Utility executives in Kentucky are planning the future of electricity generation in the warmth of coal’s dying light.
Kentucky remains one of the top five coal-burning states and among the worst for solar and wind production. Historically, coal provided nearly all of the state’s electricity, but that’s changing as older plants become more costly to operate.
The state’s electric utilities have mostly traded coal power for natural gas, a fossil fuel that releases less carbon into the atmosphere, but is also prone to leaking another potentgreenhouse gas — methane.
In the coming years, all six major electric utilities in Kentucky are adding some combination of solar, wind and battery storage to their generation portfolios, but with trepidation, and at a slower pace than many other states in the country. So they’re also counting on fossil fuels.
“Currently, renewable energy alone cannot meet the around-the-clock energy needs of our customers, particularly in the winter,” said Chris Whelan, Vice President of Communications for LG&E and KU. “However, we expect renewables like solar to play an important part of our energy portfolio alongside flexible generation resources.”
Utilities in Kentucky are nervous about the changing energy landscape. Despite the strides made in solar and wind power, they remain skeptical that renewables are affordable and reliable enough to power their service areas. Instead, they’re hedging their bets with fossil fuels and crossing their fingers for a technological breakthrough that will help them achieve their carbon reduction pledges.
For this story, LPM News surveyed and reviewed hundreds of pages of records for every major electric utility in Kentucky including Louisville Gas & Electric and Kentucky Utilities, Duke Energy, Kentucky Power, Big Rivers Electric Corp., East Kentucky Power Cooperative and the Tennessee Valley Authority. Big Rivers was the only utility that declined to respond.
‘No regrets’
Nearly a quarter of the country’s remaining coal fleet is set to retire by 2029. Utilities in Kentucky anticipate closing more than a dozen coal units in the next 15 years. These older, less efficient units face higher operating and maintenance costs making them less competitive when compared to new technologies.
In the midst of this energy transition, the state’s largest utility is planning on a future with no regrets. LG&E and KU executives told state regulators they are hedging against “regret” in a rapidly transforming world, according to testimony in an ongoing case before the Kentucky Public Service Commission.
In early July, average global temperatures reached the hottest ever recorded several days in a row. Dangerous heat waves spread across the South. Marine heatwaves are spreading across the oceans. Sea ice around Antarctica is reaching record lows, hundreds of wildfires are disrupting Canada’s economy and spreading toxic air pollution all the way into Kentucky.
But when utility executives talk about avoiding regret in a rapidly transforming world, they’re not talking about how additional carbon emissions will affect future generations. They’re not talking about electricity generation’s contribution to the climate crisis. They’re talking about preserving affordable, reliable electricity for their ratepayers while accounting for future changes in regulation and technology.
For example, LG&E and KU, are proposing two new natural gas power plants; each with a decades-long lifespan at a combined cost of $1.36 billion dollars to be paid for by ratepayers who have little say in where their power comes from.
Dozens of Kentuckians have written comments to state utility regulators opposing the new gas plants. Many cited the climate crisis and asked the utility to more swiftly phase out fossil fuels.
“I am a grandparent who has been watching the development of more frequent and severe weather events with fear for my grandchildren,” wrote Ray Barry from Lexington. “There is no time to waste. New gas fired plants will either become stranded assets [or], in the meantime, worsen global warming.”
But in testimony to state regulators, LG&E and KU Vice President David Sinclair said he doesn’t think those new gas plants would cause any “material regret.” In this case, he means economic regret, i.e. bad investments.
“It is hard to see how any plausible broad-based CO2 regulations or new generation technology that would be commercially deployable at scale would cause material regrets any time in the foreseeable future or would justify forgoing the benefits the proposed resource portfolio will provide for decades to come,” Sinclair said in testimony to utility regulators.
It’s important to note that state regulators at the Kentucky Public Service Commission are legally required to balance the interests of utilities and customers, and there is nothing in state law that allows regulators to directly address the environmental harm or benefit of future power generation.
Diverse portfolios for an uncertain future
LG&E and KU’s “no regrets” power generation portfolio would cut coal power by a third by 2030, bolster the company’s renewables and split the difference with natural gas. The net result would reduce carbon emissions by about 23% compared to 2021 levels. Coal would remain the utility’s primary source of electricity, followed by natural gas and a modest increase in renewables: From less than 1% of LG&E’s total generation capacity to about 9%.
Utilities across Kentucky have similar plans to diversify their energy portfolios in the face of an uncertain future.
- Kentucky Power, which electrifies much of eastern Kentucky, plans to end its contract with the coal-fired Mitchell Plant in 2028, add a new gas plant and extend the life of the Big Sandy gas plant through 2041. The utility also plans to add a significant amount of wind and solar through 2037 and some battery storage by 2035.
- Duke Energy, which covers a portion of northern Kentucky, plans to retire the East Bend Generating Station coal plant in 2035 and increase its renewable portfolio to 22% by that time.
