As Earth faces climate catastrophe, US set to open nearly 200 power plants

USA TODAY, by Elizabeth Weise, Sept. 9, 2019

Industry continues to invest heavily in carbon-polluting natural gas – government regulators favor gas

A new climate report, Volume II of the National Climate Assessment, says that the effects of global warming are intensifying and getting costlier. USA TODAY

Powerful hurricanes. Record-breaking heatwaves. Droughts that bring ruin to farmers. Raging forest fires. The mass die-off of the world’s coral reefs. Food scarcity.

To avoid a climate change apocalypse, carbon dioxide emissions need to fall by as much as 45% from 2010 levels by 2030,  according to the U.N. Intergovernmental Panel on Climate Change.

Instead, utilities and energy companies are continuing to invest heavily in carbon-polluting natural gas. An exclusive analysis by USA TODAY finds that across the United States there are as many as 177 natural gas power plants currently planned, under construction or announced. There are close to 2,000 now in service.

All that natural gas is “a ticking time bomb for our planet,” says Michael Brune, president of the Sierra Club. “If we are to prevent runaway climate change, these new plants can’t be built.”

It also doesn’t make financial sense, according to an analysis by the Rocky Mountain Institute, a Colorado-based think tank that focuses on energy and resource efficiency. By the time most of these power plants are slated to open their doors, the electricity they’ll provide will cost more to produce than clean energy alternatives.

By 2023, the U.S. Energy Information Administration estimates the average cost of producing a megawatt hour of electricity will be $40.20 for a large-scale natural gas plants. Solar installations will be $2.60 cheaper and wind turbines will be $3.60 cheaper.

Catastrophic effects ahead unless we make changes

The world needs to reduce its carbon emissions rapidly – by 50% within the next decade – or face the prospect of a global temperature rise of more than 2.7 degrees within decades, said Michael Mann, a professor of atmospheric sciences at Pennsylvania State University.

That’s enough warming to kill off the coral reefs, melt large parts of the ice sheets, inundate coastal cities and to yield what Mann calls “nearly perpetual extreme weather events.”

“By any definition, that would be catastrophic,” he said.

We’re seeing the start of it now. There’s strong data to suggest that global warming is already causing changes in the jet stream and other weather systems. That can cause hurricanes to slow down and wreak devastation in single areas for longer, said Marshall Shepherd, director of the atmospheric sciences program at the University of Georgia.

“With Dorian, we saw it stall over the Bahamas. We saw that with Harvey in Houston and Florence in the Carolinas,” he said.

More gas = more carbon dioxide

Adding dozens of new natural gas plants in the coming decades is going in the exact opposite direction of what we need, clean energy advocates say.

“If the current pipeline of gas plants were to get built, it would make decarbonizing the power sector by 2050 nearly impossible,” said Joe Daniel, a senior energy analyst with the Union of Concerned Scientists, a nonprofit based in Cambridge, Massachusetts.

An analysis by the Rocky Mountain Institute published Monday looked at 88 gas-fired power plants scheduled to begin operation by 2025. They would emit 100 million tons of carbon dioxide a year – equivalent to 5% of current annual emissions from the U.S. power sector.

The institute calculated the cost of producing a megawatt-hour of electricity of a clean energy portfolio in each state that would provide the same level of power reliability as a gas plant. It determined that building clean energy alternatives would cost less than 90% of the proposed 88 plants.

It would also save customers over $29 billion in their utility bills, said Mark Dyson, an electricity markets analyst who co-authored the Rocky Mountain Institute paper.

“If you look at how things pencil out, we’re at a tipping point,” he said. “Here’s evidence that the switch from gas to clean energy makes economic sense and is compatible with utility companies’ need for reliability.”

More power plants coming to a state near you

USA TODAY compiled its own list of 177 planned and proposed natural gas plants through August, using data from S&P Global Market Intelligence, which tracks power plants that have been officially announced, and the Sierra Club, which tracks proposed plants.

Of those, 152 have a scheduled opening date of between 2019 and 2033, though only 130 have specific locations chosen. An additional 25 are part of companies’ long-term planning processes and don’t have estimated opening dates yet.

The plants are a mix of large-scale installations meant to provide lots of electricity much of the day and smaller plants used for short periods when demand for energy is particularly high.

