That was the verdict from TVA’s Final Environmental Impact Statement issued by the federal utility Feb. 16 after a public review process last year over how to replace the coal-fired units at Kingston. TVA anticipates making a final decision in March 2024.

TVA mainly evaluated two options to provide at least 1,500 MW of generation to replace the capacity to be lost, plus additional capacity to support anticipated load growth.

The first option would include the construction of a single combined-cycle gas plant paired with 16 dual-fuel Aeroderivative combustion turbines, a 3 to 4 MW solar site and a 100 MW battery energy storage system on the Kingston Reservation. The combined-cycle plant would be capable of burning 5 percent hydrogen by volume at commissioning and 30 percent hydrogen with modifications to the balance of plant once a reliable source of H2 was identified, TVA said.

The first option would also include Eastern TN Natural Gas (ETNG) constructing and operating a 122-mile natural gas pipeline, gas compressor station and metering and regulator stations.

The second option would consist of constructing multiple solar and energy storage facilities at alternate locations, including in Eastern Tennessee. The construction of a pipeline would be subject to Federal Energy Regulatory Commission (FERC) jurisdiction and additional review.

TVA said its preferred option is the first. The federal utility said a combined-cycle plant paired with dual-fueled aero turbines would be the “best overall solution to provide low-cost, reliable energy to TVA’s power system, and could be built and become operational sooner” than the solar and storage in the second option.

The utility said it also preferred the gas plant option to provide the flexibility needed to bring 10,000 MW of solar onto the system by 2035.

‘Increased wear and tear’ for coal units

Kingston’s nine units can generate about 1.4 GW of electricity at capacity. The plant, located about 35 miles west of downtown Knoxville, entered operations in the 1950s.

TVA said frequent cycling of Kingston’s units, reflected in start-up and shutdown events, are currently averaging more than 85 times per year, which the utility said is outside the intended design of the plant.

This is resulting in “increased wear and tear, which presents reliability challenges that are difficult to anticipate and expensive to mitigate.”

TVA also said Kingston has experienced a “significant decline” in material condition over the last five years, including the need for repairs to the lower boiler drum, which the utility said are symptomatic of age-driven material condition failures which are difficult to proactively address.

The utility said based on these factors, it has developed planning assumptions for the timing of the proposed retirement of Kingston.

In general, TVA said its aging coal fleet is experiencing deterioration of material condition and performance challenges. Performance challenges are expected to increase because of the fleet’s advancing age and the difficulty of adapting coal within the changing generation profile.

TVA has reduced carbon emissions from its entire generating fleet by about 60% since 2005, thanks to a combination of closing coal plants and building solar and wind.

D&Z will also perform scaffolding, coatings, insulation, asbestos abatement and lead abatement work. The $985 million contract spans five years, with the option to renew for an additional five years.

D&Z has more than 25 years of experience working with TVA, according to John McCormick, president of D&Z’s maintenance and construction division. In April 2022, TVA named D&Z its 2022 Prime Supplier of the Year through TVA’s Diversity Alliance Program.

TVA is a corporate agency of the U.S. that provides electricity for business customers and local power companies, serving nearly 10 million people in parts of seven southeastern states. In addition to operating and investing its revenues in its electric system, TVA provides flood control, navigation and land management for the Tennessee River system and assists local power companies and state and local governments with economic development and job creation.

The electricity TVA delivers is nearly 60% carbon-free through its 29 hydroelectric projects, TVA’s nuclear fleet and other renewables such as solar. TVA owns four fossil plants, three nuclear plants, 29 hydro plants, one pumped storage hydroelectric plant, nine natural gas combustion turbine gas plants, eight natural gas combined cycle gas plants, one diesel generator site and 13 solar energy sites.

TVA is reducing its reliance on coal and plans to expand its natural gas fleet to provide the ongoing flexibility needed to reliably integrate more renewables.

The combustion turbine units, totaling an additional 750 MW, are designed to reach full power within minutes when electricity demand increases. The GE 7F.05 units began commercial operation on Dec. 31, and during testing, the three units came online to full power within 11 minutes, TVA said.

The new units join three other combustion turbines that began operating in July at the Colbert site in northern Alabama. Together, the two new sites add almost 1,500 MW to the grid that didn’t exist last winter.