- Big Rivers Electric Corp., which powers part of western Kentucky, is converting its coal-generating plants into natural gas plants. It will keep at least one coal plant operating for the foreseeable future, and idle two more. It’s also planning on adding a small amount of new solar capacity and will maintain a current hydro electric project.
The Tennessee Valley Authority, which powers counties in the southern part of the state, has the cleanest portfolio of the state’s utilities. It received about 57% of its electricity from renewable sources. Mostly from nuclear, about 12% from hydroelectric and another 3% from wind and solar as of 2020. TVA plans to retire the Tennessee Bull Run coal plant at the end of the year. Over the next 15 years, it’s planning to add a significant amount of natural gas and solar power, according to its latest integrated resource plan, or IRP.
“We are moving toward a renewable energy future. And for now, that includes technology like natural gas that helps us get there. But you know, we're already planning to add 10,000 megawatts of solar energy in the next decade,” said Scott Brooks, TVA spokesperson.
East Kentucky Power Cooperative, which provides electricity to 16 member-owned cooperatives and about 1.1 million Kentucky residents and businesses, has the weakest carbon reduction plans of any utility in the state.
“EKPC is concerned about future reliability of the interconnected electric system and believes that conventional generation resources will continue to be required to facilitate the transition to renewable and low/no carbon emitting resources,” the utility wrote to regulators.
About 6% of EKPC’s energy portfolio comprises renewable sources currently, though the cooperative told regulators it will supplement any future needs by purchasing solar power through third-party agreements.
EKPC told regulators in long-term plans filed with state regulators that it has enough power to meet the needs of its customers for the foreseeable future, but plans to remain “flexible,” according to its 2022 IRP.
Natural gas vs. renewables
Utilities in Kentucky say that renewables such as wind and solar are important, but cannot alone meet their customers’ energy needs.
- LG&E KU
- “In our current plan before the commission to retire 1,500 megawatts of generation, we evaluated an all-renewable energy and battery scenario and concluded it would cost about $2 billion more than our recommended portfolio,” Whelan with LG&E told LPM news.
- Duke
- “Renewables are and will continue to be part of our portfolio moving forward. But they can’t meet all of the demand for power generation, all of the time. Baseload generation that is available 24/7 is essential,” said Sally Thelen, Duke Energy spokesperson.
- TVA
- “We'll be increasing our natural gas. Natural gas kind of gets us where we want to be. It allows us the flexibility to be able to add more renewable energy,” Brooks with TVA said.
Whelan, LG&E and KU vice president of communications, said the utility recognizes the demand for cleaner energy, more stringent environmental regulations and the electrification of the economy. That requires LG&E and KU to modernize its energy portfolio, she said. However, LG&E and KU say they have to balance that transition against reliable service and ensuring power is affordable to everyone.
That’s why the utility’s hedging its bets with a portfolio that in the near-term will continue relying heavily on coal and natural gas, which produces about 65% less carbon per megawatt hour than their current coal units.
“We believe, as we transition to the future, we need a balanced mix of generation to continue to reliably meet our customers’ energy needs. Natural gas combined-cycle generation is a partner to renewables, offering the most flexibility to transition to lower emitting generation sources,” Whelan said.
The role that natural gas will play in the energy transition is a controversial subject. Many utilities say the gas is necessary a bridge between dirtier fossil fuels like coal, and a net-zero carbon future.
And a federal laboratory that studies energy agrees. National Renewable Energy Laboratory models also demonstrate that using the country’s existing natural gas fleet, and even building new plants, may be part of a least-cost solution to achieving 100% clean energy by 2035, said Paul Denholm, a senior research fellow at the NREL who studies wind and solar power.
“Certainly between now and 2035, we are using existing fossil fuel plants and in some cases, building a few new ones to get us to that clean energy future,” he said.
But any gas plants built in the future would likely remain in operation for decades as utilities seek returns on their investments. Alternatively, they could become stranded assets and lose their value before utilities see a return on that investment. Either way, they would continue adding greenhouse gases to the atmosphere for the foreseeable future.
But Denholm also said there’s a growing consensus among industry experts that getting to 80% with renewable energy and battery storage is both technically feasible and in many instances, cost competitive with current technologies.
“We’ve demonstrated time and time again that a very large scale up of wind and solar and batteries right now is cost effective and part of a kind of a ‘no regrets solution,’” he said.
What’s important, Denholm said, is for utilities to use the technologies that are available today to reach the clean energy goals of tomorrow.
The other 20%
Utilities like LG&E/KU have been exploring emerging technologies to figure out that last 20%, but so far none have proven economical. In testimony to state regulators, the utility said it’s hopeful that its natural gas plants could begin blending hydrogen with natural gas to further reduce their carbon footprint.
The utility also has nearly 140 active research projects underway, Whelan said. Researchers in one project are studying carbon capture on natural gas power plants. They’re planning to test the technology on the Cane Run Generating Station in Louisville.
