Fossil-Fuel Generation

Facts about TVAs fossil-fuel operations

TVA began its fossil-plant construction program in the late 1940s, and today it has 48 active operating units at 11 coal-fired-plant sites in the Tennessee Valley. TVA has 98 combustion-turbine units at four of its existing coal-fired sites (Allen, Colbert, Gallatin, and Johnsonville) and eight freestanding sites. The turbines burn natural gas or fuel oil. While they cost more to operate than TVAs other power sources, they are necessary for peak operating periods when the demand for power is high. In fiscal year 2011, TVAs coal-fired and combustion-turbine units produced about 81.4 billion kilowatt-hours of electricity, accounting for about 57 percent of TVAs power supply from TVA-operated facilities. TVA has long been committed to taking actions at its facilities to protect the environment and the areas natural resources. TVA installed scrubbers and electrostatic precipitators at many of its coal-fired plants when these technologies were still in the early stages of development. From 1977 to 2011, TVA invested about $5.4 billion to reduce emissions from its power plants. Of this, $264 million was spent from 2009 to 2011. To maintain compliance with future Clean Air Act requirements, TVA may need to invest an additional $3.4 billion through 2018. To reduce sulfur-dioxide emissions, TVA has installed scrubbers on 17 of its coal-fired units and switched to lower-sulfur coals at 41 units. These measures have helped reduce TVA's sulfur dioxide emissions by at least 90 percent below their peak in 1977. The TVA board of directors has approved adding scrubbers to three units at Allen Fossil Plant and four units at Gallatin Fossil Plant. To reduce nitrogen oxide emissions, TVA has installed selective catalytic reduction systems on 21 coal-fired units. TVA also has installed a variety of other emission control technologies on selected units. These include selective non-catalytic reduction systems, High Energy Reagent Technology, low-NOx burners and combustion systems, and combustion optimization measures. These measures have helped reduce TVA's nitrogen oxide emissions by at least 86 percent below peak 1995 levels. To reduce particulate emissions, TVA has equipped all its coal-fired units with scrubbers, mechanical collectors, electrostatic precipitators or baghouses. In support of recent environmental agreements and its vision of being one of the nations leading providers of low-cost and cleaner energy by 2020, TVA will idle or retire 2,700 megawatts of older, less-economical coal-fired capacity by the end of 2017. VA has high confidence in the new completion schedule and cost estimates for Unit 2. The estimate to complete called the ETC was prepared in collaboration with TVAs construction contractors and outside experts. The ETC includes a root-cause analysis of the

factors that took the project off track and detailed estimates of the costs and time needed to complete the remaining work. TVA has taken corrective actions to address the issues identified in the root cause analysis and move the project forward. The ETC also includes detailed estimates for: the amount of conduit, cable, piping and other materials still to be installed; support activities, like scaffolding, insulation and painting; and labor rates.

To validate these estimates, visual inspections were conducted to assess the work already completed, verify the scope of work remaining and confirm the quantity of materials needed. To provide the highest degree of confidence in the cost and schedule forecasts, two independent assessments were made to confirm the ETC. One assessment reviewed the methodology to prepare the ETC, and the other validated the root cause analysis.

How Watts Bar 2 will help

TVAs Integrated Resource Plan identified Watts Bar 2 as an essential new source of nuclear generation. Completing Unit 2 will put an existing asset to work for TVA customers and add more than 1,100 megawatts of safe, clean, reliable and economical base load generating capacity to the TVA power system. Not only will Unit 2 help meet growing demand for electricity in the Tennessee Valley, it will help replace older, more costly and less efficient coal units that are being retired. One nuclear unit can make as much electricity as five to 10 coal units without carbon emissions. It is estimated that Watts Bar Unit 2 will help TVA avoid coal-fired emissions of 6 million to 8 million tons of carbon dioxide a year. Bringing Watts Bar Unit 2 online will directly support TVAs vision to be one of the nations leading providers of low-cost and cleaner energy by 2020 and, specifically, to: lead the Southeast in increased energy efficiency, and

lead the nation in improving air quality and increased nuclear production.

Economic impact of Unit 2 construction

The Unit 2 construction project employs around 2,400 contractors as of April 2012. About 290 permanent positions have been added to support two-unit operation of the plant. TVA provides financial compensation to cities and counties affected by construction of new generation. In 2012, five counties and 18 cities affected by the construction of Watts Bar Unit 2 will receive more than $2.9 million in compensation from TVA

Key Topic

Coal Combustion Products

TVA is phasing out wet storage of ash and gypsum at its coal-fired power plants and installing state-of-the-art dry storage systems. The transition from wet to dry storage will make TVA an industry leader in managing coal combustion products.

Background
Following the ash spill at Kingston Fossil Plant in December 2008, TVA has developed a comprehensive plan for managing coal combustion products so no similar event ever occurs again at a TVA site.

Important points
After the Kingston spill, TVA commissioned Stantec Consulting to inspect, evaluate and recommend improvements for combustion product management at all 11 TVA fossil plants. In August 2009, the TVA Board of Directors approved a plan to end wet storage of coal ash and gypsum with a goal of making TVAs storage facilities the safest, most modern, and most thoroughly inspected in the industry. TVA plans to convert all wet ash and gypsum storage to dry storage, and to eliminate any storage impoundments federally classified high -risk potential to people and property if the impoundment failed. The plan, subject to environmental reviews and regulatory approvals, calls for building ash and gypsum dewatering facilities, permitting and constructing new dry storage landfills and closing existing ash and gypsum ponds. The plan is expected to cost $1.5 billion to $2 billion over an eight- to 10-year period.

Other information
All 11 TVA coal-burning plants now use wet bottom-ash systems, and these will be converted to dry systems. The six TVA coal-burning plants that use wet fly-ash handling systems are: Allen, Gallatin, Johnsonville and Kingston in Tennessee; Widows Creek in Alabama, and Paradise in Kentucky. The first conversion to dry fly-ash storage will be at Kingston Fossil Plant. It should be complete in late 2011. In the last decade, TVA has beneficially reused more than 29 million tons of coal combustion products. TVA is evaluating a number of market, economic and regulatory issues that will provide the basis for identifying and setting specific targets for increasing the diversion of these materials.

Combustion Turbine Power Plant

Combustion turbines are designed to start quickly to meet the demand for electricity during peak operating periods. They are normally run with natural gas as a fuel, although lowsulfur fuel oil can also be used as needed. The turbines operate like a jet engine: they draw in air at the front of the unit, compress it, mix it with fuel, and ignite it. The hot combustion gases then expand through turbine blades connected to a generator to produce electricity.