Julian Spector
Wed, July 26, 2023
LONG READ
CHATTANOOGA, Tennessee — The Tennessee Valley Authority is the biggest and most important public utility in the country. It also, historically, has resisted a rapid shift away from fossil fuels.
President Franklin Roosevelt created TVA as part of the New Deal to deliver the rural electrification that for-profit companies neglected to provide, and it has operated as an independent wing of the federal government for 90 years since.
The utility now generates power for 10 million people across seven states in the Southeast. But unlike most utilities, it answers to neither state regulators nor Wall Street shareholders: The president of the United States holds the power to appoint (with confirmation by the Senate) or fire its nine board members. TVA’s mandate is not to turn a quarterly profit for shareholders, but to serve the public good and use leftover proceeds to develop the regional economy.
Today, TVA’s electricity mix is more than 50 percent carbon-free — markedly cleaner than the U.S. as a whole, which still burns fossils for 60 percent of its power.
But that’s not because the utility embraced the rising tide of modern clean energy. The vast majority of TVA’s carbon-free energy comes from rivers it dammed and nuclear plants it built in the middle of the 20th century. Meanwhile, it gets just 3 percent of its electricity from wind and solar, even as those energy sources are surging onto the grid nationwide. TVA has no large-scale lithium-ion battery plants, and it recently cut back on rooftop solar incentives while adding fees for customers.
“Right now, they’re missing the mark, but there’s so much potential for them to become that leader and become the pioneer that they were established to be,” said Gabriela Sarri-Tobar, the Center for Biological Diversity’s lead energy justice campaigner for TVA territory.
On a recent journey through Tennessee, I found signs that TVA is working to realize that potential at last. Much of the progress still exists only on paper, but the organization is taking action now to build clean energy at a scale that few utilities can match.
In May 2021, TVA’s board set the aspirational goal of reaching net-zero emissions by 2050. Last year, the organization requested proposals for a gargantuan 5 gigawatts of “carbon-free” energy, to be operational before 2029. That request brought in 14 gigawatts’ worth of proposals, according to the utility’s vice president for origination and renewables, Chris Hansen, and it may well constitute the largest single instance of a U.S. utility buying clean power.
Meanwhile, TVA’s planners are taking advantage of the public-sector utility’s insulation from market short-termism to explore capital-intensive projects that are near impossible for private developers to build at the same scale. Engineers are pursuing decade-long bets on new pumped-hydro storage and small nuclear reactors. If these long shots ever come to fruition, they could provide the kind of firm, carbon-free power that researchers say is necessary to run a cost-effective and reliable grid without fossil fuels.
This new sprint toward renewable energy is a major shift from the utility’s trajectory just a few years ago, when new wind and solar played only a marginal role in its energy mix. But as encouraging as the pivot might be to clean-energy advocates, many worry about TVA’s pace of decarbonization, given its insistence on adding more fossil fuel plants to the mix.
“Is TVA aggressively going for renewables? 100 percent,” said Gil Hough, executive director of TenneSEIA, the felicitously named state solar trade group, in an interview with Canary Media. “Are they aggressively going after natural gas and small modular reactors? 100 percent.”
Some say the Biden administration, which has called for a “whole of government” approach to climate change, ought to apply more pressure to the utility’s clean energy plans. After all, President Biden set a national goal to remove all fossil fuels from the grid by 2035, while TVA — the massive utility that ultimately answers to him — has instead hewed to the utility industry norm of seeking net-zero emissions by far-off 2050.
But mainstream ambitions were never the metric for TVA, an organization created to achieve something the conventional utilities weren’t doing. Its New Deal–era mandate gives it the unique potential to lead on decarbonization, not to follow investor-owned utilities that have to chase profit above all else. Now it’s up to TVA’s board to decide whether they fully seize that potential — and up to Biden to decide how far he wants to push them.
TVA embraces solar to attract corporate customers
Beyond a newly constructed industrial park in Shelbyville, Tennessee, off the two-lane blacktop to a dirt road, is a sight that will soon become more common in the Tennessee Valley: row upon row of blue solar panels, tracking the arc of the piercing Southern sun. TVA facilitated this 35-megawatt utility-scale project, developed by homegrown solar company Silicon Ranch roughly 50 miles southeast of Nashville.
TVA customers as a whole aren't receiving the power; instead, one big, important customer gets it: Vanderbilt University. The Shelbyville site will offset 70% of the university’s carbon emissions from electricity consumption. It constitutes the largest project yet serving TVA’s efforts to supply big institutional customers with the clean power they desire.
TVA had 993 megawatts of utility-scale solar operating in its footprint as of June 30, meaning its entire seven-state territory has installed about 22% less solar capacity than Connecticut. That’s a decidedly unremarkable fleet for a major utility in the era when solar leads new power plant construction in America. (TVA’s 1,242 megawatts of contracted wind capacity comes almost entirely from outside its territory.) But now TVA expects to add 10 gigawatts of solar by 2035, a buildout that starts with deals like Shelbyville.
