Sen. Joe Manchin, D-W.Va., was among the most vocal objectors after President Joe Biden observed strong economic incentives for renewable energy when compared with fossil fuels in a speech in California last week.
But electric utility announcements in recent days that the companies are fast-tracking their clean energy transitions back up Biden’s comments.
And the companies have cited the landmark clean energy spending package that Manchin supported as a key to expediting their transitions to renewables.
DTE Electric, an electric utility serving customers in Michigan, filed a plan with that state’s utility regulators last week to retire four units at its coal-fired Monroe Power Plant on the western shore of Lake Erie in 2028, years before previously announced.
DTE Electric said the plan positions the company to take advantage of tax incentives and other benefits offered by the Inflation Reduction Act, the $369 billion climate and clean energy spending package signed into law by Biden in August after Manchin gave the measure his critical backing.
Minnesota Power, an electric utility serving northeastern Minnesota, on Monday cited the Inflation Reduction Act lowering the cost of renewables as a factor in a plan it announced to nearly double the megawattage of wind and solar energy it was proposing to achieve 100% carbon-free energy by 2050.
Minnesota Power already had planned to eliminate coal entirely by 2035, and has proposed that wind, hydro and natural gas become its largest sources of energy supply by 2030.
Those moves away from coal stands in stark contrast to West Virginia’s utilities, which recently renewed long-term commitments to coal in a still coal-dependent state.
The West Virginia Public Service Commission approved a rate hike request from Appalachian Power and Wheeling Power to make federally required environmental upgrades at the John Amos, Mountaineer and Mitchell coal-fired generating plants in Putnam, Mason and Marshall counties, respectively, last year. The commission’s order approved the companies’ ratepayers picking up a burden of nearly $22 million per year from Virginia and Kentucky customers to pay for wastewater treatment upgrades that those states’ regulators found uneconomic.
The order kept the plants on track to keep operating through the end of their planned lifespans in 2040.
In September, the commission approved rate increases to cover environmental upgrades federally required to keep the Fort Martin Power Station in Monongalia County, and the Harrison Power Station in Harrison County, operating through the end of their planned lifespans in 2035 and 2040, respectively.
The Inflation Reduction Act relies on carrots instead of sticks to accelerate clean energy manufacturing and lower consumer energy costs, offering a bevy of consumer and industry tax incentives.
The measure allots $60 billion for domestic clean energy manufacturing, including $30 billion in production tax credits for solar panels, wind turbines, batteries and critical mineral processing.
In a quarterly earnings call last month, Dave Ruud, senior vice president and chief financial officer of DTE Energy, parent company of DTE Electric, said the Inflation Reduction Act’s production tax credits for wind and solar support a more affordable acceleration of its clean energy transition.
Last week, DTE Electric proposed retiring two units of its Monroe Power Plant in 2028, nearly 12 years earlier than previously announced, and another two units at the plant in 2035, nearly five years earlier than previously announced.
The plan, which identifies what DTE Electric says are the most prudent means of meeting its energy and capacity needs through 2042, also includes developing 6,500 megawatts of solar, 8,900 megawatts of wind and 1,810 megawatts of battery storage
Biden noted the coal industry’s decline during comments at the corporate headquarters of communications company Viasat in Carlsbad, California Friday.
“No one is building new coal plants because they can’t rely on it, even if they have all the coal guaranteed for the rest of their existence of the plant,” Biden said. “So it’s going to become a wind generation ... . We’re going to be shutting these plants down all across America and having wind and solar.”
In a statement Saturday morning, Manchin called Biden’s comments “outrageous and divorced from reality” and accused the president of being “cavalier about the loss of coal jobs for men and women in West Virginia.”
Sen. Shelley Moore Capito, R-W.Va., who opposed the Inflation Reduction Act, also criticized Biden for his comments.
White House Press Secretary Karine Jean-Pierre later said Biden’s comments had been “twisted to suggest a meaning that was not intended.”
“[Biden] regrets it if anyone hearing these remarks took offense,” Jean-Pierre said in a statement. “The President was commenting on a fact of economics and technology: as it has been from its earliest days as an energy superpower, America is once again in the midst of an energy transition.”
The economically driven energy transition was well underway before the Inflation Reduction Act.
A 2020 analysis from the financial advisory firm Lazard estimated the ongoing cost of a new solar energy project is $24 to $32 per megawatt hour, $10 to $16 less per megawatt hour than the cost to operate an existing coal-fired power plant.
A report by strategic research provider BloombergNEF prior to the Inflation Reduction Act’s conception earlier this year found that new onshore wind and solar projects cost roughly 40% less than coal or gas plants built from scratch, with the gap widening.
It’ll take time for the Inflation Reduction Act’s full impact to unfold.
A report published last month by S&P Global Market Intelligence noted it will be years before solar and wind facilities incentivized by the law are operational. Supply chain constraints and raw material bottlenecks are delaying construction and raising wind, solar and battery storage project costs, the report noted.
But S&P Global Market Intelligence estimates that the Inflation Reduction Act could lead to over 230 gigawatts of additional wind and solar capacity compared to pre-Inflation Reduction Act forecasts.
That impact could be blunted in West Virginia if the state keeps clinging to coal, which comprises nearly 90% of West Virginia’s electricity generation — roughly four times the share of national electricity powered by coal.
The S&P Global Market Intelligence report predicts that some states will be proactive and open proceedings to review the Inflation Reduction Act’s implications. Other states will direct utilities to incorporate Inflation Reduction Act impacts into filings of integrated resource plans — assessments of a utility’s future electric needs that roadmap how to fulfill them.
Still other states will be “more reactive” and wait for companies to come to them with proposals, the report notes.
“How [the Inflation Reduction Act] plays out in each state will be influenced by the depth and breadth of the renewable portfolio and clean energy standards already in place and will also depend on whether the state has implemented retail competition for electric generation,” the report predicts.
The state Legislature repealed its renewable energy portfolio standards in 2015 — six years after approving them with Manchin as governor.