Business & Tech

Coal country’s power plants are turning away from coal

Some of the power industry’s biggest customers have made a commitment to clean energy. And to help the companies meet it, utilities are changing their ways.
Luke Sharrett/New York Times/File 2014
Some of the power industry’s biggest customers have made a commitment to clean energy. And to help the companies meet it, utilities are changing their ways.

NEW YORK — Coal is on the defensive in the nation’s power industry. Even in coal country.

The pressure to shift more of the country’s electric supply to renewable sources is not just a rallying cry for environmentalists. Some of the power industry’s biggest customers, such as General Motors and Microsoft, have made a commitment to clean energy. And to help them meet it — and keep them from taking their business elsewhere — utilities are changing their ways.

West Virginia, where coal is king, is no exception.

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Appalachian Power, the leading utility there, is quickly shifting toward natural gas and renewable sources such as wind and solar, even as President Trump calls for a coal renaissance. Appalachian Power still burns plenty of coal, but in recent years it has closed three coal-fired plants and converted two others to gas, reducing its dependence on coal to 61 percent last year, down from 74 percent in 2012.

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Chris Beam, the company’s president, made the industry’s shifting dynamics clear in an encounter with Governor Jim Justice, a Democrat, at his inaugural ball in January.

“’Look, I’d like to see you guys build another coal plant,’” he recalled the governor saying. “And our answer was: We’re not going to build another coal plant.” (The governor confirmed the account, but added in an e-mail, “I’ll continue to encourage power companies to burn more coal to put our miners back to work.”)

It’s the same story in Virginia, where Dominion, a leading utility based in Richmond — near where commercial coal mining got its start — designed a special rate to make it easier for Amazon Web Services and similar customers to buy renewable energy.

In Kentucky, a chance meeting between a state regulator and a Facebook employee ultimately led the Public Service Commission to advise utilities that they could offer customers renewable energy packages, part of an effort to attract new business and hold on to automakers such as GM and Toyota.

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And in Wyoming, the nation’s leading coal producer by far, Black Hills Energy worked with Microsoft to create a complex arrangement for the technology giant to get enough wind energy to fulfill current and future needs at Microsoft’s data center in Cheyenne.

“I’ve not spoken to a single utility that’s truly holding on to a future of more coal,” said Brian Janous, who directs energy strategy at Microsoft. “They’re looking to attract, as in the Appalachian case, new customers, and those customers aren’t attracted by coal.”

Almost half the Fortune 500 companies have adopted at least one climate or clean-energy goal, with 23 of them pledging eventually to run their businesses on 100 percent renewable energy, including Walmart, Bank of America, and Google, according to a recent report by the World Wildlife Fund and other environmentally minded organizations and investors.

Though corporations are buying renewable energy across the country, energy executives and analysts say it is notable that the trend is taking hold in states where coal production is part of the economic heart and soul.

Coal executives say they are watching the effect of the renewable-power demands on the coal industry, but it is a matter of rising unease.

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“We’re concerned about it,” said Harry Childress, president of the Virginia Coal and Energy Alliance. “We see the pressure from these companies is pushing power producers more away from coal, which is a cheaper power.”

Appalachian Power’s switch from coal was in part pushed as a result of a summit meeting that its parent company, American Electric Power, held at its headquarters last fall with corporate giants including Walmart, Facebook, Hilton, Procter & Gamble, and Marathon Petroleum.

Those companies stressed that if they were going to expand their businesses in AEP regions, they would need access to low-carbon energy. American Electric Power organized a second meeting in Washington in May that included Amazon, Caesars Entertainment, DuPont, Marriott International, and Starbucks.

With the goal of attracting big business to coal country, Beam is in the market to buy, lease, or build a fleet of wind and solar power farms across West Virginia and Virginia. The goal is to increase Appalachian Power’s renewable-energy fleet to 34 percent of its power capacity by 2031 from 17 percent today.

An announcement for a new wind farm in southern West Virginia is expected within weeks, as discussions with big companies — which American Electric Power executives refused to identify — continue.

“Specific customers are looking specifically for renewables and to what degree you are moving toward a new clean energy economy,” said Nicholas K. Akins, AEP’s chief executive. “Shareholders are more interested in sustainability going forward and improvements from a climate change perspective and carbon emissions perspective.”

Akins said American Electric Power, which serves more than 5 million customers in 11 states, intended to respond to the demands of customers whatever policies were dictated in Washington. He added, “We are trying to make our company long-term sustainable regardless of administration.”