The Tennessee Valley Authority (TVA) board of directors has approved a plan to replace the three 55-year-old coal-fired units at its Allen Fossil Plant in Memphis, TN, with a combined-cycle natural gas-fired plant.

The board authorized up to $975 million to build a gas-fired plant with a capacity of approximately 1,000 MW, enough to supply about 580,000 homes. The Allen gas plant would be the seventh combined-cycle gas plant TVA has added to its power portfolio since 2007. Compared with the existing coal plant, the gas-fired plant would reduce carbon emissions by more than 60%, nitrogen oxides by 90% and sulfur dioxide by nearly 100%, TVA said.

The plant provides electricity to the greater Memphis area and TVA’s western service territory.

“We evaluated our options from financial, business and environmental perspectives and decided this is the best way to help us meet our cleaner air goals and optimize the generation portfolio,” said TVA CEO Bill Johnson. “Memphis is our largest customer and we must have a proven source of generation in the city to ensure system-wide reliability while giving us flexibility that allows for future growth.”

TVA recommended the changes last month in an effort to comply with agreements to reduce emissions (see Daily GPIJuly 3). In a 193-page draft environmental assessment(EA), TVA proposed building either a combustion turbine (CT) or a combined-cycle (CC) plant, with the capability of generating either 600-800 MW or 800-1,400 MW, respectively. Both proposed configurations would require construction of new gas pipelines and other infrastructure.

In 2011, TVA entered into an agreement with the U.S. Environmental Protection Agency (EPA) and other environmental groups to resolve a dispute over how the federal Clean Air Act would be applied to maintenance and repair activities at the authority's coal-fired power plants (see Daily GPIApril 18, 2011). TVA agreed to either install scrubbers or to retire the coal-fired units at the Allen Fossil Plant by December 2018.

The decision was hailed by Sierra Club, which said the Allen plant was the 178th U.S. coal plant to announce retirement since 2010. But the environmental group fell short of endorsing natural gas-fired power generation.

“TVA, which is one of the nation's largest utilities, sees that coal is becoming an increasingly bad bet,” said Scott Banbury, conservation program coordinator for the Tennessee chapter of Sierra Club. “Clean energy technologies, like solar energy and wind power, as well as increased energy efficiency, are cheaper, cleaner and ultimately a better path forward for TVA and for Tennesseans…We can save money, decrease pollution and ensure that the proposed gas plant is used sparingly with strategic investment in key renewable resources, like wind, solar and energy efficiency.”

The Allen Fossil Plant's three coal-fired units currently produce about 4.8 billion kilowatt-hours of electricity per year. Located on the Mississippi River about five miles southwest of downtown Memphis, the facility was built in the 1950s by Memphis Light, Gas and Water Division (MLGW). TVA began leasing the facility in 1965 and purchased it outright in 1984.

MLGW plans to build a pipeline to supply gas to the Allen plant’s two combustion turbines.

The TVA board of directors also approved a $10.7 billion budget for fiscal 2015 that includes a record $3.5 billion in capital investment in generating plants and system improvements, including the Allen Fossil Plant project, a new gas plant on the Green River in western Kentucky and completion of Watts Bar Nuclear Unit 2 in Spring City, TN.