WVPSC Column: Coal v. Renewable Energy: Which is Cheaper?

The PSC has come under criticism for favoring coal-fired generation over renewable energy. The fact is that the Commission favors lower cost generation over higher cost generation. It is often said that coal is not a cost-efficient electricity production fuel; that the cost of renewable resources from all technologies are dead even with coal-produced energy; and that West Virginians pay a lot more for electricity than customers in many other states. These statements are just not true.

The U.S. Energy Information Administration rated West Virginia residential electricity costs in August 2022 as the 18th lowest out all 50 states. And West Virginia had the lowest rates in the country for industrial customers. The average industrial rate across the country was 55.4% higher than the West Virginia rate. Considering that we have lower rates than most states, if rates are driven by the cost of our coal-fired power plants then it must follow that the availability of the coal-fired power in West Virginia is helping to hold our electricity rates down.

Detractors of fossil fuel-fired power plants try to make the case that renewable resources (mostly wind and solar) costs less than fossil fuel power plants. It is true that the cost per kilowatt of capacity to construct wind and solar facilities is mostly lower than the cost of building coal-fired facilities (a new coal facility would cost $4,074 per kilowatt; a new on-shore wind facility $1,718 per kilowatt; a new solar facility $1,748 per kilowatt; and a new off-shore wind facility $6,041 per kilowatt).

However, unlike fossil fuel facilities, which can produce power around the clock, wind facilities can produce only within certain wind speed ranges, and solar facilities have no production capability when the sun goes down or is covered by clouds. Due to the intermittent nature of wind and solar generation, replacing 1 megawatt of coal-generated electricity will require 3 megawatts of wind capacity and 4 megawatts of solar capacity.

The costs of wind and solar facilities do not include the backup facilities needed to maintain sufficient electricity to meet load requirements when the wind is not blowing or the sun is not shining.

Adding battery storage capacity or backup always-available generation resources will increase the costs for the intermittent wind and solar resources, making them more expensive than base load power plants.

I am not suggesting building new coal facilities, but we must consider the relatively low cost of the utility-owned coal-fired capacity already existing in West Virginia. Unlike a new coal-fired facility, our existing power plants were built at much lower costs, which have been partially recovered by our utilities through depreciation paid by customers.

The depreciated cost of those existing power plants is well below the cost of constructing a new wind or solar facility. A claim that the partially depreciated coal-fired plants is more expensive than the costs of building and maintaining a comparable amount of new generation is simply wrong. Such a claim has not been supported by any evidence or expert opinions provided to date to the Public Service Commission.

The PSC is not opposed to renewable energy. The Commission has never rejected or denied an application for a certificate to site a renewable energy project in the State. The Commission is leading West Virginia in the transition to locate more renewable energy facilities in the State. But we will not go cold turkey on coal at the expense of West Virginia ratepayers.