The Tennessee Valley Authority announced earlier this month a target of reaching net zero emissions by 2050, but the goal falls far short of President Biden’s call to decarbonize the electric grid by 2035. The federal utility has proposed more than 1,500 megawatts of new gas construction which would operate well beyond 2035, raising questions about stranding those assets and their costs on the backs of TVA’s consumers. 

The Tennessee Valley Authority’s (TVA) net zero plan lacked details for how the utility planned to achieve its goal, but TVA CEO Jeffrey Lyash said that TVA will need new technologies such as carbon capture and storage to fully decarbonize by 2050, fifteen years beyond President Biden’s goal. TVA’s failure to align with Biden’s carbon reduction goal comes after Energy Secretary Jennifer Granholm’s presented to the TVA board about the Administration’s goals and offered the Department of Energy’s assistance.

TVA has come under fire in recent years for a series of actions suppressing clean energy, its lack of transparency, and weak oversight from its board of directors. The utility is also facing pressure from local power companies, some of which are threatening to drop TVA as their power provider largely due to high wholesale power costs from legacy coal and gas plants and contract inflexibility.

TVA plans new gas-fired power plants

TVA has announced plans to build 1,500 megawatts of new gas capacity at shuttered coal plant sites in Kentucky and Alabama and appears to be counting on carbon capture and storage being commercially viable by the mid-2030s. TVA did not include any carbon capture and storage costs into its analysis when determining whether to build its new gas plants. Just to TVA’s south, Alabama Power admitted in an air permit for a new gas-fired power plant that carbon capture and storage costs were “plainly excessive” and could cost the utility, and ultimately customers, as much as $322 million per year. TVA’s gas build-out plans were the second highest of any utility in the nation, according to a recent Sierra Club analysis. 

An environmental assessment released by TVA on its proposed gas plants did not consider any potential alternatives to new gas, such as renewable energy, battery storage, or energy efficiency and demand response. Previous analysis in TVA’s 2019 integrated resource plan (IRP) showed that TVA could forego 1,900 MW of gas-fired power plant construction by instead expanding energy efficiency and demand response programs, technologies available and cost-effective today.

Clean energy advocates argued that TVA’s proposed gas plants violated the National Environmental Protection Act when TVA failed to “mention the effects of accelerating the climate crisis” and did not consider “the environmental injustice of building a new fossil-fuel plant at Colbert, near the overburdened, predominately [sic] Black community of Red Rock/Barton, or at Paradise, near overburdened, low-wealth communities.”

TVA may have even larger ambitions for new gas at shuttered coal plants. On top of the already announced 1,500 MW of new gas, the utility’s 2019 IRP included as much as 17 GW of new gas-fired power plants, and TVA has already announced plans to close its remaining four coal plants by 2035. In its preliminary environmental impact statement on the remaining coal closures, two out of the three alternatives TVA will analyze included a substantial build-out of new gas, possibly as much as an additional 1,450 MW.

TVA’s CEO Jeffrey Lyash told E&E News that gas would continue to be a “bridge to allow more renewable energy” for the utility. 

Other utilities are foregoing gas entirely as they transition out of coal. The Northern Indiana Public Service Co. (NIPSCO) has told Indiana regulators that it will achieve steep emissions reductions by 2030 by retiring its coal plants, foregoing the construction of new gas plants, and investing in renewable energy and battery storage. The company told Indiana regulators that of all the pathways it analyzed, retiring coal and skipping gas in favor of renewable energy was the one with the lowest cost to consumers.

That finding from NIPSCO comports with what experts are increasingly reporting: A study from the University of California, GridLab and Energy Innovation released earlier this year found that the U.S. can achieve 90% clean, carbon-free electricity nationwide by 2035, dependably, at no extra cost to consumers.

The Wall Street Journal also recently reported that gas plants are “already struggling to compete with wind and solar farms.”

TVA’s stifling of distributed energy resources inconsistent with net zero goal

Despite its net zero claim, TVA has routinely acted to eliminate or reduce emission-saving programs. Since 2014, the federal utility slashed more than two-thirds of its energy efficiency budget and eliminated most of its renewable energy programs for distributed generation. In 2020, TVA began allowing its local utilities to tax solar customers. TVA has planned to halve its energy efficiency from just 2% of its energy mix in 2020 to 1% in 2030 while increasing its energy derived from gas from 27% to 32% over the same decade. An updated contract TVA has pushed its local utilities to sign limits locally procured renewable energy to less than 5% of the local utility’s load. 

Source: Southern Alliance for Clean Energy

TVA has since started a new solar program called Green Connect, but the program removed all incentives and only offers customers a list of solar contractors and a complementary post-installation inspection. Two of TVA’s largest local utilities, Nashville and Memphis, do not participate in the scaled back program, according to the program’s website.

A recent study led by Dr. Christopher Clack of Vibrant Clean Energy and issued by Vote Solar, the Coalition for Community Solar Access, and SunRun, found that developing 247 GW of local rooftop and community solar and 160 GW of local energy storage nationally would be the most cost-effective way to transition to a clean energy system by 2050, and would unlock additional utility scale solutions.

Energy efficiency is often referred to as the “first fuel” reflecting its low cost and ability to save customers money on their bills, according to the American Council for an Energy Efficient Economy. TVA has admitted, despite cutting incentives, that energy efficiency is one of the fastest and most cost-effective solutions to reduce carbon emissions.

Header image source: YouTube

Posted by Daniel Tait

Daniel Tait is a Research and Communication Manager for the Energy and Policy Institute.

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