The rapid cost decline of renewable energy means running existing coal generation now exceeds the all-in cost of replacing it with wind and solar in most of the United States. This “coal cost crossover” begs regulators and utilities to reconsider the prudency of continuing to operate existing coal plants. Though cleaner resources save customers money almost immediately, untangling potentially stranded assets and transitioning this unproductive capital into new clean energy resources requires balancing consumer, environmental, investor, and local interests through complex regulatory proceedings.
Regulators, utilities, stakeholders, and investors must work together to ensure customers benefit from closures while helping affected communities transition away from a coal-based economy. But regulation needs to adapt – without opportunities to reinvest in clean resources, regulated utilities that own uneconomic plants will seek to keep them running as long as possible because they can still earn substantial returns even on uneconomic assets.
Energy Innovation analysis highlights different tools to balance stakeholder interests and facilitate the transition away from uneconomic fossil fuel plants. We provide utility stakeholders with information about tools to manage financial transition to balance stakeholder interests, and can help states facing new economic realities embrace clean energy.