After years of shielding the economic status of its coal-fired power fleet from public view, utility PacifiCorp is taking the first step toward considering early closure of some of its poorest-performing coal-fired power plants, and replacing them with hundreds of megawatts of less costly wind, solar and energy storage resources.
Last week, the Berkshire Hathaway-owned utility revealed that its customers could save up to $248 million over the next 20 years, under a plan to retire four of its least economically competitive coal units in Wyoming by 2022, several years ahead of schedule.
The analysis also showed that PacifiCorp could close up to nine of its coal units in Wyoming and Colorado and still achieve a long-term savings of $12 million over 20 years.
The economic analysis is not a concrete plan for early retirements, just one of several steps that still need to be taken before the six-state, 1.9-million customer utility files its final integrated resources plan, or IRP, in August. Still, it’s the first time PacifiCorp has laid out a public proposal that includes early retirement for coal plants in Wyoming.
This move has drawn the ire of Wyoming’s coal-friendly state political leadership, and could face a challenge in the form of a newly passed state law that puts multiple barriers in front of companies trying to sell or shut down coal plants in the state.
At the same time, PacifiCorp’s new proposal was welcomed by environmental groups like the Sierra Club, which have been arguing for years that much of PacifiCorp’s coal fleet could be more cheaply replaced with less-polluting resources.
This could include some of PacifiCorp’s first major commitments to battery energy storage. A majority of its coal early retirement scenarios call for anywhere from 300 megawatts to more than 500 megawatts of standalone energy storage, as well as several scenarios that add hundreds of megawatts of solar-plus-batteries to its mix.
The murky cost of a pricey coal fleet
Last week’s news is the latest in a long-running series of revelations about PacifiCorp’s struggling coal fleet, stretching back to 2017, when the Oregon Public Utility Commission ordered the utility to evaluate its coal plants’ cost-effectiveness as part of its IRP.
PacifiCorp has claimed the data is market-sensitive and fought against its release. Last year it won a decision from the Oregon PUC to keep much of its data confidential, and successfully fought an effort to reveal more data from regulators in neighboring Washington by winning a judge’s injunction.
Despite these efforts, the data on PacifiCorp’s coal fleet has continued to emerge through its current IRP process, which is reviewed every two years.
In December, a PacifiCorp analysis showed that 13 of its 23 operating coal units in Montana, Colorado and Wyoming were more expensive than their cleaner-energy alternatives across a range of scenarios, including one that could save customers up to $317 million over 20 years by early retirement of five units generating 834 megawatts, currently set to close no earlier than 2029.
However, this analysis only took into account the economic impacts of closing multiple plants, not the impact that the combination of closures could have on the reliability of PacifiCorp’s transmission system.
But last week’s presentation takes that additional step, noting that all of the multiple “retirement stacks” under consideration would save money and could be carried out without threatening system reliability — although that second finding will still need to be reconfirmed if any of these scenarios end up making their way into PacifiCorp’s final IRP.
Ravi Manghani, energy storage research director for Wood Mackenzie Power & Renewables, notes that PacifiCorp’s economic troubles with coal, and its range of options for dealing with it, are mirrored at utilities across the country.
“It’s getting increasingly costly to operate traditional power plants due to low capacity factors and increasing environmental costs,” Manghani said.
At the same time, the coal plants face growing pressure from “impressive cost declines for renewables, and more recently energy storage,” he said. “Utilities are in a tough spot when it comes to retiring these plants as public opinion continues to shift toward a cleaner grid, while simultaneously designing a system that doesn’t compromise reliability.”
A big move into energy storage?
PacifiCorp’s IRP already calls for more than $3 billion in investment into renewables over the coming years, including the addition of up to 1,200 megawatts of new wind power in the Pacific Northwest and Rocky Mountain regions, along with major new transmission lines to carry it westward.
Parent Berkshire Hathaway Energy, whose other utility subsidiaries include MidAmerican Energy and NV Energy, is the country’s second-largest owner of wind capacity, with nearly 8 gigawatts clustered in Iowa and Wyoming, according to the American Wind Energy Association.
In last week’s economic analysis, PacifiCorp also revealed for the first time that it will be considering a major investment in standalone energy storage for a majority of its early-retirement replacement plans.
That’s a new move for a utility that hasn’t made any major commitments to energy storage. In fact, PacifiCorp’s Oregon subsidiary Pacific Power told state regulators last year that it was unable to identify a cost-effective project to meet the state’s energy storage mandate.
But in most of the “stacked retirement” scenarios outlined in last week’s PacifiCorp IRP analysis, energy storage will be playing an important role. For example, the “C-42” scenario — the one with four unit closures and $248 million in savings that PacifiCorp highlighted as most cost-effective — would call for about 300 megawatts of energy storage, along with more than 200 megawatts of solar power and nearly 400 megawatts of natural-gas generation, according to the chart shown below.