Published on April 25th, 2019 | by Tina Casey0
#PruittFail: Indiana Nixes Coal & Natural Gas, Too
April 25th, 2019 by Tina Casey
File this one under D for Don’t look back, somebody might be gaining on you. Just a few years ago, natural gas was riding high as a low cost, “cleaner” alternative to coal for power generation. Now all of a sudden low cost renewables are breathing down the neck of coal and natural gas, too.
The latest development is an especially interesting one on that score. Earlier this week the Indiana Utilities Regulatory Commission nixed a new billion-dollar natural gas plant proposed by the energy company Vectren, which was intended to replace a group of aging coal power plants.
That might seem like a win for newly minted coal industry lobbyist Scott Pruitt, fresh from his stint as Administrator of the US Environmental Protection Agency (I know right? Shocker!). However, the situation is more complicated than it might seem.
Act I: Coal Must Die
Indiana is probably not the first state that comes to mind when the topic turns to coal, but it should be at least among the top ten. As of 2016, the US Energy Information Agency put Indiana at number 7 for coal production among the 50 states. It’s also right up there at number 3 for coal consumption, right after Texas and Illinois.
Indiana perfectly illustrates the rise of natural gas and the fall of coal:
Typically, more than four-fifths of Indiana’s electricity generation has been fueled by coal, but coal use is declining. In 2017, about 70% of the state’s megawatthours was generated by coal, while the share of net generation from natural gas more than doubled from three years earlier to about 20%. Eight of Indiana’s 10 largest power plants are still coal-fired, but 60% of the state’s 200 megawatts of new generation capacity that was brought on line during 2017 was powered by renewable energy sources, while the other 40% of new generation was powered by natural gas.
EIA painted that picture as of two years ago, and things haven’t gotten any better for coal. Earlier this month, John Russell of the Indiana Business Journal began an in-depth report by asking if the Indiana coal industry is heading for the “scrap pile.” He answered himself in the next line:
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.
Russell cites Northern Indiana Public Service Co., which plans to phase out all five of its coal units within the next ten years, replacing them with natural gas and renewables.
As for Vectren, the Evansville-based company had previously announced that it would retire three of its four coal units by 2024 — to be replaced by natural gas, of course, as well as a 50-megawatt solar farm.
If all goes according to plan, Indiana will have only five coal units left in the state in short order, down from 26 as recently as 2010.
Act II: A Ray Of Hope
Do read the full piece for more insights into the inevitable decline of coal power — not just in Indiana, but all around the US.
So, what about that natural gas power plant?
That’s where Scott Pruitt comes in. Earlier this month, the disgraced former EPA chief surfaced as a registered lobbyist for an Indiana coal company called Rail Point, which comes under the umbrella of Denver-based Hallador Energy. Hallador also owns Sunrise Coal, one of the biggest coal mining companies remaining in Indiana.
Hallador engaged Pruitt to step into the Vectren and NIPSCO cases. Earlier it week it looked like the fledgling K-Streeter scored a major victory, when the Indiana Public Service Commission dunked on Vectren’s plans to build the huge gas power plant as a replacement for the three retiring coal units.
Well, maybe that wasn’t such a big victory after all. The new gas power plant had plenty of other opponents aside from the coal industry. Environmentalists weren’t happy about the prospect of a major new gas power plant, either.
The cut to Pruitt’s street cred goes even deeper than that. Here’s Reuters with the scoop:
The Indiana Chamber of Commerce took the unusual step of calling out Pruitt and Rail Point – a coal company with whom he has registered as a lobbyist – for pressuring local lawmakers to block utilities Vectren Corp and the Northern Indiana Public Service Co (NIPSCO) from shutting their remaining coal plants and replacing their generation capacity with natural gas and renewables.
Unusual! Do tell! That’s just the appetizer. Here’s the main course:
The Chamber’s 50-member energy committee unanimously rejected Pruitt’s campaign.
Act III: Coal & Natural Gas Must Die
So here we are, with the Indiana business community bigly giving a thumbs-down to saving coal power. Meanwhile, the Indiana Utility Regulatory Commission had this to say about replacing coal with natural gas:
…The proposed large scale single resource investment for a utility of Vectren South’s size does not present an outcome which reasonably minimizes the potential risk that customers could sometime in the future be saddled with an uneconomic investment or serve to foster utility and customer flexibility in an environment of rapid technological innovation.
Got all that? Basically, IURC determined that new electricity generation technology is emerging so quickly that it makes no sense to saddle ratepayers with a new 850-megawatt natural gas power plant for the next 30 years.
That’s quite a turnaround for a state that was on the forefront of the coal-to-gas trend.
If coal is breathing a sigh of relief, that’s probably its last breath. In the same order, IURC directed Vectren to come up with a new plan that will “incorporate more options for partnering with other entities and competitive inquiries into smaller-scale options that can be acted upon swiftly to meet the end-of-2023 date upon which additional capacity may be needed.”
Yikes! In other words, where was Vectren while everyone else piled on to the sparkling green grid of the future. The US Department of Energy envisions a modernized electricity grid based on small scale, distributed energy resources including copious amounts of renewable energy, and it looks like Indiana policy makers are on board with that.
In that regard, the planned 50-megawatt solar farm is a big jump up for Vectren, which currently has only two 2-megawatt solar arrays in its stable.
Also, did you catch that thing about “partnering with other entities?” If you did, run right out and buy yourself a cigar. Indiana already depends heavily on electricity imported from other states, so what’s a few kilowatt hours more?
Indiana gets some of its imported electricity through the wind-rich MISO grid. Combine that with Vectren’s plans for a 50-megawatt solar plant, and you have something called complementarity. That’s fancyspeak for combining different wind and solar power generating patterns to create a reasonably steady stream of clean power.
Indiana’s other source of imported electricity is another wind-friendly interconnection, the PJM grid. The battery-curious PJM has also become a proving ground for cutting edge energy storage technology, so there’s that.
Act IV: Coal & Natural Gas Must Die, No, Really
Not helping matters much for the Indiana coal industry is the energy efficiency trend, which has tamped down overall demand for electricity.
The building electrification movement could help push up demand, except that energy efficiency gains in heat pumps and other equipment could offset any overall increase.
Electric vehicles are another potential growth area, though it will take some time for EVs to break into the mainstream market. Even so, both coal and natural gas face the inevitable prospect of falling costs for wind and solar power as the technology matures and economies of scale kick in.
Add the growing public awareness of climate change risks and hazards, and that spells bad news for a fossil future in power generation.
One alternative market for Indiana coal producers is the steel industry, but that’s a temporary out. Global steel makers are already looking into “green” processes that eschew coal in favor of renewable hydrogen.
If Indiana coal is looking to the aluminum industry for relief, that door is also closing.
Meanwhile, state legislators have dug in their heels against the state’s solar industry. Why? Who knows! CleanTechnica is reaching out to our friends over at the Solar Energy Industries Association for some insights on that, so stay tuned.
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