Study: Sourcing Kentucky’s electricity from coal-fired power plants is more expensive than replacing with solar
It is now cheaper to build local solar farms than to continue operating Kentucky’s remaining coal-fired power plants, according to a new study from the nonpartisan climate policy think tank Energy Innovation Policy and Technology.
The report “Coal Cost Crossover 3.0” compared the cost of operating every U.S. coal plant in 2021 and found in all but one case, the country’s coal power plants are more expensive to operate than new wind or solar generation.
“Ninety-nine percent of coal plants that we studied are more expensive to run than it would be to replace their energy generation with either wind or solar,” said study co-author Michelle Solomon.
Today, the majority of the electricity that keeps the lights on in Kentucky still comes from coal. As of 2021, about 71% of all electricity generated in Kentucky came from coal -- the fourth largest share of any state, according to the U.S. Energy information Administration.
That electricity came from 10 remaining coal-fired power plants. Together those plants produced nearly 50 million metric tonnes of carbon that year, filling the atmosphere with heat-trapping gases while polluting the air, water and soil.
The Energy Innovation study found that in every case, it would be cheaper to build enough solar generation locally, within three to 12 miles, than to continue operating the coal plants.
It found the greatest savings at Eastern Kentucky Power Cooperative’s John Sherman Cooper Station near Somerset, Ky., where it could be as much as 53% cheaper to go solar.
Even one of the country’s newest coal fired power plants -- Louisville Gas and Electric’s Trimble County Generating Station -- fell short of new solar. Researchers found it would still be 4% cheaper to build new, local solar farms.
“Unequivocally, renewables provide the cheapest generation cost,” Solomon said. “For the most part these coal plants are not on the bleeding edge of the crossover, they are significantly cheaper with renewables.”
To do the study, researchers compared the cost of energy for existing coal plants across the U.S. with the cost of building and operating new wind and solar generation. To calculate the cost for coal plants, they added up the cost of fuel, operations and maintenance and routine capital expenditures.
Solomon said researchers did not have access to utilities’ proprietary data but used their best estimates.
Louisville Gas and Electric and Kentucky Utilities spokesperson Natasha Collins pushed back on the report’s methodology. She pointed to LG&E’s responses in its 15-year integrated resource plan that found the levelized cost of energy for new wind and solar does not consider the reliability that fossil fuels offer in comparison.
“While energy from the sun may seem free, since it doesn’t always shine, it cannot meet our customers’ ‘round-the-clock energy needs,” Collins said.
It was three years ago the International Energy Agency declared solar as one of the lowest cost sources of electricity in history.
Meanwhile, coal generation has declined 52% nationally since 2010, according to the the report. Many of the nation’s remaining plants are aging and require expensive retrofits and upgrades to meet new pollution control standards. Coal plants have to pay for their fuel while the sun offers it for free.
Another major reason for the crossover is due to the passage of the Inflation Reduction Act. The act extended clean energy tax credits and provides bonuses for projects located in communities with retired coal plants, according to the report. It also created new funding to guarantee low-cost, government-backed loans to transition coal power plants to new renewable sources.
“There’s a potential there to take that stranded asset, that stranded debt, refinance it at a lower rate and reinvest it in communities,” Solomon said.
The future of power in Kentucky
Climate scientists say humanity has to halve carbon emissions globally by 2030 and reach net-zero by 2050 to avoid the worst impacts of warming.
Unfortunately, Kentucky state law doesn’t allow utility regulators to take the environment into consideration when it makes decisions about Kentucky’s power companies. But regulators do take cost into consideration.
The mission of regulators at the Kentucky Public Service Commission is to provide safe and reliable service at a reasonable price to the customers and financial stability for utilities.
If solar is now the cheapest option, it will be up to utilities to prove why fossil fuel infrastructure is warranted over new solar and wind power.
“Regulators need to be looking at the economics of every individual plant. Even if they’re not exactly the same as what we see in our analysis, they are likely quite close. And it really means regulators need to be taking a good long look at these costs,” Solomon said.
Supporters of fossil fuel power often point to the reliability of coal and natural gas as a reason for its continued existence, but that’s up for debate. The winter storm that hit the South in December demonstrated that renewables including solar and wind improve the reliability of the power grid while natural gas equipment froze.
The Energy Innovation study calculated that utilities could use the cost savings from replacing coal to pay for battery storage for renewable energy. Solomon calculated that the savings would pay for enough battery storage to replace 77% of the coal plant’s generation capacity.
The future of power at LG&E/KU
Kentucky’s largest utility has plans to build two 621-megawatt natural gas combined cycle units at existing power plants (Mill Creek in Jefferson County and E.W. Brown in Mercer County); nearly 1,000 megawatts of solar generation and 125 megawatts of battery storage, Collins said.
She said a replacement portfolio including natural gas combined cycle plants is significantly less expensive than a combination of solar, wind and battery storage, which would cost about $2 billion more than their current plan.
Collins said the gas plants they are proposing produce 65% less carbon than the coal-fired units they are retiring.
“Our transition to cleaner, more sustainable, reliable generation sources and work toward our goal of net-zero by 2050 is a process. We’re taking care to make that transition in a conscientious way, with a measured approach that does not put undue burdens on our most vulnerable customers, our communities or the industries we serve and we’ll be making more decisions along the way,” she said.