The new units are part of TVA’s plan to add more than 3,800 MW of generation to the grid by 2028, according to Jamie Cook, TVA’s General Manager of Major Projects.

“Many of TVA’s new CTs are replacing older, less efficient units,” said Cook. “We can also operate them when other sources of generation, like solar, aren’t available. They supplement those sources with reliable power when we need it most.”

In September 2023, TVA and TC Energy announced they were investing $1.25 million to study carbon capture retrofits at TVA’s natural gas-fired plants in Mississippi and Kentucky, implying the Ackerman plant and the Paradise plant, respectively. Both are combined-cycle facilities.

The aim is to assess the feasibility, costs, and impacts of carbon capture technology as part of TVA’s decarbonization efforts. TVA said study findings will inform future decisions regarding TVA’s generation fleet. The federal utility’s goal is to achieve net-zero emissions by 2050.

In 2020, TVA shut down the last coal-fired unit at Paradise Fossil Plant after 50 years of operation. Paradise Unit 3, located in Muhlenberg County near the Green River, began operation in 1970 with a net generating capacity of 1,080 MW. It generated enough electricity to supply more than 800,000 average homes.

TVA’s Board of Directors voted in 2019 to retire the unit. The other two coal-fired units at Paradise were retired in 2017. That generation was replaced with a combined-cycle natural gas plant with a baseload capacity of 1,025 MW, which began operation next to the fossil plant site in 2017.

In February 2019, the TVA Board of Directors approved the retirement of Bull Run by December 2023. TVA officials said at the time that hundreds of millions of dollars would be saved in compliance and environmental upgrade costs by closing the plants.

TVA says it is currently evaluating the future use of the Bull Run site, including potential opportunities to maintain grid stability based on its strategic geographic location in the TVA service territory, including the potential for battery storage or the installation of synchronous condensers to support the stability of the transmission grid.  With TVA reducing its reliance on coal, the enterprise aims to build new generating assets to replace retiring megawatts. 

The TVA heard a vast amount of responses from its customers and stakeholders concerning its decision, both good and bad. The TVA released a Q&A about the Bull Run plant on its website in response to many questions and concerns raised over the decision process.

Bull Run was the only single-generator coal-fired power plant in the TVA system before its retirement. When the generator went into operation in 1967, it was the largest in the world in the volume of steam produced. The plant was originally designed to produce up to 950 MW with a recent summer net capability to generate up to 765 MW, and the unit’s cross-compound turbogenerators from General Electric could produce a yearly total of 6 billion KWh.

After the sharp increase of power demand due to military needs in the 1950s, subsequent non-military demand required additional generation resources near Knoxville, Tennessee. In March 1961, President John F. Kennedy agreed with TVA Chairman Herbert Vogel’s decision to build Bull Run.

Construction began a year later and commercial operations began on June 12, 1967. The original construction cost was $141,483,000 – or about $1.4 billion today.

The NCG Site is an approximately 63-acre existing parcel of federally owned property managed by TVA in Lowndes, Mississippi, located 10 miles northeast of Columbus. The site is a former CT facility, originally constructed in 1998 and operated for several years by a private company. The company dismantled the site in 2007, removing the existing six frame CTs.

The study area for the proposed action is 145 acres and includes the entire proposed combustion turbine property as well as the adjacent substation property, which remains in operation. TVA is considering constructing and operating an approximately 500-MW combustion turbine facility at the same brownfield location as the previous generating facility, which would allow TVA to utilize existing natural gas and transmission infrastructure.

TVA has issued a Notice of Intent to prepare an Environmental Assessment (EA) or Environmental Impact Statement (EIS) to address the potential environmental impacts associated with the proposed construction and operation of the plant at the NCG site. TVA is seeking comments from the public on what should be included in the environmental review for the project.

TVA anticipates that the scope of the EA or EIS will evaluate a “no action” alternative and an “action” alternative. The “no action” alternative provides a baseline for comparing against the “action” alternative. Under the “no action” alternative, TVA would not develop the TVA-owned property in Lowndes County for energy generation. The “action” alternative would evaluate the development of the New Caledonia brownfield site for construction and operation of a CT plant.

Earlier this year, the TVA proposed three generation projects, including a pumped storage hydro plant.

First, TVA said it is studying various technologies to store energy, including pumped storage hydroelectricity. TVA will need long-duration energy storage to meet energy demand as more intermittent renewable energy sources are added to the grid.

