A Cost-Effective Solution to an Energy Emergency

On June 4, the Trump administration announced $700 million in funding for 17 coal power plants and one export facility. The investment in the country’s energy infrastructure includes upgrades to 13 currently operating plants, the reopening of two recently closed plants and development of two new plants. In total, the administration’s coal-focused efforts have now supported ongoing generation from 45 coal plants providing more than 40 gigawatts of coal power from 42 coal mines.

“Coal generation shields consumers from the impacts of volatile energy prices and supply challenges; it’s a vital piece of a sound energy strategy designed to meet the challenge of today’s AI-driven demand growth in the context of the conflict in the Middle East,” said Rich Nolan, NMA president and CEO, in praise of the administration’s announcement.

While the administration’s actions have garnered widespread support throughout coal country and certainly by those grappling with the nation’s grid reliability emergency, there has been no shortage of critics.

One of the most mystifying criticisms has been about cost, particularly the cost of orders to keep existing plants running and to invest in plant upgrades. Including previous support to upgrade six Appalachian coal plants, the administration’s efforts to upgrade 19 total plants and bring two more units back online has a price tag of several hundred million dollars. Not billions. Not tens of billions. On the scale of what has been afforded other sources of power, for reasons that weren’t nearly as urgent as today’s grid reliability crisis, this is all but a rounding error that provides outsized returns in the form of stable electricity that can be ramped up in times of high demand.

Recall, the myriad provisions included in the Inflation Reduction Act for alternative sources of power were projected to cost $825 billion over a decade with some estimates exceeding a price tag of $1.2 trillion.

In the world of rapidly escalating capital costs – particularly for energy and energy infrastructure projects – these targeted coal investments are remarkably cost effective. They are exactly the kinds of creative, fiscally responsible actions ratepayers should hope to see from an administration focused on electricity affordability.

Cost Savings

With power demand soaring, grid reliability under tremendous stress and the cost of new generating capacity continuing to rise (the cost of gas turbines has jumped nearly 200% since 2019!), finding cost-effective solutions to address all these challenges is a tall order. Yet, the administration’s coal actions do exactly that. 

Investing in existing units so they can run more efficiently and flexibly helps stabilize grids at a fraction of the price of other options. And doing so helps ensure investments in new generation go toward meeting new demand, not backfilling holes left by the closure of existing, dispatchable plants.

The administration believes its coal investments have saved approximately $50 billion that would have had to go to new power generation to meet rising demand—an enormous savings for consumers. And that calculation doesn’t even include the savings afforded by preserving fuel optionality, essential to shielding ratepayers from natural gas price volatility and potential price spikes.

Last year, the optionality provided by coal generation helped save consumers an estimated $30-40 billion in energy costs when wholesale natural gas prices jumped 56%. As the world navigates another energy crisis, and with U.S. LNG export capacity poised to double, investing in fuel optionality is a timely investment in domestic energy affordability.

The suggestion that the administration’s support for U.S. coal capacity carries too large a price tag is laughable. By any measure, these targeted investments are a remarkably cost-effective response to an urgent energy emergency.