Utilities that are transitioning away from coal are starting to view the creation of a natural gas “bridge” to renewable energy as an unnecessary step. Last week utilities in Arizona, Colorado and Florida announced plans to close one or more of their coal plants and build renewables without adding any new gas-fired generation.
Separately, staff at the New Mexico Public Regulation Commission recommended a similar gas-free transition when assessing the future capacity needs of the Public Service Company of New Mexico (PNM).
Renewable energy economics have been challenging the competitiveness of coal for a while now, but these latest moves indicate a greater confidence that the switch from coal to renewables can be done cost effectively and reliably without the construction of new gas fired generation as an interim step.
“Up until recently, the easy option for utilities would have been to propose using gas to replace coal. But not any longer. Rising concerns about climate change and continuing reductions in wind, solar and battery storage costs coupled with improved performance have altered the playing field,” Institute for Energy Economics and Financial Analysis (IEEFA) said.
Tucson Electric Power (TEP) and Colorado Springs Utilities (CSU) both outlined their plans to skip the gas bridge as they transition away from coal in their resource plans. Meanwhile, Florida Power & Light (FPL) and Jacksonville’s municipal utility, JEA, entered into an agreement under which they will rely on existing natural gas and new solar generation to retire their jointly-owned facility, Unit 4 at Plant Scherer, the largest coal-fired plant in the US.
According to the IEEFA, to replace JEA’s share of the unit’s output, the two utilities signed a long-term, fixed-price power purchase agreement under which FPL will sell electricity to JEA from one of its exiting gas-fired generation units. Under the agreement, JEA can opt to switch to solar power at the 10-year mark.
TEP’s proposal calls for closing all of its coal-fired generation by 2031 and replacing this capacity with 2,457 MW of new wind and solar generation and 1,400 MW of battery storage. Similarly, CSU’s plan also calls for replacing coal capacity with wind, solar and storage generation. It plans to add 500 MW of new wind generation, 150 MW of new solar and 400 MW of battery capacity. To enable the early retirement of its 208 MW Martin Drake Power Plant in 2023, CSU will be installing temporary natural gas generators at the site “to ensure system reliability.” CSU said that it will remove these generators as its new renewable and storage projects are completed.
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