The other two projects for which TVA is seeking input are a solar and battery storage project to facilitate its goal of 10,000 MW of solar by 2035, and a 900 MW natural gas combustion turbine and 400 MW battery energy storage system.

TVA and TC Energy also recently invested $1.25 million to study carbon capture retrofits at TVA’s natural gas-fired plants in Mississippi and Kentucky.

The aim is to assess the feasibility, costs, and impacts of carbon capture technology as part of TVA’s decarbonization efforts. TVA said study findings will inform future decisions regarding TVA’s generation fleet. The federal utility’s goal is to achieve net-zero emissions by 2050.

Proponents say CCS could have a huge role in reducing emissions, while opponents note the technology is far from scale and argue that focusing on it distracts from renewable energy solutions.

TVA’s operating revenues were $12.1 billion in FY 2023, falling from $12.5 billion in FY 2022. The company cited lower fuel rates (primarily due to lower natural gas prices) and lower sales volumes driven by milder weather.

Although TVA faced days of single-digit temperatures and record-setting demand due to Winter Storm Elliott in December 2022, the utility said these impacts were more than offset by milder weather during the remainder of 2023.

Total operating expenses increased from $10.1 billion in 2022 to $10.4 billion in 2023, according to the utility’s annual report filed with regulators.

TVA said O&M costs increased by $386 million, primarily due to increases in payroll and benefit costs ($110 million), expenditures related to TVA’s New Nuclear Program ($73 million), outage and contract labor expenses ($83 million) and post-employment benefit expenses ($37 million).

Depreciation and amortization expenses increased $159 million, primarily driven by an increase in depreciation expenses associated with the planned retirements of the Cumberland and Bull Run coal-fired plants and an increase in amortization expense of decommissioning costs. TVA said these increases were partially offset by a $288 million decrease in purchased power expenses, primarily due to lower demand for energy from overall milder weather and higher availability of nuclear generation.

Fuel expenses fell $18 million in FY 2023, primarily due to lower natural gas prices and nuclear fuel efficiency gains. Partially offsetting these decreases was an increase in fuel cost recovery from unplanned fuel costs that were deferred in the summer of 2022.

Purchased power expenses fell $288 million, primarily due to lower energy demand due to milder weather and higher availability of nuclear generation. This was partially offset by an increase in fuel cost recovery from unplanned purchased power costs that were deferred in the summer of 2022.

Future of coal, gas

TVA continues to evaluate the impact of retiring its coal-fired fleet by 2035.

The utility said it plans to retire the two coal-fired units at Cumberland, which make up 2,470 MW of TVA’s summer net capacity. The first unit is scheduled to be retired at the end of 2026, while the second unit is expected to be retired by the end of 2028.

TVA plans to replace one unit with a 1,450 MW combined-cycle plant at Cumberland. In the filing to regulators, TVA said it could spend up to $1.2 billion on construction to replace part of the generation from the other unit.

MORE: Tennessee Valley Authority considers replacing coal with gas

The utility is also weighing the potential retirement of Kingston Fossil Plant and asked for public input this year. TVA could spend up to $2.8 billion on the construction of facilities to replace part of that generation.

As part of its strategy, TVA is evaluating adding flexible and fast-ramping natural gas-fired plants to maintain reliability. During 2019, the TVA Board approved an expansion of peaking gas replacement capacity at two combustion turbine gas facilities.

Commercial operations began at Colbert Combustion Turbine (CT) Units 9-11 in July 2023, with a total summer net capability of 681 MW. As of September 30, 2023, TVA had spent $329 million on this expansion, and TVA expects to spend an additional $56 million. Pre-commercial plant operations have begun on Paradise Combustion Turbine Units 5-7, and all three units are expected to come online by the end of 2023, with an expected summer net capability of 681 MW.

A 500 MW aeroderivative combustion turbine project at TVA’s Johnsonville site has been approved for $599 million. The utility anticipates that project to enter commercial operations by the end of 2024.

TVA is also exploring a 200 MW aeroderivative CT project at TVA’s Allen site and a 500 MW simple cycle CT project at TVA’s Caledonia site, contingent on the outcome of environmental reviews.

Read the full SEC filing here

The work includes loading 92 new nuclear fuel assemblies, performing inspections of reactor components and steam generators, maintenance of plant equipment and installing unit enhancements.

