More on the War on Coal

Back in June, the Supreme Court quietly took another step in their ongoing “war on coal”.

Background

The EPA’s Mercury and Air Toxics Standards rule (MATS) extends that agency’s restrictions on the amount of mercury, assorted other metals like cadmium, nitrous- and sulfur-oxides, and fine particulates that electric generating plants can emit. The rule has been tied up in the federal courts, not because the EPA lacks authority to issue such a rule generally, but over whether the EPA followed the proper procedural steps in this particular case. Last year, the Supreme Court ruled that the EPA had done certain things out of sequence and remanded the matter to the D.C. Circuit Court. That Court in turn remanded the rule to the EPA but did not vacate it.

The EPA corrected its analysis and reissued the rule. Under the latest version, power plants are given between four and six years to come into compliance. Twenty states, led by Michigan, requested that the D.C. Circuit court issue a stay on the rule – in effect, stop the four-year timer – until all appeals of the rule itself were finished. The D.C. Circuit court declined to do so. The states appealed that decision to the Supreme Court. This past June, the Court declined to hear that appeal. The countdown for MATS compliance is running. Generating companies are going to have to make tough decisions about how to spend – or not spend – their money. Should they add the necessary gear to their coal-fired plants to clean up the exhaust? Should they convert to natural gas?

Why Michigan?

Michigan is the lead plaintiff in the MATS lawsuit for good reason. The MATS rule hits hardest at coal-fired power plants – almost exclusively so. Most of Michigan obtains electricity through the market operated by the Midcontinent Independent System Operator (MISO). The generators that sell power through the MISO market are heavily dependent on coal. For various reasons, those generators are retiring coal-fired plants at a brisk rate. That retirement rate is, according to various studies (PDF), much faster than the region has ever been able to add new capacity in the past. MISO anticipates that the reserve margin (generating capacity held in reserve for emergencies) will drop below the level required to ensure reliable grid operation as early as this year.

Currently, the conventional wisdom is that coal-fired generation will simply be replaced by natural gas. The availability of additional natural gas in Michigan is limited by, among other things, the capacity of the pipeline network that delivers gas to that state. Despite a general national glut of natural gas with resulting low prices, in recent years Michigan has experienced regional natural gas shortages and price spikes. The ability for Michigan utilities to purchase electricity from farther afield is limited by the existing capacity of the MISO transmission network.

This all leaves Michigan in a tough place. The cost to clean up the coal-fired plants – adding scrubbers for mercury, filters to capture the particulates, etc – is larger than the plant owners are willing to pay. Building new interstate pipelines to support reliable supplies of natural gas takes a long time (if possible at all; consider Kinder Morgan’s experience in New England). New or expanded transmission lines are always controversial. It all adds up to a short-term version of the question that I often ask more broadly for the longer term: how are they going to keep the lights on?

But the MATS rule might be overturned…

As a matter of personal speculation, I think the Supreme Court sent exactly the opposite message in their decision. I think they’re sending the same message that was sent in the Cross State Air Pollution Rule decision: the Clean Air Act and Clean Water Act pass constitutional muster; those acts require that coal-fired power plants be cleaned up; therefore there must be some rules that force the clean-up and pass constitutional muster; CSAPR was such a rule, and so is MATS. Shorter version: we (the Court) are going to approve MATS, so y’all had better start planning how you’re going to conform.

One important aspect of the MATS situation is to demonstrate the difficulty of making policy about electricity supplies at the national level. CSAPR was the first large example of this: while eastern states are screaming about it, the rule was a non-event for states from the Great Plains west. MATS will be similar, in the long run. California is busily replacing coal and nukes with renewables. Pennsylvania will get every last gasp of natural gas out of the Marcellus Shale. Georgia and South Carolina are exploiting anticipated growth to finance new nukes. And poor Michigan is stuck, without inexpensive renewables, without local natural gas, without growth, trying to figure out who will bail them out.


Staff Writer

Michael is a systems analyst, with a taste for obscure applied math. He's interested in energy supplies, the urban/rural divide, regional political differences in the US, and map-like things. Bicycling, and fencing (with swords, that is) act as stress relief. ...more →

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60 thoughts on “More on the War on Coal

  1. “Generating companies are going to have to make tough decisions about how to spend – or not spend – their money. ”

    Nope. Generating companies are going to hit rate payers up for this. The end user is going to pay, along with possible brown outs and the like.

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      • The highest retail electric rates in the country (excluding Alaska and Hawaii, which are their own special cases) are in CA and the NJ/NY/CT/MA cluster. Both heavily Democratic. Both opting for cleaner supplies over lower prices. TTBOMK, neither making any noises about federal subsidies.

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        • Do those two coastal areas have expensive retail electricity because they are switching the cleaner supplies? Or is electricity expensive because they are high cost of living areas with dense concentrations of population?