After the ceremonial flipping of the switch for the Silicon Ranch–Vanderbilt solar project one April morning, Hansen told me that TVA warmed up to new renewable power because large corporate customers were clamoring for it.
“Around 2017–18, we saw the next phase of our economic development was really focused on the technology companies bringing their data centers to the valley,” Hansen said. “And they came and said, ‘Hey, we're not going to build here unless we have a path to 100% renewables.’”
Since that revelation, TVA has solicited several rounds of large-scale proposals for clean energy projects. It signed contracts for another 2.2 gigawatts of new solar that is under construction between now and 2028. The forthcoming deals from the 5-gigawatt solicitation will get the utility most of the way to its 10-gigawatt goal, well ahead of 2035.
“Historically, TVA was a slow and steady [solar] market, but now I’d call them one of the most aggressive, at least in the Southeast,” said Hough, whose job is to advocate on behalf of Tennessee’s solar industry.
Now, if Google, Meta or a new electric vehicle factory (like Ford’s enormous Blue Oval City outside Memphis, which TVA is supporting) want to buy a bunch of cheap, clean energy, TVA arranges it for them via its “Green Invest” label; Vanderbilt was the first customer to sign a contract through that program. It’s a two-for-one win for a public utility charged with both providing electricity and developing the regional economy.
Small-scale solar still stymied
After the speeches and acknowledgments praising the Shelbyville project, multiple attendees pulled me aside and darkly whispered that I should dig deeper into rooftop solar. This was something Hough had warned me about, after praising TVA’s progress on big solar: “It's the small, distributed stuff that we’re still hurting in,” he said.
TVA used to offer incentives for customers to install solar locally, but it ended the Green Power Providers program in 2019. As TVA’s Hansen tells it, the incentives helped install more than 3,000 rooftop systems since the early 2010s, but “it just became a really expensive program.” TVA’s website describes it more imperiously: “The market no longer needs these incentives.”
Now, though, TVA customers cannot access net metering, the bedrock solar policy that pays residential solar owners for excess rooftop production they send to the grid. This makes TVA territory an outlier nationally: Nearly everywhere else offers net metering, per a recent tally by Solar.com. In 2018, TVA updated its rate design to add grid-access charges that further cut into the potential savings from adding solar.
The result is that TVA made it more difficult for ordinary households to access clean energy and bill savings by putting solar on their roof, while enthusiastically and explicitly delivering these benefits to the Googles and Metas of the world in order to attract them to the region. That discrepancy amounts to a “massive energy injustice,” Sarri-Tobar declared.
“It leaves this massive gap for actual residential customers who can’t access renewable energy as easily,” she said. It’s not just rooftop solar that’s held back: TVA “needs to be doing a whole lot more” for energy efficiency, distributed energy, microgrids and demand response, according to Sarri-Tobar.
The Center for Biological Diversity recently published a study on how a rapid shift to clean energy and a distributed-energy-focused scenario might work in TVA territory. It concluded that the latter strategy, which includes the deployment of 6.3 gigawatts of distributed solar by 2050, would reduce the cost of decarbonization compared to the scenario that banks on large-scale clean power plants. If saving money for customers overall was TVA’s justification for axing rooftop solar incentives, there’s now an argument to be made that distributed energy delivers more savings in the long run.
As it stands now, communities have a better shot than individuals at accessing the benefits of solar, thanks to a program called “Generation Flexibility” that TVA formalized in 2020. TVA doesn’t sell electricity directly to customers — it sells to 153 local power companies, the municipal and cooperative utilities which then retail to local residents and businesses. At the Shelbyville plant, for instance, Silicon Ranch exports power to TVA’s grid, which TVA passes along to Nashville Electric Service, which allocates it to Vanderbilt’s power bills.
Under Generation Flexibility, local power companies may self-generate up to 5% of their annual needs. They can typically build solar at cheaper costs than TVA power, Hough said, so this puts downward pressure on costs for customers while easing the strain on TVA to keep pace with quickly growing regional electricity demand.
A year and a half into the program, a few companies are coming close to this threshold, like BrightRidge in Johnson City, Tennessee. If everyone seems to benefit from this affordable, clean, local generation, one might well wonder why TVA only allows it to make up only 5% of a community’s annual consumption; Sarri-Tobar called the limit “arbitrary.”
Hansen, TVA’s renewables leader, told Canary Media that Generation Flexibility is a “first step” toward encouraging distributed energy across the valley. He held out the possibility that the cap could rise: “Where we go from there — there's a lot that could still be implemented,” he said.
