Federal utility chooses gas plant despite EPA concerns

NASHVILLE, Tenn. (AP) — The nation's largest public utility has decided to build a new natural gas plant despite concerns from the Environmental Protection Agency that its analysis of alternatives is faulty and that the project is at odds with President Biden's clean energy goals.

Tennessee Valley Authority President and CEO Jeff Lyash on Tuesday signed a decision to move forward with a 1,450-megawatt natural gas plant at the site of the utility's coal-burning Cumberland Fossil Plant, near Cumberland City, Tennessee. TVA plans to retire the first of two coal burning units there by the end of 2026 and plans to have the gas plant up and running before then.

TVA provides power to 10 million people in parts of seven Southern states.

The utility provided the EPA with a final environmental impact statement in early December analyzing alternatives for replacing the Cumberland plant. It compared the costs and benefits of two types of natural gas plants as well as a solar array with battery storage. The analysis recommended a combined cycle natural gas plant as the preferred alternative. It determined that the solar array would cost $1.8 billion more and could not be completed by the utility's 2026 deadline.

"Replacing retired generation with a natural gas plant is the best overall solution because it’s the only mature technology available today that can provide firm, dispatchable power by 2026 when the first Cumberland unit retires – dispatchable meaning TVA can turn it off and on as the system requires the power,” Lyash said in a statement Tuesday.

The EPA issued a detailed response to the analysis on Friday, writing that TVA relied on “inaccurate underlying economic information” and “may continue to underestimate the potential costs of the combined cycle gas plant and overstate the cost of solar and storage.”

TVA used a “misleading” measure of comparison to show that solar and storage would be more expensive than gas, according to EPA. TVA also failed to account for the opportunities presented by recent federal legislation providing $375 billion over 10 years for clean energy projects. And TVA failed to consider that the cost of renewables is declining while gas prices are expected to rise, the EPA said.

In addition to the economic analysis, the EPA is critical of TVA's environmental analysis. The utility found similar greenhouse gas impacts for solar and gas. When factoring in the social costs of greenhouse gases, TVA found the solar alternative would save $4.8 billion over the “no action” alternative — that is, keeping the coal plant in place — while the combined cycle gas plant would save $4.4 billion.

But the EPA said TVA used outdated social cost estimates and falsely asserted that there is "legal uncertainty" around the newest estimates.

Although TVA stated that the environmental impacts are relatively close for all alternatives, the utility's own analysis results in a $3 billion difference between gas and solar over the 30-year life of the project, according to the EPA.

“Moreover, the document does not reflect the urgent need to take climate action” despite TVA's own strategic plan calling for a “deep carbon reduction,” EPA states.

Biden has set a goal of a carbon-pollution-free energy sector by 2035 that TVA has said it can’t achieve without technological breakthroughs in nuclear generation and energy storage. TVA has set a goal to reduce greenhouse gas emissions by 80% by 2035, compared with 2005 levels.

Scientists have warned that failing to meet the 2035 target will only lead to more intense and more frequent extreme weather events, as well as droughts, floods and wildfires. Teams of meteorologists across the world have predicted there is nearly a 50-50 chance that Earth will hit a key warming mark that international agreements have tried to prevent by 2026.

EPA's letter states that TVA failed to incorporate several suggested improvements, including using energy efficiency and demand management to reduce the need for new electricity. Demand management helps customers change their usage patterns to flatten peak demand periods and could "help avoid rolling blackouts like those TVA implemented recently,” EPA wrote.

The Cumberland plant and a second coal-burning plant, Bull Run, went offline during a deep freeze over Christmas weekend. Along with unspecified “issues” at some of TVA’s gas plants, the outages forced TVA to resort to rolling blackouts for the first time in its 90-year history. TVA has said it is investigating what went wrong but has provided few details.

TVA did seem to take one of EPA's suggestions into consideration. Lyash's Tuesday decision in favor of the gas plant says the utility will design it to accommodate modifications that would allow it to capture carbon and use hydrogen fuel if those become viable options in the future.

Already, TVA is facing a lawsuit that claims it violated federal law by approving a gas-power plant that is under construction at its retired coal-burning Johnsonville Fossil Plant without properly assessing the environmental and climate impacts.

The Center for Biological Diversity issued a statement on Tuesday calling for TVA's board of directors to take action. Six new Biden-appointed board members were sworn in last Thursday, making up a majority of the utility's nine-member board of directors. However, a previous board had already delegated the decision on the Cumberland plant to Lyash.

“TVA’s gas plants failed miserably during the December storm, and now its CEO is making the grave mistake of doubling down on fossil fuels,” Gaby Sarri-Tobar, with the Center for Biological Diversity’s energy justice program, said in a news release. “Our country’s largest federal utility is dependent on fossil fuels when it should be leading the transition to 100% renewable energy.”

TVA also plans to retire Cumberland's second coal-burning unit by the end of 2028. The utility has not yet said how it will replace the power lost from that retirement.