The falling prices of coal: Opportunities for Ohio renewables
By EnPowered - December 01, 2020
As coal use in Ohio declines, there are signs that the state could see an energy storage boom. EnPowered simplifies energy management.
For decades when you thought about energy in Ohio, you thought of coal. The tried and tested fossil fuel has long been both the literal and metaphorical bedrock supporting Ohio’s economy. The United States has the world’s largest coal reserves, and Ohio has been a key player in that industry: as recently as 2006, Ohio generated 87% of it's electricity from coal. Fast forward to 2020, and the state has capitalized on the natural gas boom and ridden the fracking train to lower emissions and cleaner energy. The state’s energy makeup has shifted as a result, with coal accounting for less than half of the Buckeye State’s energy needs in 2019 - the first time gas had supplanted coal in state history.
Coal fortunes have continued to look shaky. Natural gas production increased more than 30-fold between 2012 and 2019 while coal use fell 11% in 2017-18 alone, despite vows from the Trump administration to revive the industry. That said, Ohio remains among the top ten coal consuming states, importing three times more coal than it produces. Together with its status as one of the top five states for electricity demand, Ohio’s energy sector is set for more shake-ups as the state looks to green its energy sector.
Just upgrading an existing coal plant to meet current emissions regulations can cost $1 billion.
Coal-based loyalties may have helped Trump carry Ohio in 2016 and 2020. Still, coal is increasingly becoming economically unsustainable, facing steep competition from cheap natural gas, falling electricity prices, tightening environmental regulations, and competitive renewables. One key reason for this decline has been the fact that natural gas plants are significantly cheaper to build. AEP CEO Nick Akins told the Columbus Dispatch that a coal plant can take up to seven years to complete and cost $5 billion, while a natural gas plant of equivalent capacity can be erected in two years for (only) $1.3 billion. Just upgrading an existing coal plant to meet current emissions regulations can cost $1 billion.
Nationwide the coal industry is facing strong headwinds, with US coal production falling from 1,027 million tonnes in 2005 to 702 million tonnes in 2017. Decreased production has gone hand in hand with the shuttering of coal plants across the country. Sticking with Ohio, American Electric Power (AEP) closed the last unit at the Conesville power plant (nameplate capacity 2GW) on April 29th, 2020. Similarly, FirstEnergy plans to shut down the remaining units (units 1-4 decommissioned May 2020) of the Sammis power plant (nameplate capacity 2.2GW) in Stratton by June 2022.
Companies exiting coal, focusing on green tech
Texas-based Vistra Energy announced in September 2020 that it is shuttering its entire fleet of coal stations - a total of 6.8GW worth of capacity - in Illinois and Ohio by 2027, as it seeks to reinvent itself as a renewable energy and battery company. The 1.3GW Zimmer power plant near Moscow, Ohio, and the Miami Fort plant (1GW) in North Bend, Ohio are among the seven coal plants to be decommissioned. Speaking on this development, Vistra CEO Curt Morgan told Forbes that “Vistra’s commitment to our transformation to a low-to-no carbon future is unequivocal.”
As part of the company’s about-face, Vistra new investments include the world’s largest battery storage facility, the 400MW Moss Landing facility in California and a 260MW project in Texas. In Texas alone, Vistra is working on seven new zero-carbon generation facilities with a combined nameplate capacity of almost 1GW.
“When energy storage takes off, Ohio could be a leader”
In contrast to those lamenting the malaise gripping the coal industry and the prospect of job losses, renewable energy, and battery firms express confidence about the state’s energy future. The introduction of the Energy Storage Tax Incentive during the 116th Congress in 2019 demonstrated the growing interest in energy storage together with calls from industry to add energy storage facilities to the list of eligible Investment Tax Credit projects.
While the bill remains stuck in congressional limbo, companies such as Akron-based Echogen continue seeking out opportunities to build a battery industry in Ohio. “When energy storage takes off, Ohio could be a leader [...],” argues Echogen CEO, Phil Brennan. “With our world-class universities and labs, we have the talent right here in the Buckeye State to crack the case.”
Brennan points to the infamous 2003 blackout as evidence for the need for greater grid resiliency and flexibility, elements that are both addressed by battery storage facilities. Echogen is working on a $3 million contract from ARPA-E - a competitive grant program from the Department of Energy- to create a proof-of-concept electro-thermal energy storage (ETES) system using low cost, high storage materials such as sand and concrete. The company is also planning a 10MW demonstration facility.