by Mike Sloan SEP 26, 2009.
7 Reasons for Austin to Re-Think its Loyalty to the Fayette Coal Plant.
Coal has long been considered cheap energy: unhealthy yes, but with an intoxicatingly low price. That mindset should be abandoned. It is no longer true.
If you believe quitting coal is for tree-huggers only, please consider the hard economic facts of betting Austin’s future on continued use of the Fayette Power Project:
- Coal Fuel Costs are Rising. 73% increase in 2008 alone. During the past 10 years, coal fuel expenditures have gone from $37 million to $87 million.
- Coal Plant Operating Costs are Rising. 12% over budget in 2008. During the past 10 years, coal expenditures have gone from $12 million to $21 million.
- Investment in Coal Plant Emission Controls is Rising. $74 million was spent in 2008 as part of a multi-hundred million dollar investment to extend the Fayette coal plant’s life.
- Carbon Regulation expected to impose sharp cost increase. Expected to roughly double the future operating cost of the coal plant.
- Operation of Coal Plants projected to Decrease due to Wind Power. Zero fuel cost wind power is expected to reduce coal plant operations in Texas by 10%.
- Low Natural Gas prices threaten viability of Coal plant economics. Coal plants depend on high gas prices to make money. At present, some gas plants are cheaper than coal plants.
- The Value of the Coal plant was decimated in 2009. Low gas prices and abundant renewables equals shaky economics for Texas coal plants. Now add carbon regulation.
The cumulative effect of such factors have led many Texas energy investors to sharply decrease their interest in developing new coal plants during the last three years, with much attention now turning to wind and solar power.
While the confluence of game-changing environmental and economic factors pose serious concerns for owners of coal plants, it is quite possible that natural gas prices will rise, that new wind and solar projects will be delayed, and that pro-coal interests will successfully weaken pending federal carbon legislation.
If these things come to pass, and we ignore health and environmental impacts, Austin could yet extract some financial benefit from continuing to own the Fayette coal plant for additional years even while investing millions more to keep it going.
Which brings us to one additional factor.
What are Austin’s words worth when it says “make Austin the leading city in the nation in the effort to reduce and reverse the negative impacts of global warming”?
Austin City Council will decide.
Learn about the medical dangers of burning coal in our video with Dr. Elliot Trester.
