Utilities switching from coal to gas

Utilities around the country are closing or converting older coal-fired power plants, and increasing the use of natural gas.  Pressure to make this shift comes from several factors, including tighter regulation of air emissions and the low price of natural gas compared to recent history.

The stacks of the Salem Harbor Power Station rise above Cat Cove in Salem, Massachusetts.  Dominion announced last year that it would close this plant, which it then sold to Footprint Power.

One electric generation plant that may illustrate this trend is Dominion Virginia Power's Bremo Power Station on the James River in central Virginia.  Originally built by the Virginia Electric & Power Company in 1931, the plant can now produce 227 megawatts of electricity by burning coal to boil water; the resulting steam spins turbines attached to electric generators.  According to Dominion, the Bremo plant consumes an average of 2,500 tons of coal per day.

This week Dominion announced plans to convert the Bremo plant from coal to natural gas.  In a filing with the Virginia State Corporation Commission, the regulatory body responsible for electric utilities, Dominion asked for approval to convert the plant over the next year at an estimated cost of $53.4 million.  If the SCC approves the conversion, the utility anticipates stopping coal consumption at the plant by the fall of 2013.

Dominion had previously agreed to convert the Bremo Power Station by spring 2014 as part of the air permit it received for the 585-megawatt Virginia City Hybrid Energy Center.  That plant entered commercial operations in July of this year, burning a mix of coal and biomass.

Dominion describes the Bremo conversion as being the ninth company-owned, coal-fired power station with units recently announced to be closed or converted to alternative fuels.  The utility points to the uneconomic nature of operating smaller, older coal-fired stations given the spread of cheaper natural gas and new environmental regulations requiring operators to retrofit plants with upgraded emission control equipment.  According to Dominion, the Bremo conversion would allow consumers to save about $155 million when compared to continued operation on coal.

Other utilities are making similar conversions or are considering closing some existing coal-fired plants. Natural gas consumption is on the rise, particularly in the electric generation sector.  At the same time, many utilities continue to rely on coal as part of their generation portfolio, as evidenced by Dominion's construction of the the primarily coal-fired Virginia City plant.  The trend appears to be one of closing or converting older or smaller coal-fired plants, consolidating coal consumption in larger, newer plants and increasing the use of natural gas to produce power.