special report Smith Mountain Dam is a 50-year-old example of Appalachian’s renewable energy portfolio.
If the CPP is not enacted, will coal consumption likely increase? No.” Here’s why: The cost of generation per megawatt hour is $114 for utility-scale solar, $73 for wind, $100 for natural gas with carbon capture and storage technology, $73 for natural gas, $144 for advanced coal with carbon capture and storage, and $95 for conventional coal. “Are entire communities being decimated by the decline of coal? Yes.” Employment in the coal industry from 2008 to 2015 fell 28 percent, and severance tax — a key metric and source of revenue for coal communities — decreased 25 percent over the same period. “Will technology stall if the CPP is not enacted? No.” Private sector embraces renewables Regardless of government mandates, the private sector already is moving toward cleaner energy sources, Patton says. Investment managers controlling $2.6 trillion have committed to divest from fossil fuels, while corporate giants such as Johnson & Johnson, Procter & Gamble, Starbucks, Goldman Sachs and Walmart have committed to renewable energy goals. The large-scale shift that Patton talked about has coal companies 10
FEBRUARY 2016
reeling. Federal regulations such as MATS and the CPP have contributed but are far from the only factors. Horizontal drilling and hydraulic fracturing have made natural gas prices much more competitive, especially when paired with the fuel’s comparatively clean burning profile. While those dynamics have crippled the market for steam coal, used to generate power, an economic slowdown in China has driven down demand for metallurgical coal, used in making steel. Those two trends have resulted in a steady stream of layoffs, bankruptcies and consolidation within the coal sector, especially in Appalachia, where seams tend to be thinner and more difficult to access compared with coalfields in the Midwest. That chain reaction has not only affected coal country but also areas like the Roanoke and New River valleys, which play a less direct but still important role within the industry. As coal volumes declined, for example, earnings at Norfolk Southern, a longtime area employer and a freight carrier for coal — took a hit as well. Appalachian Power has built coal-fired plants fairly recently — its 600-megawatt, John W. Turk Jr. Power Plant began operations in southwestern Arkansas at the end of 2012 — but no longer. “The Turk
plant is the last coal plant we’ll build in my career, unless there’s a technology change,” Patton says. Congressman Morgan Griffith of Salem, a Republican who represents Virginia’s 9th District, levels blame at President Barack Obama’s administration. “Natural gas is cheap, no doubt, but they probably wouldn’t be closing and retrofitting plants if it weren’t for the regulations,” Griffith says. “Natural gas might be a problem and there’d be some shift from coal, but you wouldn’t see this rapid collapse of the coal industry. You wouldn’t see AEP moving this fast if it weren’t for the administration’s policy.” While those connected to coal see a continued downward trend, environmental advocates see a lot to like in the company’s IRP document. “The IRP is very strong and has really demonstrated the positive benefits of wind power in particular — the lowest cost resource going forward, after Kresowik energy efficiency,” says Mark Kresowik, regional deputy director for the Sierra Club’s Beyond Coal campaign. “Now we certainly think there is more they can do, particularly on energy efficiency and moving beyond coal.” Hannah Wiegard, Virginia campaign coordinator for Appalachian Voices, expressed similar support for the IRP’s approach to wind. “It’s interesting to us that Appalachian is recognizing most of that wind resource potential is in western Virginia on ridges. That’s a good resource in our view,” Wiegard says. “I had just been reviewing the numbers they set in the plan — 150 megawatts of wind energy next year followed by 150 annually beginning in 2022 is significant. In that sense we appreciate Appalachian looking at diversifying its mix.” Wind matches the dirtier, cheaper version of natural gas — burned without the use of carbon capture technology — as a relatively low-cost Photos courtesy Appalachian Power Co.