LG&E executives say they will burn coal after 2050 if carbon capture is proven to be cost effective. Last year, LG&E’s own official testified carbon capture remains an aspirational goal, its potential “yet to be determined.”
Kentucky Power’s parent company ran a carbon capture and storage (CCS) project for two years on a coal plant in West Virginia, but didn’t expand to commercial scale because of “regulatory and economic factors.”
“One of the challenges with CCS is to make it economically viable at a large scale. More work is needed to overcome this, but progress is being made and we are keeping an eye on the future of the technology,” said Sarah Nusbaum, Kentucky Power spokesperson.
Other utilities are researching the use of small modular nuclear reactors. As it turns out, the U.S. Department of Energy found at least nine retired coal-fired power sites in Kentucky that could be converted into nuclear reactors. The Legislature also established a nuclear development working group earlier this year.
“We’re going to need a mix of resources to continue providing reliable power to customers in the future. The development of emerging technologies such as hydrogen, battery storage and small modular reactors can provide new ways to deliver energy to customers while helping to maintain reliability of the grid,” Nusbaum said.
But there’s a lot of red tape when it comes to nuclear power. LG&E’s vice president of energy supply and analysis estimated it won’t be a viable resource option until the early 2040’s.
“Though there is a lot of industry interest in the potential for new nuclear generation, particularly associated with small modular reactors (“SMR”), technology risk remains large and the Nuclear Regulatory Commission’s (“NRC”) permitting process is long and expensive,” David Sinclair told regulators last December.
The potential for a brighter tomorrow
Right now, there’s only enough solar capacity in Kentucky to power around 6,800 homes, said Andy McDonald, director of Apogee, a research and advocacy group advancing the energy transition.
But renewable experts say Kentucky does have substantial untapped capacity for renewables, particularly solar. One study found it is now cheaper to build local solar farms than to continue operating Kentucky’s remaining coal-fired power plants.
And while there are stronger wind resources in other nearby states, they also exist within the commonwealth, particularly in western Kentucky. But more importantly, there are opportunities to work with neighboring states, improve transmission and share resources in a way that helps everyone, he said.
McDonald said he believes that Kentucky’s utilities can gradually phase out existing fossil fuel plants without having to add new ones. To do it, will require a lot more rooftop solar panels, more utility-scale solar, more four-hour battery storage, and energy efficiency improvements in homes.
“What I'm saying is, over the next 15 to 20 years, we can transition away, gradually phase out the plants that we have,” McDonald said. “So it's not the solar resource or the wind resource that's preventing them from being developed in Kentucky. It's our policies.”
Kentucky’s non-existent climate goals
At least 22 states have established 100% clean energy goals including Illinois, Michigan, North Carolina, Virginia and Louisiana, but Kentucky isn’t one of them. The state’s last climate action plan was written in 2011 while Gov. Andy Beshear’s father, Steve Beshear, was still in office. And the state isn’t likely to write another one anytime soon.
Kentucky’s Republican-dominated Legislature has shown no interest in adopting clean energy goals or reducing the state’s carbon footprint. Republican and Democratic candidates for governor have both expressed support for the continued use of coal and other fossil fuels for electricity generation.
Republican candidate Daniel Cameron has spent his term as attorney general undermining efforts to reduce carbon emissions and adapt to a changing climate in Kentucky and across the country. Democratic Gov. Andy Beshear said he doesn’t want to see any more coal power plants retired, according to WCHS.
"We need the capacity. We need the power on the grid, and so right now we need all forms of energy here in Kentucky. we shouldn't be retiring any of them,” he said.
McDonald said the rate of renewable adoption has been slow in Kentucky because of the state’s devotion to the coal industry.
“Other states that are far more advanced than Kentucky have had very supportive policies,” he said.
Until then, Kentucky will have to rely on utilities’ pledges to cut carbon emissions. Here they are:
- LG&E/KU
- plans to achieve net-zero carbon emissions by 2050, with interim reduction targets of 80% from 2010 levels by 2040 and 70% by 2035. In addition, the utility said it’s committed to not burn coal beyond 2050 unless it can be mitigated with carbon capture technologies.
- Tennessee Valley Authority
- “aspires” to achieve net-zero carbon emissions by 2050.
- Duke Energy
- is striving toward at least a 50% reduction in CO2 emissions from electricity generation in 2030 and plans to reach net-zero CO2 by 2050.
- Kentucky Power
- plans to achieve an 80% reduction in carbon dioxide emissions from 2005 levels by 2030 and reach net zero by 2045.
- Big Rivers Electric Corp.
- plans to reduce carbon emissions 77% by 2030 compared to 2005 levels, according to a 2021 annual report.
- The East Kentucky Power Cooperative
- plans to obtain 15% of its energy from renewable sources, reduce CO2 emissions by 35% 2035 and 70% by 2050, based on 2010 emissions, according to its website.
Editor’s note: This is the third of three stories in the “Coal’s Dying Light” series. This series was supported by the MIT Environmental Solutions Journalism Fellowship.
