An independent analysis describes how Colorado’s coal-burning power plants are economically unviable and burdening customers with extra costs, compared to renewable energy resources. Conducted by energy consulting firm, Strategen, the report finds that renewable resources have outpaced coal, with the potential to save customers millions of dollars. These savings increase when the social cost of carbon (SCC) for the 10 units in the study is accounted for and securitized bonds are used as a tool to transition away from coal.
The Colorado Coal Plant Valuation Study provides new information on Colorado’s coal-fired power plants. The analysis includes the cost of replacing the 10 existing coal plants slated for retirement after 2025 with wind or solar resources.
“This report backs up what so many of us already know: coal can no longer compete with cheaper renewable energy generation,” said Anna McDevitt, Senior Campaign Representative at the Sierra Club’s Beyond Coal Campaign. “In Colorado, we have clear options on the table to support communities, ratepayers, and utilities in the transition away from coal. It’s time that Colorado utilities — big or small, public or private — take the benefits of renewable energy seriously.”
The analysis also examines the social cost of carbon of Colorado’s coal portfolio and the impact of using securitization, a financial tool to retire coal plants without burdening ratepayers, for retiring Xcel’s coal fleet, per provisions in SB19-236, the Sunset Public Utilities Commission Act.
“Moving towards a clean energy economy not only protects Colorado’s natural resources, it also has economic benefits. Transitioning away from coal has the potential to significantly reduce air pollution, which in turn results in cost savings in health care spending,” said Abbey Pizel, Natural Resource Policy Analyst at Colorado Fiscal Institute. “Moreover, better air quality leads to better quality of life, and translates to greater worker productivity and economic activity.”
Using publicly available data and applying conservative assumptions, Strategen found the following:
- Wind resources are cheaper than coal for all 10 Colorado coal units analyzed, including the newest coal plants in the state, Xcel’s Comanche and Pawnee plants. Solar resources are cheaper than all of Colorado’s coal fleet except for Pawnee and Rawhide.
- $1.7 billion is the potential savings if all 10 coal units are replaced with wind.
- $1.4 billion is the potential savings if all 10 coal units are replaced with solar.
Strategen calculated the SCC of the 10 units, applying a value of $46 per short ton of carbon dioxide emitted in 2020 which is the minimum value required by SB19-236, to calculate savings when switching to alternative renewable sources and found:
- $18.7 billion is the potential savings when accounting for SCC if all 10 coal units are replaced with wind.
- $17.7 billion is the potential savings when accounting for SCC if all 10 coal units are replaced with solar.
Strategen calculated ratepayer benefits that might be achieved through the securitization of the remaining plant balance of Xcel’s 5 units over a period of 20 years starting in 2023 and found the following:
- $467 million is potential savings for Xcel customers when compared to business-as usual scenario.
- A portion of these savings could fund worker and community transition projects in coal-dependent communities.
“Strategen took some of the innovative tools to fight climate change that came out of the 2019 legislative session and applied them to Colorado’s coal, giving us, for the first time, an idea of the significant economic burden our communities bear when it comes to our aging energy infrastructure,” said Representative Chris Hansen, State House District 6. “The savings we see in this report from the use of innovative financing tools to transition off of coal are a win-win for ratepayers and fossil-fuel dependent communities.”
Hansen added: “The Legislature and the Governor have primed Colorado for a carbon-free future, and now it is time for the utilities to deliver customer savings and environmental benefits.”
“The promise of retiring coal plants early not only will benefit ratepayers and Colorado’s environment,” said Susan Nedell, Mountain West Advocate at Environmental Entrepreneurs (E2), “but also continue to build on Colorado’s strong clean energy economy, which already employs more than 57,000 workers across the state.”