Texas has the most proposed plants, with 26. Next is Pennsylvania with 24, North Carolina with 12, Florida with 10, California with nine and Montana with eight.

Not all will be built. Power companies are required to estimate future needs and plan as much as 15 years out, and this list includes plants which the companies may eventually decide they don’t need.

But the numbers show that greenhouse gas-producing natural gas is still on the table for many power producers, despite warnings that the energy sector needs to be quickly moving away from carbon-producing power sources.

Another concern raised by clean energy advocates is that once built, natural gas plants typically have a 30-year lifespan. Many of these plants will end up as “stranded assets,” unused because they’re too expensive to run, while consumers will still be on the hook for the cost of the construction, said Daniel.

It’s also true that power companies are building out solar and wind generation. Over the next two years, clean energy is expected to be the fastest-growing source of U.S. electricity generation, according to the U.S. Energy Information Administration.

Even so, that will only bring the share of wind and solar in the United States electricity market to slightly under 11%.

By 2020, EIA expects natural gas will make up about 36% of U.S. electricity generation. In comparison, coal is at 23%, nuclear at 20% and hydroelectric at 7%.

Why are we still building natural gas plants?

If natural gas plants contribute to global warming and most of them are going to be more expensive, why are so many still on the drawing board? The reasons are varied.

Energy companies say gas is more reliable than renewables and cheaper and less carbon polluting than the coal it often replaces.

But renewable energy advocates say the incentives for utilities and energy producers aren’t always in line with those of consumers.

For regulated utilities, one of the easiest ways to make money is to invest capital in large building projects, such as natural gas plants. Regulators allow utilities to set rates so that they get a return on invested capital of about 10%, Dyson said. That gives energy companies an incentive to build as much as possible.

In contrast, utilities that procure wind and solar power via commonly available purchase contracts earn no returns for these projects.

“There’s a perverse incentive for some utilities to build as big as they can, rather than to build as smart as they can,” said Ben Inskeep, an analyst with EQ Research, a clean energy policy consulting firm in Cary, North Carolina.

Companies also focus on reliability. Duke Energy, a power company based in Charlotte, North Carolina, has more than 7 million customers. As it transitions away from coal, it has embraced natural gas, announcing last week that it was considering as many as five new gas plants.

Today 5% of Duke Energy Carolinas’ electricity comes from solar, a percentage it plans to increase to between 8% and 13% by 2034, according to its most recent filing with state regulators. The state has almost no wind energy because of laws restricting the placement of wind turbines.

“We know our customers and communities want cleaner energy, and we’re doing our part to deliver that,” said spokeswoman Erin Culbert.

But she emphasized that Duke doesn’t believe solar and wind can be cost-effective and reliable enough to meet all its customers’ energy needs.

“Continued use of natural gas is key to our ability to speed up coal retirements, and its flexibility helps complement and balance the growing renewables on our system,” she said.

Government regulators favor gas

Another hurdle for renewable energy, some supporters say, is a combination of state-level rate-setting requirements and regional market rules that have led to a compensation structure for companies that favors coal and natural gas.

Who sets those rules depends on where the plant is.

In states where retail utilities own their own power generation facilities, the rates are approved by public utility commissions. Commissioners are typically appointed by state governors.

The process is less clear in the Midwest, Northeast, Mid-Atlantic, California, and Texas, where utilities buy and sell their power through organized markets run by regional transmission organizations.

These are run by boards that by law must be independent. They are typically composed of people from the business and energy world and are chosen by complex systems. In some cases they are voted on by existing board members.

The boards set the rules, which are then approved by the Federal Energy Regulatory Commission.

Ultimately these commissions and boards are supposed to decide what’s cost-effective for both the companies and ratepayers, said Scott Hempling, an adviser to regulators, law professor at Georgetown University in Washington, D.C., and author of two books on public utility law and regulation.

“A utility’s preference for profit is neither surprising nor wrong. But it’s not the utility’s job to balance its self-interest against the customers’ interest. It’s the job of regulators to constrain the private profit impulse with public interest principles,” he said.

It’s not news that there is bias towards profit, which can disadvantage customers. “The question is why it’s allowed to persist,” he said.

