Dive Brief:
- American Electric Power (AEP) will retire its 680 MW Oklaunion coal plant in 2020 because it cannot compete with cheaper power from gas and renewables, the utility announced Thursday.
- The plant, partially owned by Oklahoma utilities, is located on the Texas side of the border between the two states and feeds power into the Southwest Power Pool (SPP) and Electric Reliability Council of Texas (ERCOT). AEP previously warned the profitability of Oklaunion and its other coal properties was declining.
- The Sierra Club welcomed AEP's announcement, saying Oklaunion was one of the top 10 producers of nitrogen oxide — a key component of smog — among all industrial facilities in Texas.
Dive Insight:
The Oklaunion retirement is another indication that President Trump's efforts to revive domestic coal generation are losing out to market forces.
Opened in 1987, Oklaunion is relatively young compared to many of the coal generators that have retired in recent years, and Texas has no state environmental policies or renewable energy subsidies that might push it offline earlier.
Instead, Oklaunion is falling prey to the same conditions that pushed three gigawatt-scale coal plants out of the Texas market this year: cheap gas and renewables. Texas and Oklahoma are first and second, respectively, in wind power capacity installed, and much of that is in the region that hosts Oklaunion.
"West Texas and west Oklahoma have some of the cheapest electricity anywhere in the U.S.," Sierra Club Beyond Coal Representative Chrissy Mann pointed out in a statement. "No doubt that reality made this plant more expensive to operate than the available ERCOT and SPP resources in the area."
Though more than a year away, the retirement will likely contribute to tight capacity conditions in the ERCOT market. This year, due to coal retirements, the grid operator's reserve margin fell to 11%, below its 13.75% target, and ERCOT expects it to stay at about that level through the early 2020s.