          Lots of people should push up electrical prices on the demand side. High cost of living should push up prices on the supply side (higher production costs due to cost of living) but lots of people may also do this (need to locate production facilities away from where all those people are)

          Then in turn, doesn’t higher retail prices (which are heavily regulated everywhere in the US) *allow* those regions more flexibility to switch to alternatives, because they won’t change the economic bottom line of the producers as much?

          (the characterization got me thinking this way because “rich areas are heavily Democratic” somewhat confuses cause and effect.)

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          • Historical cause-and-effect is always an interesting game. Certainly I am as guilty as anyone from time to time in picking an interpretation of the facts that match what I want.

            Southern California, at least, is an interesting case. Over a ten year interval from 50-60 years ago, California imposed its own heavy clean air statutes and started construction of San Onefre and Diablo Canyon. Nuclear electricity turned out to be much more expensive than thought. 15 years later, needing more power, they built the Intermountain power station — huge, coal-fired, and located in Utah where it wouldn’t affect Southern California’s air quality. As a philosophical matter — LA’s decision to be coal-free — they are spending something north of $500M to convert the Intermountain plant to natural gas. I interpret that as a decision to favor clean air over cheap electricity — some of it by accident, some of it on purpose. YMMV.

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            • I think that’s about right — in the recent past, the political priority was to have substantially cleaner air in and around the urban areas of Southern California. That goal was achieved by essentially outsourcing the generation of pollutants to Utah. A new generation of subject matter experts and political officials now in power sees the environmental question a little bit differently than did the previous generation, and the prevention of pollutants from entering the atmosphere at all, rather than contaminating populated areas, is the priority.

              Whether that’s because it’s now possible to see the ocean from a downtown office tower where a generation ago that would have been difficult to do even in a Santa Ana wind condition, or because there’s just plain better science out there, I don’t pretend to know. It’s simply the advance of time and the framing of issues has changed. That is the way of things and perhaps it is a good reminder that we shouldn’t try to solve too many of tomorrow’s problems today.

              Keeping consumer prices down has not a been a political priority for that entire time. Part of that is because the state subsidizes consumer prices for people of moderate incomes. Whether a state with a less robust economy and a less robust tax base than California could do that without Federal assistance, I don’t know.

              But it is a function of setting political priorities largely by a combination of elected officials in relatively obscure offices and subject matter experts, and the voters not disputing the priorities set by these people in any serious way.

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          • Personnel costs are a rounding error on the cost of generating electricity.

            Offshore wind plants with several hundred MWs of installed capacity run remotely with zero on site personnel.

            Most other plants have one to three operators per shift and a couple more people around: a chemist or similar for environmental and fuel testing, a secretary to pick up calls, a couple of guys scheduling maintenance and another couple keeping up the purchase, receipt and warehousing of spare parts.

            Plants run themselves these days. Another example of blue collar jobs that have disappeared never to come back.

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    • At the end of the day, rate payers are the only source of revenue for the whole electrical grid, from Hoover Dam to the plug where you plug your computer (not counting taxpayers subsidies).

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  2. Five years on: ” ‘We’re running the stove to keep the house wam’ Detroit family’s experience shows racial bias in electrical-power charges”

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  3. Michigan can just start building solar plants and wind turbines, right?

    PS that article does start to explain the reality of running on pure solar/wind power.

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        • Batteries don’t scale very well. If you’re not going to baseline the grid on nuclear, pumped storage is a far better way to go (the argument against it is that you need to place reservoirs on mountaintops, but thanks(?) to mountaintop removal in the east there are plenty of locations where you’re not going to further destroy scenic vistas.)

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          • Gotcha. I agree that if someone is talking about electrochemical energy storage for large scale needs, as opposed to potential energy storage, then they aren’t being very serious.

            And @j_a is right, electrochemical is a necessary component of home or business scale distributed storage. It has a role, just not the role mentioned.

            Anyway, my main point was that, much like , I have a hard time taking certain renewable energy advocates seriously because they think the only reason we aren’t swimming along on solar & wind power is because of Big Fossil, without trying to understand the economics, or infrastructure, requirements.

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            • You are right in general, but the particulars of the economics on wind have changed dramatically in the last 15 years.

              Given that wind costs is basically repaying the initial investment, the drop in $/MWh from 2000 to 2015 is about 1/3 or more, making wind competitive in the generation pool without subsidies.

              There are already places, not only in the USA, with more wind than what the grid stability can manage. And more keeps coming on line.

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              • @j_a

                More wind potential, or more deployed generating capacity?

                Because I can believe that we (the US) have mapped out a lot of potential, but I’d be surprised that we have more capacity than the grid can handle.

                Additionally, if the grid can’t handle it, then we still have the problem that the infrastructure isn’t in place yet to allow us to shutdown fossil fuel or nuclear generation as quickly as some would like.

