Sierra Club — “State electric plants pivoting away from coal”

John Russell, IBJ, April 5 2019

Is the Indiana coal industry heading for the scrap pile?

Its biggest traditional customers, electrical utilities, are quickly moving to less-expensive fuel sources—including natural gas, solar and wind—to power their generating plants. The shift, years in the making, is accelerating and shows no signs of letting up.

Three years ago, Indianapolis Power & Light sent a shudder through the coal industry when it converted its Harding Street Station power plant—which used to burn 2 million tons of coal a year—to natural gas, ending a coal tradition that began when the plant opened in 1931. A few months later, IPL converted the coal-fired units at its Eagle Valley power plant in Martinsville to natural gas.

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Other Indiana electric utilities are heading in the same direction.

Vectren Corp., based in Evansville, plans to retire three of its four coal-burning generating units by 2024. In their place, Vectren will substantially increase the use of natural gas as a fuel source and build a 50-megawatt solar farm.

“We have demonstrated a tipping point where coal is no longer the exclusive solution for southwest Indiana customers and continues to be highly risky due to plant age and environmental regulations,” Mike Roeder, Vectren’s vice president of government affairs, told the Indiana House Utilities Committee last month.

And last fall, in the latest bombshell for the coal industry, Merrillville-based Northern Indiana Public Service Co. said it plans to retire four of its five remaining coal-fired electricity-generating units within five years and the other within a decade. The move will save NIPSCO $4 billion over the next 20 years, the company said. It plans to generate 65 percent of its power from solar, wind and other renewables by 2028, and at least 25 percent from natural gas, as it shifts toward less-costly energy sources.

“Coal has been an important and valuable part of our history and energy mix for nearly 90 years; [it] reliably and cost-effectively services the electric needs of customers,” Mike Hooper, NIPSCO’s senior vice president, told the Indiana House Utilities Committee. “However, many coal-fired generating stations have aged and gotten more expensive to maintain and operate.”

In 2010, Indiana had 26 active coal-burning power units. By 2016, it had just 13, and now that number is on track to decrease by at least another eight by 2028.

And fewer coal-burning plants means utilities are less reliant on any one source of power. In 2008, Indiana utilities counted on coal as the fuel source for 97 percent of their electricity generation. By 2017, that figure had fallen to 76 percent, with the rest coming from natural gas, oil, hydro, solar and nuclear.

Experts say that’s likely to continue.

“As utilities look further into the future, where they expect things to trend, that dynamic is not changing,” said Doug Gotham, director of the State Utility Forecasting Group at Purdue University. “On an economic basis, coal has trouble competing.”

Rising costs

Coal plants have been hit hard by rising maintenance costs, including pollution controls. At the same time, the cost of solar and wind power has fallen as the technology has improved. Natural gas, meanwhile, is beating coal as a fuel source in price, thanks to the shale-drilling boom.

Together, the moves are certain to deliver a huge punch to the coal industry, as electric companies convert their baseload to other fuel sources. Last year, U.S. coal consumption hit its lowest level in 40 years. At least five major coal companies have gone bankrupt since 2015.

Nationally, a total of 16,900 megawatts of U.S. power-generation capacity retired in 2018, representing nearly a 50 percent increase from a year earlier, according to S&P Global Market Intelligence data. And coal-fired capacity made up nearly 70 percent of that, despite efforts by the Trump administration to ease regulations on emissions from coal-fired plants.

For coal companies, the issue is critical in Indiana, which still ranks in the top 10 states for both energy production and consumption. Slowly, however, the industry seems to be losing ground. Indiana produced 33.5 million tons of coal last year, down 7 percent from a decade ago.

And Indiana ranks third among all states—behind only Ohio and Pennsylvania—for the number of coal-fueled generating units that have retired or are retiring, according to a March report from the American Coalition for Clean Coal Electricity, an advocacy group for coal producers.

‘Coal’s last gasp’

The trend away from coal is welcomed by many environmentalists. They say coal is a dirty fuel source that spews toxic emissions into the sky, including carbon dioxide, sulphur dioxide, nitrous oxide and particulates, and contributes to chronic health problems, from asthma to cancer.

To them, the fact that coal is more expensive than many other fuel sources is a welcome turn, and one utilities can no longer ignore.

“Coal’s days are done. It’s not even a debate anymore,” said Kerwin Olson, executive director of the Citizens Action Coalition of Indiana, an energy consumer group.

The Sierra Club says coal’s decline is inevitable, as utilities increasingly look elsewhere for energy sources.

Wendy Bredhold

“I would characterize this moment in Indiana as ‘coal’s last gasp,’” said Wendy Bredhold, senior representative for the Sierra Club’s “Beyond Coal Campaign” in Indiana and Kentucky. “Coal companies are desperate to delay their certain decline into obsolescence.”

A report in March by Energy Innovation, a renewables analysis firm, concluded that around three-quarters of U.S. coal production is now more expensive than solar and wind energy in providing electricity to American households.

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