TVA’s long-shot bets for a low-carbon future
While TVA bolsters its (large-scale) renewables fleet, it’s winding up for two big swings to deliver dependable, carbon-free power in the long run: new pumped-hydro storage and novel modular nuclear reactors. Both endeavors build on decades of previous experience at the utility. Neither is guaranteed to succeed, but they represent the kind of long-term thinking that TVA is uniquely designed to do.
With its solar capacity rising like a rocket, TVA will need to expand its grid storage capabilities. Utilities elsewhere have turned to large-scale lithium-ion batteries for that task. TVA has none, so far — but it wields something far more powerful.
Another 100 miles southeast of Shelbyville, Chattanooga straddles an S-curve of the Tennessee River, downstream from TVA’s Chickamauga Dam. To the south, flat-topped Lookout Mountain looms above town, the site of a decisive Union victory that cleared the way for the campaign that ended the Civil War. To the west, Raccoon Mountain rises nearly 1,800 feet tall, crowned with a shimmering lake and partially hollow on the inside.
TVA constructed an epic water battery inside Raccoon Mountain in the early 1970s to store excess power from the utility’s nuclear fleet, said Scottie Barrentine, project manager for TVA’s Pumped Storage Hydro Initiative. Instead of scrambling to turn down reactors when the region didn’t need all their power, TVA used excess electricity to pump water 1,000 feet up to the newly dug reservoir on top of Raccoon Mountain. When that power was needed once again, operators let it out through hydropower turbines, unleashing a deluge of electrons onto the grid.
Now the mountain acts as an “enabler” of new clean energy technologies, helping TVA’s grid absorb the ups and downs of increasing renewable generation, Barrentine said. Indeed, Raccoon Mountain positively swaggers in the Greek pantheon of grid storage: After a recent upgrade, it can surge 1,680 megawatts onto the grid for up to 22 hours straight. That astonishing capability outclasses any lithium battery plant in the world, as does its five-decades-and-counting lifespan. And in contrast to the forgettable aesthetics of battery plants with their rows of off-white shipping containers, Raccoon Mountain welcomes hikers and picnickers to the lip of its elevated lake to savor water-colored sunsets over forest-green slopes.
The mind-boggling scale of this 1970s-era technology puts TVA in a funny position: It lags behind just about any large utility in its adoption of advanced battery technology, but even so, it stands better prepared than most to absorb the ebbs and flows of renewable generation. And instead of simply chasing the contemporary grid battery trend, TVA planners are investigating new pumped-hydro construction that would build on their legacy expertise.
“We’ve not been this deep into a study of pumped storage since the 1970s and ‘80s,” Barrentine said. His team is exploring two sites in northeastern Alabama and a potential expansion of capacity at Raccoon Mountain by adding new turbines. The utility is conducting field investigations, geologic studies and an environmental impact study to comply with National Environmental Policy Act permitting requirements.
But Barrentine cautioned that a new pumped-hydro plant can take a decade or more to complete.
That’s true even though TVA is exempt from the market forces that have made pumped hydro all but impossible to build in most parts of the U.S. Monopoly utilities created most existing pumped hydro before the power sector deregulation of the late-20th century, back when they planned over the timescale of decades on behalf of their captive customer populations. Private investors seeking a short-term return in the marketplace have never pulled off a pumped-hydro project in the U.S. But TVA, untouched by time, operates the same way now as it did way back when it engineered Raccoon Mountain.
Similarly, TVA has operated light-water nuclear reactors for decades and pulled off the country’s first new reactor completion of the 21st century at its Watts Bar site in 2015. Now TVA wants to build on that expertise by co-developing a brand-new, nimbler reactor with industrial heavyweight GE.
TVA partnered with GE to help develop the forthcoming BWRX-300, a 300-megawatt light-water reactor — basically a smaller, mass-produced version of the standard technology that powers existing nuclear plants around the world. This design uses conventional nuclear fuel, unlike most newfangled “advanced” reactors. TVA is supporting the reactor’s development with $200 million that its board earmarked for research into new nuclear tools, and it will work with GE to tailor the product design based on TVA’s experience operating plants.
It’s an unusual arrangement, to be sure: a public utility investing in a private product that will be sold by a private company. But TVA deemed this to be the best shot at getting its hands on the kind of new nuclear reactor it actually wants to build.
If approved, the first reactor would be built at Clinch River, a site initially designed to host a breeder reactor in the 1980s. That plan got canceled, but TVA already has an early site permit approved by the Nuclear Regulatory Commission for adding small modular reactors there.
Crucially, TVA has no obligation to buy one of the small reactors forthcoming from GE until the design meets the utility’s cost-effectiveness tests (and pins down the necessary regulatory approvals).
