Michigan utility plans to phase out coal ahead of schedule — but replace it with gas

Consumers Energy says closing coal plants by 2025 will help reach its goal of being 90% carbon-free by 2040. But the switch to natural gas is opposed by climate advocates.

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Michigan utility Consumers Energy wants to buy existing natural gas plants so that it can close its last coal-fired power plants by 2025, 15 years ahead of its previous schedule. This shift would make the utility one of the first in the nation to go coal-free,” Consumers Energy claims, and put it on track to shift to 90 percent clean energy by 2040.

But climate and community activists in Michigan want more from the state’s largest utility. They welcome the early coal-plant closures but contend that Consumers Energy should replace that power with renewables and battery storage.

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They’re doing kind of a coal-for-gas swap, where they shut down the coal, but they’re really just moving to a different fossil fuel,” Margrethe Kearney, an analyst with the Environmental Law and Policy Center, told Michigan Radio.

An April letter from environmental and community leaders and solar companies asked Consumers Energy to hasten its shift from fossil fuels to clean energy and commit to renewables, efficiency and distributed customer-owned energy resources. It specifically asked the utility to not invest in new or existing sources of fossil gas.”

But Garrick Rochow, president and CEO of Consumers Energy, said in a Wednesday press conference that the utility needs that flexibility, that reliability, that comes with natural gas.”

Consumers Energy, which is owned by CMS Energy Corp. and serves 6.7 million customers, made its proposal to state regulators on Wednesday. It’s the latest update to its 20-year clean energy plan, which sets a goal of reaching net-zero carbon emissions by 2040. Consumers says swapping the coal for gas-fired power will save its customers about $650 million through 2040.

Consumers is asking the Michigan Public Service Commission for permission to close a combined 1,440 megawatts of coal-fired generating capacity near Holland, Michigan by 2025, as well as 1,100 megawatts of natural-gas- and fuel-oil-powered generation near Essexville, Michigan by 2023. The plan would replace that capacity with a roughly equivalent amount of baseload and peak capacity from four existing natural gas plants.

Consumers’ long-range clean energy plan calls for 5,000 megawatts of solar by 2030 and nearly 8,000 MW by 2040, along with a significant increase in wind power, to obtain more than 60 percent of its generating capacity from carbon-free resources by 2040. To reach its goal of 90 percent clean energy by 2040, it also plans to rely on additional energy storage capacity for that clean power, as well as increased demand-side resources such as residential smart thermostats and commercial and industrial demand response to reduce peak electricity demand.

Both Consumers and DTE Energy, Michigan’s other major investor-owned utility, have set carbon-reduction goals that are more aggressive than required under the state’s renewable portfolio standard, which calls for 15 percent renewable energy by 2021. But with that RPS leveling off this year, Democratic Gov. Gretchen Whitmer is now aiming much higher. She has signed an executive order setting a goal of cutting carbon emissions across the state’s economy to zero by 2050, in line with goals set by an increasing number of states controlled by Democrats.

Last year, the Michigan Public Service Commission pushed DTE Energy to be more aggressive in switching to clean energy. The PSC rejected DTE’s 15-year integrated resource plan, saying it failed to fully explore how renewable energy could serve to replace its 1.6‑gigawatt Belle River coal plant, which the utility intends to keep open until 2030. The PSC later approved a revised plan from DTE that boosted energy-efficiency investment and agreed to further analyze its retirement plans for Belle River.

Consumers Energy’s proposal is a nod to the increasing difficulty of operating coal plants. Coal-fired generating facilities are closing under both environmental and economic pressure across the country. S&P Global Market Intelligence tracked 9.2 gigawatts of coal plant retirements last year, down from 14.2 GW in 2019. Over the past few years, a growing number of major U.S. utilities have pledged to accelerate coal plant retirements and attain net-zero carbon emissions by midcentury.

But environmental groups and analysts say coal plants must be closed down even faster, and they want to see renewables paired with batteries supplant natural gas plants as replacements for coal in order to meet the steep pace of carbon reduction needed to avert the most catastrophic effects of climate change.

Duke Energy, the six-state utility headquartered in North Carolina, is facing pressure from environmental and consumer groups to reduce its planned reliance on new natural gas plants in North and South Carolina to replace coal-fired power plants it plans to close by 2030.

Northern Indiana Public Service Co. has been lauded by environmental groups for its plan to retire its entire coal fleet by 2028 and seek renewable energy and storage instead of building new natural gas plants.

(Article image courtesy of Valeriy Kryukov)

Jeff St. John is the editor-in-chief of Canary Media. He covers the technology, economic and regulatory issues influencing the global transition to low-carbon energy. He served as managing editor and senior grid edge editor of Greentech Media.