Carolina Energy Company to Shutter Coal Plants

Decision is a bellwether of several big important trends in electric power

2 min read

Progress Energy announced yesterday, Dec. 1,  that it will close four coal-burning electric power plants in North Carolina, rather than to go to the expense of  equipping them with flue-gas desulfurization scrubbers. The decision was taken in response to a ruling of state regulators who ordered the company to prepare retirement plans for the plants, which have a combined generating capacity of 1,485 MW, unless it outfitted them with scrubbers. The four plants represent about 30 percent of Progress's North Carolina coal-generating capacity; it has cost the company about $2 billion to install pollution control equipment on the remaining plants, which have a combined capacity of 3,542 MW. That translates to a cost of about 50 U.S. cents per watt.

During the last few years, as an anti-coal movement has taken root in the United States and as corporate executives and shareholders have become more and more worried about the prospect of a penalty being put on carbon emissions, many dozens of coal generating projects have been cancelled across the country. But this week's decision by Progress Energy may represent the first major case of existing coal plants being decommissioned rather than improved.

“Coal-fueled generation will continue to be vital to our ability to meet customer electricity needs,” said Lloyd Yates, president and CEO of Progress Energy Carolinas, in the corporate press release. “But as environmental regulations continue to change, and as even more significant rule changes appear likely in the near future, the costs of retrofitting and operating these plants will increase dramatically. We believe this is the right decision for our customers, our state and our company.”

Partly to replace the coal generation, Progress plans to build a 950 MW natural gas fired plant in Wayne County, and a gas plant of about 600 MW near Wilmington. It's also looking at the possibility of obtaining about 150 MW from biomass such as wood waste, biomass being the states most plentiful renewable resource, according to the company.

Yesterday's announcement “sends a clear signal that coal is not the future,” the Environmental Defense Fund's Michael Regan told the Wilmington Star News. “Cleaner energy is part of the future,” said Reagan, who is EDF's climate and air policy director for the U.S. Southeast.

The announcement also sends a clear signal that natural gas is coming back, with estimated reserves way up and, and of wind's, possibly, starting to run into some cost limits. But is it also a signal that many energy companies will opt to shutter dirty coal plants, in anticipation of Federal carbon regulation? Not necessarily. The CEO of Progress Energy Carolinas explained to the New York Times that by closing the plants now, the company may be unable to get credit for reduced carbon emissions later, when a cap and trade system is introduced, and may therefore have to do even more to cut emissions.



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