There are signs that what clean energy advocates have called an automatic rubber stamp for natural gas is beginning to change.

In April, the Indiana Utility Regulatory Commission denied a permit for a southern Indiana utility named Vectren South to build a $780 million natural gas plant. The regulators weren’t convinced the utility had chosen the best option to ensure its customers weren’t in danger of being “saddled with an uneconomic investment” in the future, it said.

In Michigan last year, local utility DTE won a bruising battle to build a 1,100 megawatt natural gas plant that will open in 2022 and cost nearly $1 billion. Critics complained the projections DTE used to make its case to regulators made wind and solar look less attractive.

The three members of the Michigan Public Service Commission, who are appointed by the governor, ended up approving the project. But the board’s 136-page opinion was not complimentary toward the utility, noting it was “concerned” about the constraints DTE built into the models it used to estimate whether renewable energy would be a viable alternative.

Some utilities choose clean energy

Not every utility company is ignoring warnings about the planet’s health, or customers’ pocketbooks.

Michigan utility Consumers Energy decided last year not to build new natural gas plants and instead focus on a combination of energy efficiency, renewable energy and batteries, which it says will be cheaper for customers.

The company, which has more than 4 million customers, plans to use 90% clean energy by 2040, said Brandon Hofmeister, senior vice president for governmental, regulatory and public affairs.

When the utility was putting together its existing energy plan, it took a new approach, balancing the cost to consumers and to the Earth.

“Honestly, there was some pushback. There were several pretty tense meetings,” Hofmeister said. “You’d hear someone ask in a meeting, ‘Is that really the right thing to do for Michigan and the planet?’”

A similar story played out in Indiana, one of the nation’s top 10 coal-producing states. A few years ago, Northern Indiana Public Service Company, based in Merrillville, Indiana, was getting ready to retire its old, expensive coal-fired power plants. An analysis in 2016 said they should be replaced with natural gas plants.

To be on the safe side, Joe Hamrock, president and CEO, checked again last year.

“We knew this is moving pretty fast and we needed to take a new look. A 30-year bet on a gas plant is a long time,” he said.

When his team sat down to look at the 90 project proposals that had come in, the answer came as a shock – natural gas wasn’t even in the picture anymore.

“The surprise was how dramatically the renewables and storage proposals beat natural gas,” Hamrock said. “I couldn’t have predicted this five years ago.”

The company is now set to retire all its coal-fired power plants, which produce 65% of its electricity today, and replace them all with renewables. In nine years, it expects to get 65% of its electricity from renewables and 25% from natural gas.

What will U.S. energy look like in the future?

Electricity generators counter that it’s impossible to get entirely away from natural gas because solar and wind are intermittent. When it comes time to turn on the lights, consumers can’t wait for the sun to come up or the wind to blow.

“We believe that natural gas has a role in a clean future because we believe it will be needed to balance out renewables,” said Emily Fisher, general counsel for the Edison Electric Institute in Washington, D.C. EEI is the trade association that represents investor-owned electric utilities in the United States.

“But we’ve also got to make sure the power supply stays affordable and reliable,” she said.

Electricity generators have a point, say energy analysts who aren’t necessarily in the pro-renewable camp. But those same analysts suggest a lot less natural gas is needed than we’re using today.

“The cheapest way to reduce carbon is to replace coal with a combination of renewables and as little natural gas as you can get by with to keep the lights on,” said Arne Olson, a senior partner with Energy and Environmental Economics, a San Francisco-based energy consulting firm that works with multiple states to craft energy plans.

That makes getting to the goals of the Paris Agreement on climate change – cutting greenhouse gas emissions at least 26% below 2005 levels by 2025 – not quite so daunting. The United States initially pledged to join the agreement but President Donald Trumpsaid in 2017 that the nation would not uphold the deal.

In fact, the electric industry is already undergoing a major restructuring. Largely because of the rapid rise of cheap natural gas, coal went from producing almost 45% of U.S. electricity in 2010 to a predicted 23% next year, according to EIA data.

The energy sector has shown it can move quickly when the prices are right, said Dyson of the Rocky Mountain Institute. And, he said, it’s imperative that a similar shift happen now with natural gas – and fast.

“Constructing these gas plants is incompatible with a low carbon future,” he said.

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