“Refueling and maintenance outages allow our highly skilled team members to make the improvements and upgrades to the unit’s systems and components to ensure Watts Bar Unit 2 continues to deliver safe and reliable carbon-free energy for 10 million people across the Tennessee Valley,” said Tony Williams, TVA Watts Bar Site Vice President.

Watts Bar Unit 2 is one of seven TVA nuclear reactors. TVA’s nuclear fleet is the third largest in the nation, providing more than 40% of all electricity TVA generates.

After decades of development, TVA announced in late 2016 that Watts Bar Unit 2 had completed a series of power ascension tests and reliably operated at full power for more than three weeks. Construction began on TVA’s third nuclear plant in 1973 and Unit 1 at Watts Bar entered commercial operations in 1996. TVA, in 1988, suspended construction activities on Unit 2 due to a reduction in the predicted power demand growth. In 2007, TVA approved the completion of Unit 2 after finishing studies of energy needs, schedule, costs, environmental impacts and financial risks.

In November 2022, TVA’s Watts Bar Unit 2 completed a steam generator replacement project at the 1,150 MW facility in eastern Tennessee. Unit 2 entered service in 2016 at a construction cost of $4.7 billion.

The original steam generators were built in the 1970s using a metal alloy that prematurely developed leaks and other problems at other nuclear plants. The equipment was installed at Watts Bar in the 1980s before TVA halted work at the site due to cost overruns, employee safety concerns and a drop in projected power demand. 

TVA determined it would be too costly to replace the original steam generators when construction resumed, so Unit 2 entered service with its original steam generators. The cost to replace the steam generators rose to around $590 million and took weeks longer to install than originally expected due to weather issues.

The $500 million expansion adds 750 MW of new natural gas generation to TVA’s generation fleet.

The Colbert Combustion Turbine Plant started commercial operation of three new units on July 25th of this year. Construction began in the summer of 2021, with more than one million hours of work safely dedicated to the project, with no significant environmental events, no OSHA serious events, and no lost-time injuries, TVA said.

“These units provide needed flexibility, responsiveness, and reliability for the power grid,” Roger Waldrep, Vice President of Major Projects, said. “They allow us to meet demand during peak periods, like the extremely hot days we experienced in August and September and the upcoming cold nights that are ahead this winter.”

TVA plans to invest $15 billion over the next three years to build additional generation and upgrade the existing system. The expansion of Colbert is part of TVA’s larger effort to build more than 3,800 MW of new generation that includes solar, energy storage, combustion turbines and combined-cycle natural gas.

The aim is to assess the feasibility, costs, and impacts of carbon capture technology as part of TVA’s decarbonization efforts. TVA said study findings will inform future decisions regarding TVA’s generation fleet. The federal utility’s goal is to achieve net-zero emissions by 2050.

Carbon capture involves sending emissions from natural gas plants to a CO2 scrubber, where a chemical process absorbs CO2 before release into the atmosphere. The captured CO2 is then heat-treated, compressed and safely stored underground. In some instances, the CO2 is transported across states through pipelines and stored at facilities and used for other purposes.

The Biden Administration believes large-scale deployment of carbon capture, transportation and storage infrastructure could play a vital role in reducing emissions and has increased pressure on the CCS industry to show that the technology can significantly help combat climate change.

Proponents say CCS could have a huge role in reducing emissions, while opponents note the technology is far from scale and argue that focusing on it distracts from renewable energy solutions.

Rules announced by the U.S. Environmental Protection Agency earlier this year set caps on carbon dioxide pollution that most coal and gas-fired plant operators would have to meet. The EPA rules would not mandate the use of CCS but are expected to help usher it in.

TVA said the study would be conducted at its plants in Ackerman, Mississippi and Drakesboro, Kentucky. That would imply the 705 MW Ackerman plant and the 1,000 MW Paradise plant, respectively. Both are combined-cycle facilities.

The three new units add about 750 MW of capacity to the federal utility’s fleet. TVA spent about $500 million to build the three new gas-fired turbines.

The decommissioned coal-fired Colbert Fossil Plant was imploded at the site about two years earlier.

TVA has or is planning to add more natural gas-fired capacity at its Paradise, Allen, Cumberland and New Johnsonville former coal plant sites.