“The numbers we have right now suggest this plant can be competitive” in a net-zero grid, Greg Boerschig, vice president of the Clinch River Project, said. But TVA has “an off-ramp at every gate”; if it comes time to send the board a specific nuclear project proposal and the numbers don’t make sense, TVA can walk away. Nobody wants to project-manage the next Vogtle, the over-budget, fantastically delayed Georgia project that likely portends the end of large-scale nuclear construction in the U.S.
If the GE product does work, TVA could add new carbon-free nuclear for dispatchable, on-demand power — the role currently served by fossil gas. The smaller reactors could operate more flexibly with the patterns of renewable generation than big old reactors.
TVA CEO Jeff Lyash said last fall that he’s not interested in just buying one small nuclear reactor; if it works, he’d want to install 20 or more.
“This is a perfect sweet spot for a public power entity to take on some of that risk, to try to really get a technology that we need off the ground,” Matt Huber, a professor of geography at Syracuse University, said of TVA’s small modular reactor program. “They have the resources and the social mission to do that, where private capital wouldn't.”
Will Biden let TVA lock in new fossil fuel construction?
TVA has come a long way on its climate strategy in the last five years. Now it’s chasing large-format renewables on a scale seemingly unparalleled among U.S. utilities and encouraging local communities to install their own solar, albeit while making it tougher for individual households to do the same. The public utility is also using its freedom from short-term market pressures to methodically pursue expensive, long-lead-time projects that could yield carbon-free power on demand — if they ever pan out.
So what’s left to do?
The obvious place for TVA to start is the gap between its decarbonization timeline and Biden's more ambitious 2035 clean grid target.
Hardly any power company has sped up its decarbonization timeline in response to that White House goal, even though various studies suggest it’s both feasible and economical. Michigan lawmakers are debating whether to adopt that target for the state’s power sector, but they would be the first state to legislatively phase out fossil fuel power by then.
Unlike the rest of the utility industry, however, TVA answers to a board of directors that’s mostly handpicked by Biden. If the major utility under presidential control won’t heed those clean power goals, it's hard to imagine why anyone else would. When asked why TVA doesn’t subscribe to the president’s timeline, a TVA spokesperson told Canary Media in an email that “TVA is aligned with the Biden administration, as well as other stakeholders, in that reducing carbon emissions across the economy must be a shared priority.”
Curiously, Biden hasn’t said much about TVA’s deviation from his target, at least in public. Back in January 2021, when the White House first declared its “whole of government” response to climate change, the clarion call neglected to even mention the federal agency that generates and transmits electricity to 10 million people in the Southeast.
“Biden doesn't seem to want to center TVA in the climate stuff he's doing,” Huber observed. “He's now going all around the country to trumpet all this infrastructure stuff, but I don't think he's talking much about TVA.”
Canary Media reached out to the White House to clarify how TVA fits into its climate strategy but did not receive a response. This radio silence is a far cry from the most ambitious left-wing proposals for wielding the TVA, such as the People’s Policy Project’s 2020 concept to unleash the public utility to build clean energy across the U.S.
Sarri-Tobar, the energy justice campaigner, said it’s time for Biden to “bring TVA into this ‘whole of government’ approach to tackle the climate crisis and achieve a just energy future.”
Though it will turn off its remaining coal plants in the next decade, TVA plans to fill the gap by building more natural-gas plants; that fossil fuel burns cleaner than coal but still imposes severe warming impacts, especially when it leaks along the supply chain. TVA is building 3,450 megawatts of new fossil gas plants in just the next three years, and more beyond that to replace its outgoing coal capacity.
Biden’s board appointees will vote later this year on whether to replace the outgoing Kingston coal plant with a new fossil gas plant and 122-mile pipeline, or with a portfolio of solar and storage plants instead. And those leaders will steer and vote on the next integrated resource plan, the document that guides new power plant development to meet future needs. Discussion kicked off at the May board meeting and will continue through next year until a final decision.
Changing 10,000-employee bureaucracies takes time, especially when they shoulder the responsibility of keeping the lights on. The hope, for climate hawks, would be that TVA leadership reassesses whether it needs all the gas turbines it currently views as necessary, in light of rapidly emerging clean technologies and the swath of new incentives in the Inflation Reduction Act. Around the country, utilities have warily resisted clean energy, until they tried it and liked it and then sought out more than they had ever expected to.
Whether or not TVA succeeds in its clean energy aspirations matters to more than the 10 million customers who could enjoy cleaner air and more stable power prices. Observers like Huber argue that the big public power model is necessary to decarbonize society at the urgent pace justified by the planetary crisis we face.
“When you talk about what we need to do with climate change and the scale of it and the speed of it, the private sector’s doing some good things, but it's very clear we're not going fast enough,” Huber told Canary Media. “We need much more coordination, not just throwing out a bunch of market incentives and hoping that the market will magically get us to the destination.”
If public power truly can lead the way on economywide decarbonization, TVA is the largest and best-equipped practitioner to prove it.
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