For the first time in more than six decades, the Tennessee Valley Authority got more power from renewable sources than from burning coal during the first three months of 2020.
With electricity sales down due to the mild weather and COVID-19 virus shutdowns, TVA used its coal-fired power plants to generate only 12% of its power needs in the past quarter.
A generation ago, TVA’s coal plants supplied more than two-thirds of the utility’s electricity.
Last month with most schools, restaurants and stores shut down, TVA at times turned off its 25 remaining coal-fired units and relied entirely upon its nuclear, hydro, natural gas, solar and purchased power supplies to meet the electricity needs in its seven- state region.
“In this, the 50th anniversary of Earth Day, I am pleased to say that TVA is on track to achieving its goal of reducing carbon emissions by 60% below peak 2005 levels in 2020 and we’ll see a 70% reduction by 2023,” said TVA President Jeff Lyash on Tuesday in the utility’s quarterly earnings call. “TVA has more than 8,000 megawatts of renewables under contract now, including hydro, wind and solar, and we are proactively pursuing more renewables to position us for a greener future.” added Lyash.
Despite President Donald Trump’s appeal to TVA and others to revive “beautiful coal,” TVA has phased out more than half of the 59 coal-fired units it once operated, including the shutdown of its last unit at the Paradise Fossil Plant in Kentucky in February. At the same time, abundant rainfall pushed up power production at TVA’s 29 power-generating dams and the addition of more solar farms in the Tennessee Valley boosted power generated from the sun.
The biggest share of TVA’s power, 43% in the first quarter, came from TVA’s seven nuclear power reactors in Tennessee and Alabama. TVA is studying whether to add even more atomic power by building the nation’s first small modular reactor to help supply Oak Ridge, Tennessee.
Although environmental groups such as the Southern Alliance for Clean Energy claim TVA is not doing enough to promote solar and wind energy, TVA President Jeff Lyash said the federal utility is generating nearly twice as much carbon-free electricity as the national average.
“In this, the 50th anniversary of Earth Day, I am pleased to say that TVA is on track to achieving its goal of reducing carbon emissions by 60% below peak 2005 levels in 2020 and we’ll see a 70% reduction by 2023,” Lyash said Tuesday in the utility’s quarterly earnings call. “TVA has more than 8,000 megawatts of renewables under contract now, including hydro, wind and solar, and we are proactively pursuing more renewables to position us for a greener future.”
TVA was not alone in turning to wind, solar and hydro power, rather than coal, for its power this year.
The Institute for Energy Economics and Financial Analysis reviewed government data on energy production across the United States and found electricity generated by renewable sources like solar, wind and hydro exceeded coal-fired power in the U.S. for a record 40 straight days during the coronavirus pandemic.
The shift has helped cut energy costs for TVA. Cheaper fuel prices and other efficiencies allowed TVA to lower its average price of power delivered in the first quarter by about 4% below a year ago, TVA Chief Financial Officer John Thomas said.
TVA’s board voted last August to try to freeze base rates for the next decade and grant rebates to local power companies like Chattanooga’s EPB that sign 20-year power purchase agreements with TVA.
So far, 139 of the 154 municipalities and power cooperatives that distribute TVA electricity have signed such long-term purchase power contracts. For those signing the long-term agreements, TVA’s electricity rates have been cut for the first time in 13 years.
TVA reported Tuesday that its revenues declined by 8.3% in the first three months of 2020 due to the lower rates and a drop in electricity consumption. But operating expenses fell even more, dropping 11.3% to $1.9 billion with declines in everything from fuel costs to interest payments to operating expenses.
The second quarter of 2020 was the wettest TVA second quarter on record with 24.6 inches of rainfall, boosting output from the TVA dams which first supplied nearly all of TVA’s power when the utility was created in 1933.
TVA reported net income in the first six months of 2020 of $447 million, down from the record profits in the previous year of $664 million.
TVA said so far the coronavirus has not significantly affected power sales or delivery. But in its quarterly report Tuesday, TVA projects that the economic slowdown from the COVID-19 pandemic is likely to cut TVA revenues from $300 million to $500 million during the balance of its fiscal 2020 year.
Due to higher volatility in the financial markets from COVID-19, TVA also increased its target balance of cash and cash equivalents by $500 million in what officials said was “a precautionary measure” for a more uncertain future.
“The impact of the COVID-19 pandemic on the communities we serve is unprecedented, and we know there will be continued economic uncertainty in the weeks and months ahead,” Thomas said.
TVA announced last month that it is making up to $1 billion of credit support available as an option to local power companies through the deferral of wholesale power payments, based on the needs of individual local power companies, and TVA has donated $2 million to match local power company relief efforts.
“We believe that using the strength of TVA’s balance sheet to support our partners and customers during this difficult time is just as vital to ensure a successful recovery for the Tennessee Valley,” Lyash said.
Contact Dave Flessner at [email protected] or at 423-757-6340.