Coal-Fired Power: A Sure Thing in Uncertain Times

Executive Order Aims to Protect the Power Grid
May 11, 2020

The recent news out of Texas that the mothballed 470-megawatt Gibbons Creek coal-fired power plant will be back online is a victory for electric reliability and for power customers. After all, Texas is forecasting record demand over the next two years. The fact that the power grid in the Lone Star State – a state rich in renewable energy – couldn’t simply abandon the Gibbons Creek plant should also be a clear signal for policymakers: we still need coal for reliable electric generation.

In a year so far characterized by uncertainty, a sure thing is more valuable than ever. And if the Covid-19 pandemic has taught any single lesson; it’s that our nation and its people need to be equipped for the absolute worst-case scenario.

In 2005, President George W. Bush was in the fifth year of his presidency when he received an advance copy of John Barry’s book about the 1918 Flu pandemic, “The Great Influenza.” The 43rd U.S. President was taken aback by the societal impact of the pandemic, but more rightly concerned about the prospect of another pandemic ravaging the U.S economically and emotionally and costing people their lives. He instructed his Homeland Security Advisor, Fran Townsend, to develop a national strategy to combat another pandemic, noting “this[pandemic] happens every 100 years. We need a national strategy.”

Planning for the worst-case scenario is what electric reliability planners contemplate daily because losing access to affordable and reliable power is not an option in today’s America. Families count on reliable power for their homes, and our modern economy is fueled by it. 

The electric power industry contributes $880 billion to the U.S. GDP, or five percent of the nation’s total GDP – we might think of this as the first five percent of the American economy because virtually every other sector of the economy depends on the reliable and affordable electric power it provides.

In economic terms, reliable power isn’t just about “keeping the lights on.” A power grid that runs 24/7 is also engrained in everyday technology. From powering your broadband router to charging electric vehicles to sustaining the massive server farms that make the Internet and cloud possible, electricity is a commodity we can’t do without.

Seventeen years ago, as a young congressional aide, I was covering a hearing on the origins of the August 2003 Blackout that plunged New York, much of the Northeast United States, and parts of Canada into darkness. As he opened the hearing, the chairman of the U.S. House Energy and Commerce Committee, Billy Tauzin (R-LA), highlighted the need for affordable and reliable power by noting,

“We were painfully reminded of the importance of electricity in our day-to-day lives…I think it was even worse than we thought. I talked to people who were caught in the New York Airport, who told me it was bad enough sleeping in an airport at 130 degrees…but what was even worse was that the commodes wouldn’t flush because they are all electricity flushed today…the economy and our way of life demand affordable, reliable electricity.”

Fast-forward 17 years and our desire for affordable and reliable power has only intensified, some would say exponentially. At the same time, intermittent (not always on) renewable energy deployment from wind and solar has increased by 90% from 2018, according to the U.S. Energy Information Administration. And while a more diverse American power grid is a good thing, we also can’t afford to rely too heavily on power sources that don’t work on command.

Unfortunately, in some states, policymakers have created economic and environmental frameworks where the only sensible move for utilities and independent developers is to invest in wind or solar, putting the future of electric reliability at risk. For example, over the past several years, we’ve warned about the potential reliability issues that face consumers in the Electric Reliability Council of Texas (ERCOT) region. Mass retirements of coal-fired generation precipitated our warnings within the ERCOT footprint. More than 5000 MW of coal-fired generation was placed on the retirement block in 2018 alone.

The retirements of a reliable coal-fired generation led to dire reliability situations in Texas last August. Consider, for example, that peak power rates in Texas climbed to an astronomical $9,000/Mwh in August of last year, a testament to the flaws of the state’s deregulated marketplace and to the folly of abandoning reliable power sources such as coal.

Much has been said about how the Covid-19 pandemic has reduced electricity demand as the U.S. economy all but halted for the last two months. Yet, as game-changing a force as the coronavirus has been, it hasn’t managed to end summer. In many states, summer activities may be canceled, but the unbearable, scorching heat will still drive customers to rely on reliable power supplies to keep cool.

ERCOT is already warning that this summer could break records for electricity consumption and that “low wind output and higher-than-normal generation outages may result in the need to declare Energy Emergency Alerts (EEAs)”

“Low wind” and “higher-than-normal generation outages” are bad news for customers counting on power to be there when they need it. In that light, Gibbons Creek coming back online is welcome news and a major win for the Texas power grid and the people who use it.

In the same vein, maintaining focus on power reliability is also a win for economic recovery as we begin to emerge from the pandemic related “shelter in place” orders. We’ll need all electric generation resources working, including coal-fired plants like Gibbons Creek, if we intend to keep electricity rates low and help businesses get back on their feet as quickly as possible.

Hopefully, policymakers in Texas and beyond take note. Hot summer weather and high customer demand for power are sure things. So is coal-fired power. Now, more than ever, we should hold tight to solutions we can count on.