Parties say that Gaston is not needed, coal or no coal as its fuel

Two organizations told the Georgia Public Service Commission that if Georgia Power no longer has access to the coal-to-gas converted Gaston plant in Alabama, it will create incremental though not direct opportunities for new solar power development in Georgia.

Both organizations were responding to questions from a PSC member as part of the commission’s review of Georgia Power’s January integrated resource plan (IRP) filing, which contemplates a number of coal-fired shutdowns and conversions. The commission is nearing a decision in this case.

The Georgia Solar Energy Industries Association (GSEIA), asked if it is appropriate to compare solar generation with baseload generation, wrote in a July 9 response: “No, not now. Hearing testimony from both GSEIA and Company witnesses confirmed that solar energy is primarily an energy resource, not a capacity resource. In simplest terms, the difference between energy and capacity resources is the difference between peaking and baseload. The Company’s purchase of an energy resource is a variable cost, focused on peaking demand needs. Each generation resource has different energy and capacity characteristics. The purchase of additional solar energy as an energy resource makes sense because (like the wind purchase) it puts downward pressure on rates. This has been confirmed through the competitive bidding process established in ASI. The Company confirmed that the ASI small/medium scale price of $.13/kw creates no upward pressure on rates. The witnesses agreed that solar, as a generation resource, must be valued properly and that the Value of Solar (‘VOS’) exceeds the Company’s avoided costs. Therefore, GSEIA urged the Commission to conduct a further study on VOS.”

GSEIA, asked in order to add more solar, do you need to close Gaston or another plant to make room, said: “No. Again, the answer is already present in hearing testimony. The decision to close a plant or develop solar is not an “either/or” question. The two options are not mutually exclusive because solar and wind resources do not compete for selection against a specific resource. Despite excess capacity, there is still room for the Company to find ‘good deals’ for the purchase of energy resources. In the IRP, the Company has identified its committed resources, but it plainly has room to talk about additional energy resources, such as solar. … Irrespective of whether Plant Gaston is closed, the Company has room to make good economic deals that will expand solar. The testimony of all witnesses established that the purchase of solar generated electrons at a price below VOS is a good deal, creating downward pressure on rates.”

GSEIA was also asked whether Georgia Power can quantify the generation cost of solar relative to other generation sources, including Gaston: “Yes, the relative costs of all generation resources are detailed in the Company’s Generation Resource Technology Data Book which is a part of the Company’s initial IRP filing. As to solar, the Company also responded to Staff’s data requests stating that it had received proposals for utility scale solar PV below $2.00 per watt. Hearing testimony confirmed that solar now costs less per watt than nuclear at Plant Vogtle 3-4. The Company’s testimony projects that by 2026 (well within the IRP planning period) solar will cost less than one-half the cost of nuclear and bio-mass. While solar (by that time) is projected to still cost more than natural gas generation, the Company’s assumption that gas prices will stay the same for more than ten (10) years must prove to be accurate. Bottom line: hearing testimony established that the levelized cost of solar electrons under ASI at $.13/kw is cheaper than the cost of the very first electron that will be generated by Vogtle 3.”

GSEIA said its basic contentions remain the same: solar is now a necessary part of a properly diversified portfolio. The cost of solar is well within the range of the other generation resources in the Georgia Power portfolio. Solar’s cost has come down so much that “good deals” on solar energy are available that put no upward pressure on rates, and solar energy purchased at or below VOS benefits all ratepayers by putting downward pressure on rates.

Georgia Watch says shutting Gaston would help solar

Georgia Watch, a consumer advocate group, also filed a July 9 response to the questions. Georgia Watch had argued in its brief in this case that Gaston Units 1-4 should be retired because Georgia Power has an extremely high reserve margin, the limited capacity value of the Gaston units is dependent upon the company getting adequate gas transportation to supply the retrofitted units, and retiring the units will reduce the company’s $1.3bn anticipated environmental remediation costs.

The company’s proposal in its application is to convert the Gaston units from coal to natural gas so that they can be used for the limited purpose of summer peaking units, Georgia Watch noted. As summer peaking generation, the Gaston units have a similar load profile and are comparable to solar generation. Retiring the Gaston units will provide the company with additional opportunities to consider developing new solar generation projects in the future when its reserve margin is lower and there is a need for summer peaking capacity, the group added.

Gaston’s location in Alabama is irrelevant concerning whether the Georgia PSC should decertify and retire the aging coal units, Georgia Watch said. “The important issue is whether the cost of converting these old coal units to natural gas when the nearest gas supply is 30 miles away and the Company has an excess reserve margin of 25% after they retire 2,093 MWs of older coal units is worth the cost and the gamble that these units will be available in the future for the limited purpose of providing summer peaking generation,” it added.

“The retirement of the Plant Gaston units will enhance the opportunities for future solar development and reduce the immediate financial impact of the current Integrated Resource Plan on Georgia ratepayers,” said Georgia Watch. “By retiring the Gaston units the Company’s excess reserve margin will be lowered, excess capacity will be removed from the market enhancing the value of the remaining capacity and costs will be reduced for Georgia ratepayers.”

Completion of the gas lateral and unit modifications for Gaston Units 1-4 is scheduled for 2015 to meet the Mercury and Air Toxics Standards (MATS) compliance timeline, though Georgia Power said in the IRP that an extension to the MATS compliance date may be required to ensure the units operate in compliance while on coal if the current gas conversion schedule cannot be met. 

U.S. Energy Information Administration data shows Gaston getting coal earlier this year from Alabama coal producers Walter Energy (North River longwall mine), Twin Pines Coal and Alabama Coal, plus coal from Colorado from the Elk Creek longwall mine of Oxbow Mining, and coal from Indiana from the Gibson deep mine of Alliance Coal.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.