less reserves. Same for solar, geothermal, hydro. Reserves are for unplanned demand or supply drops, thats why they are probabilistic. Further, the amount of reserves needed for wind is negligible for less than 30% penetration. A larger grid with more distributed wind sources and solar act to dramatically improve the picture. Here is a study on wind energy reserve requirements on the MISO grid.
    That is a “real” professional discussion about wind energy.
    When you hear talk about power lines for wind (solely), or backup for wind(solely), or any other source, you can almost be certain they are not professionals. Power professionals are always aware of the aggregate nature of the power system. Its more like a team with a lot of substitute players.

  7. […] 2014/01/03: PSinclair: In the Midwest: Wind Up. Coal Down […]

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