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                • There have been cases in the last couple of years where a combination of grid limits and dispatching rules have resulted in an excess of wind power. Western Oregon/Washington, for example. BPA’s dispatching rules give priority to power generated when their dams are releasing water for other purposes. At times, the combination of that dam power plus what the Columbia Gorge wind farms can produce exceeded the ability of the grid to move power to demand centers. Expansion of the ties to population centers in Northern and Southern California would help. I believe Texas has also had some odd combinations of dispatching and transmission that led to wind turbines being shut down ( @j_a probably knows those in painful detail). This has not been a problem in Colorado because Xcel’s dispatching rules prioritize wind over most everything else.

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                  • Well, the west is, as you’ve said before, well positioned to enjoy wind & solar power. Too bad the east is not so lucky (although I bet if they built some stuff offshore… but naw, can’t disrupt the view (-; )

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                    • Don’t forget hydro. Conventional hydro is the Western Interconnect’s nuclear — a bit over 30% of generation in wet years, a bit over 20% in dry years. According to NREL, the Western could double that — not a big deal on a national scale, but definitely big for those states. Unconventional hydro like run-of-river stuff is an even bigger potential source.

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                • Particularly, with wind, large wind facilities should probably be paired with fast on line open cycle gas turbines, quite inefficient but very fast to ramp up and down. Probably regulations should require developers to add such fast reserve on a ratio of X to Y when developing wing above a certain level

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                    • Totally dependent on head.

                      You are converting massxheadxg to electricity at an efficiency factor of 40% or so (been years since I cared). You can get enough for a small village with a creek and the head of a small hill. You can do a city with a not too big river and 1,000 mts head

                      Full run of river with no head whatsoever (Danube River style) is a matter of water flow. Bulb turbines are just boat propellers running in the other direction.

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                      • And yes, water is very fast to be brought on line, but might not be in the right location. You can have the gas turbines in site with compressed natural gas, if piped gas is not available. A 20′ container with give you almost 20 MWh of generation. A similar container of LNG would do about 50 MWh.

                        Several containers on site can allow for fast ramping of a small gas facility to take over under sudden wind drop conditions without affecting the grid stability

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                        • You can have the gas turbines in site with compressed natural gas, if piped gas is not available.

                          As I understand it, Xcel Energy does a much more centralized version of this along Front Range Colorado. Coal and/or base load natural gas plants spaced north and south along the strip. The big wind farms are mostly far north along the Wyoming border or well off to the SE of Denver. Xcel’s now standard deal is to sign long-term contracts and take every watt the farms produce. Their own centralized gas- and coal-fired plants spin up and down to adjust for the vagaries of wind. I understand that they’re getting to be very good at wind predictions, so the adjustments aren’t that big a deal.

                          It’s a peculiar situation in many ways. Expanding to cover the Western Interconnect is feasible, given a large (but topologically fairly simple) HVDC system. Elsewhere, yeah, local pairing is probably much more important.

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    • Michigan can just start building solar plants and wind turbines, right?

      In theory, sure. In practice? In 2015, 46% of Michigan’s in-state generation was coal-fired. If you believe my interpretation of the Court’s action, Michigan has six years to clean that up or replace it. The owners don’t seem inclined to clean up most of the small plants (which is true nationally, not just in Michigan). From 2008 to 2015, with a specific target in statute, Michigan increased the share of wood/hydro/wind/solar in-state generation from 3.4% to 7.7%, most of the increase due to wind. A state-wide referendum to increase the renewable share went down in flames. To compound things, the NRC has already said that the smallest of Michigan’s three nuclear plants (800 MW capacity) has to shut down in 2030 — its operating license will not be renewed. Sort those into any order you want, but I don’t see how there aren’t significant supply issues down the road.

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      • It seems to me that Michigan is tailor made for nuclear power. Tons and tons of water, cool climate, extremely stable; no earthquakes of any significance, no tidal waves, no major storms, a huge market for waste heat.

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        • Personal opinions here, entirely… Michigan will opt for nuclear power if and only if they are provided a means of burying their reactors’ spent fuel far away. The choice of Yucca Mountain was a political decision that put the spent fuel far enough away to provide political cover for the eastern US, which desperately needs nuclear — but can’t overcome the political problem unless the spent fuel is buried in what is, for practical purposes, a foreign country.

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            • The funny thing is that the prohibition on recycling spent nuclear fuel is not based on environmental concerns, but on “minimizing” the risk that processed fuel gets in the hands of terrorists or rogue actors.

              I think most environmentalists would support raising the ban, in order to reduce the risk of the spent fuel seeping out and polluting the area.

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              • For sure, as if the US was ever at serious risk of reprocessed fuel getting stolen by terrorists of rogue actors (eyeroll).

                One would -think- environmentalists would be in favor of that but unfortunately anti-nuclear everything was baked into mainstream environmentalisms bones during the formation of modern environmentalism and it’s sunk in deep.

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              • This. I know the radiological compounds tracking system isn’t perfect, but it does work.

                Question: Anyone know if there is a technical reason to not have a reprocessing facility at the power station? Is it a scaling issue (better to have a handful of reprocessing plants that can handle large amounts all at once, rather than tons of little ones)?

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