Balancing Fossil Fuels Within the TVA Portfolio

As part of its mission of service, TVA is committed to managing its power portfolio so that it can offer electricity at minimal wholesale prices and maintain its record of 99.999 reliability. That means TVA must be able to:

• Adapt to changing business environments
• Keep costs less volatile and more predictable
• Minimize risks to our customers
• Meet peak demand without faltering
• Get fuel when we needs it, where we needs it

Troubleshooting Markets

Because flexibility is critical to managing both costs and reliability, TVA must be responsive to changing markets and environments. Over the long term, this means shifting the emphasis of the entire production portfolio (see below).

Short term, however, the focus is on shifting emphasis between coal and natural gas—one of the key dynamics in the power industry, as fossil fuels still form the backbone of energy production in the U.S. and at TVA. The focus is on providing adequate supplies while maintaing the flexibility to rely more heavily on one source over the other when internal (maintenance work) or external (price volatility) circumstances demand.

Purchasing Fossil Fuel

TVA's coal and gas supply team works 24/7 to closely monitor price and transportation issues, working to ensure that all of TVA's fossil generating facilities have the fuel required to deliver on the promise of generating electricity that is both reliable and delivered at the lowest-possible cost.

The group is responsible for the purchase, transportation, storage and delivery of coal, natural gas, fuel oil and reagents (such as ammonia and limestone) for TVA’s entire power fossil generation fleet. In 2015, coal and gas services purchased approximately $2 billion of fuel.

TVA is one of the top 10 largest consumers of coal for the purpose of generating electricity in the United States. In 2014, its fossil plants burned more than 24 million tons of coal derived from four major U.S. coal basins. The Illinois Basin and Power River Basin mines accounted for 90 percent of the total coal purchased.

Meanwhile, the number of units in our natural gas fleet has increased, so TVA is purchasing a greater amount of natural gas today than in years past. In 2015, TVA purchased more than 190 billion cubic feet of natural gas.

Our Changing Portfolio

Coal purchases in the future will be far less: In 2014 TVA operated 11 coal-fired plants; by mid-2016, there will be only nine coal-fired plants. Gas purchase amounts, too, will be reduced in 2016 when TVA's Watts Bar Nuclear Unit 2 comes online and adds 1,100 MW of power to the grid.

There will always be a place for fossil fuels in TVA's portfolio, though they will represent a smaller piece of the pie. As you can see on the charts below, TVA has already shifted away from fossil fuels since 2007, placing increasing emphasis on nuclear and energy efficiency measures. That will continue through 2020, when coal and gas will account for only 41 percent of TVA's power portfolio, as compared to 68 percent in 2007.