Coal Is The New Bridge Fuel

Authored by Bernard L. Weinstein via RealClear Energy,

Once again, the consensus of government and private weather forecasters is that this coming summer will witness above-average temperatures in most parts of the United States. Already, warnings have been sounded that America’s power grids will be under great stress—as has been the case for a number of years—with a strong probability of blackouts and brownouts in some parts of the country.  For example, the North American Electric Reliability Corporation’s (NERC) summer reliability assessment published on May 18 cited the 15-state Midcontinent Independent System Operator (MISO) as the regional grid most likely to see a meltdown this summer.

NERC’s warning proved to be prescient. On May 25, more than 100,000 customers in and around New Orleans lost power for most of the day when electricity demand exceeded supply, despite an emergency order from the Department of Energy several days earlier to keep a 1,560 megawatt coal plant in Michigan on-line that was slated for closure by the end of May. ERCOT, the Texas grid operator, has also warned of possible outages this summer due to potential low solar and wind energy availability during peak demand.   

The strains on America’s power grids are easy to explain. After remaining relatively flat for a decade, electricity demand is now projected to jump 50% over the next 10 years. Investments in server farms, artificial intelligence, crypto-mining, and a revival of manufacturing activity account for most of this growth. For example, a recent study by the Berkeley National Laboratory found that data centers consumed 4% of total U.S. electricity in 2023 but will account for 12% of power demand by 2028.    

At the same time, construction of new base-load power plants—natural gas, nuclear, and coal—has plummeted. Driven by federal, state, and local tax incentives, wind and solar have accounted for the lion’s share of new installed generation in recent years. The problem, of course, is that these power sources are intermittent, which is why New Orleans lost electricity in May and why the Iberian Peninsula suffered a blackout in April.

Although several states—most notably Texas—have adopted programs to encourage new construction of natural gas plants, for the near term it’s critical to keep the nation’s remaining coal plants online.

Since 2010, 300 “always on” coal-fired power plants have been closed, reducing its share of generation from 45% to 16% nationwide. Only about 200 remain on the regional grids today.

The Trump administration has taken several steps to enhance power grid reliability and resiliency by keeping these coal plants on-line, including a series of executive orders signed by the President in early April. One of these orders allows a number of aging coal plants slated for closure to continue producing power. 

Not surprisingly, these actions have energized environmentalists who remain committed to shuttering the remaining coal fleet and banning the construction of any new fossil fuel power plants. But the renewables-or-nothing approach they favor is crashing into a new energy reality. Not only is power demand poised to surge but building and connecting wind and solar plants, as well as the infrastructure needed to integrate them into the grid, is proving increasingly costly and challenging. Coupled with higher interest rates and supply chain challenges, local opposition to wind and solar farms, as well as new transmission lines, is having a significant impact on the speed and scale at which new generation is entering service.

The era of tearing down existing, well-operating power plants before reliable replacement capacity is built and connected to the grid is over. The on-demand power plants already in service are more valuable than ever. While coal’s long-term future remains in question, its near-term importance is clear. Our existing fleet of coal plants can help us manage the transition to a more reliable and resilient energy future as we build the next generation of base-load resources.

Bernard L. Weinstein is retired associate director of the Maguire Energy Institute at Southern Methodist University, professor emeritus of applied economics at the University of North Texas, and a fellow of Goodenough College, London.