Fade to Black: Coal Closures Accelerate

Just last summer, Northern Indiana Public Service Co. planned to retire two of its five remaining coal-fired power plants by 2023. Now, it plans to do away with all of them over the next decade, and buy more solar and wind power instead.

The Midwestern company’s decision is part of a shift among some American utilities toward less costly energy sources. The companies are accelerating the closure of coal plants, as wind and solar power become more economical alternatives, aided by federal subsidies, and natural gas continues to be a cheap fuel for electricity in the U.S., thanks to the shale-drilling boom.

Northern Indiana Public Service, part of NiSource Inc., concluded that phasing out coal sooner was worth it because it would move the company to what is becoming a cheaper source of power, and ultimately reduce costs for its 470,000 customers by as much as $4 billion over 30 years. It has proposed raising average rates by $11 a month starting later this year to cover higher short-term costs related to closing the plants, as well as grid upgrades and other unrelated expenses. However, the company expects that the accelerated closures will reduce its overall generation costs starting in 2023.

“We’ll continue to see renewables and other technology become more cost competitive,” said Joe Hamrock, NiSource’s chief executive. “There’s recognition that the market is changing in a fundamental and permanent way.”

The shift is taking place as the Trump administration tries to revive the coal industry by rolling back environmental regulations and easing restrictions on building new plants. Those efforts have done little thus far to curtail the closure of coal plants, which account for the majority of U.S. coal demand. The Energy Information Administration estimated that domestic coal consumption in 2018 fell to 691 million tons, the lowest level since 1979, and expects it to continue dropping this year.

Xcel Energy Inc. said last month that it plans to shift entirely to 100% carbon-free power generation by 2050, becoming the first major U.S. utility to make such a pledge.

The company, which covers parts of Colorado, Minnesota and six other states, says that coal could account for as little of 10% of its power mix by 2030. It was more than one-third of the mix in 2017. Xcel expects lower fuel and production costs will eventually offset some initial rate increases.

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Northern Indiana Public Service, located within another regional electricity grid, the Midcontinent Independent System Operator, decided to retire four coal units within the next five years and its final one by 2028, after soliciting bids from wholesale power providers last year.

It received 90 proposals for a range of technologies, including wind and solar generation priced at roughly $27 to $40 per megawatt hour. By comparison, the company estimated that continuing to operate its coal fleet would cost between $57 and $82 per megawatt hour.

“We were certainly surprised,” said Mr. Hamrock, the CEO of the utility’s parent. “We’re in a very different moment, with renewables dramatically more competitive for our customers in our region.

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Wall Street Journal:

In 2016, the latest year for which data is available, about $297 billion was spent on renewables—more than twice the $143 billion spent on new nuclear, coal, gas and fuel oil power plants, according to the IEA. The Paris-based organization projects renewables will make up 56% of net generating capacity added through 2025.

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Renewable costs have fallen so far in the past few years that “wind and solar now represent the lowest-cost option for generating electricity,” said Francis O’Sullivan, research director of the Massachusetts Institute of Technology’s Energy Initiative.

This is beginning to disrupt the business of making electricity and manufacturing generating equipment. Both General Electric Co. andSiemens AG are grappling with diminished demand for large gas-burning turbines and have announced layoffs. Meanwhile, mostly Asian-based manufacturers of solar panels are flourishing.

In many places, opting for renewables “is a purely economic choice,” said Danielle Merfeld, the chief technology officer of GE’s renewable energy unit. “In most places, it is cheaper and other technologies have become more expensive.”

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Renewable-energy plants also face fewer challenges than traditional power plants. Nuclear-power plants have been troubled by mostly technical delays, while plants burning fossil fuels face regulatory uncertainties due to concerns about climate change. And pension funds, seeking long-term stable returns, have invested heavily in wind farms and solar parks, allowing developers to get cheaper financing.

“It is just easier to get renewables built,” said Tony Clark, a former member of the Federal Energy Regulatory Commission. “There is that much less opposition to it.”

Germany closes last black coal mine.

New York Times:

The Prosper-Haniel mine in the western city of Bottrop and another colliery in Ibbenbueren, about 60 miles to the north, were the last remnants of an industry that once dominated the region, employing half a million people at its peak in the 1950s. Together, they helped feed the Ruhr Valley’s hungry steel mills until imports of cheaper, foreign coal made Germany’s “black gold” lose its sheen.

For decades, the mines survived only thanks to generous subsidies. But in 2007, a political decision was made to phase them out, with a promise of early retirement or retraining for their remaining workers.

According to government figures, Germany’s coal mining industry has received more than 40 billion euros ($46 billion) in federal funds since 1998 and is set to get 2.7 billion euros through 2022. Some of the money is needed for mine maintenance and environmental cleanup efforts that include preventing parts of the Ruhr region from slowly sinking as myriad tunnels give way over time.

Further vast sums have been spent supporting economic redevelopment in the region, which has experienced growth in universities, research facilities and tech start-ups in recent years.