With New Water Restrictions in Place, Coal Can’t Survive

It’s not just about tree-hugging.

The transition of our global energy infrastructure to one that is heavily weighted in renewable energy may offer some environmental benefits, but it’s much bigger than that.

In fact, I would argue that any potential environmental benefits of renewable energy have nothing to do with this transition.

It’s really about two things: cost and necessity.

In terms of cost, it is now cheaper to build and operate solar and wind facilities than it is to build and operate new coal and natural gas plants. 

This isn’t to say that natural gas won’t continue to be an integral part of the global energy economy for years to come, but when it comes to sourcing, transmitting, and distributing electricity, fossil fuels can no longer compete with renewables on cost — an inconvenient truth for fossil fuel apologists, to be sure, but one that can’t be denied if you’re an energy investor. 

And in terms of necessity, this can be separated into two categories: national security and natural resource depletion.

You needn’t look any further than how Russia's invasion of Ukraine has affected Europe's energy economy.

Lack of domestically sourced energy resources puts any nation at risk if that nation is heavily reliant upon other countries for its power needs. 

Then there’s the natural resource issue, which few are talking about; however, it can no longer be trivialized and ignored. And I’m not talking about running out of coal or natural gas, either. That’s not a pressing issue.

What is a pressing issue is running out of one of the most important resources we rely on to actually use fossil fuels: water. 

This is particularly true when it comes to coal-fired power plants. 

Thirsty Coal 

Earlier this week, there was an interesting analysis done on the water usage of the Jim Bridger coal-fired power plant in Wyoming, which provides power for more than 1 million homes in the U.S. 

That particular power plant uses about 16 million gallons of water each day. And while the water in the plant is recirculated, it also evaporates, which means it needs to be replenished with water from the Green River, a tributary of the Colorado River. And in case you haven’t been paying attention, the Colorado River has fallen victim to a 23-year-long drought.

The Colorado River, by the way, provides water for more than 40 million people in the U.S. and supports $1.4 trillion in annual economic activity. That’s trillion with a T.

This is a very big deal when you consider the fact that extreme heat and drought conditions are now the new normal, and this historic drought will not let up anytime soon. 

The feds recently put water restrictions in place and have mandated that individual states must start reducing their reliance on water from the Colorado River.

Out west, there are about 30 operational coal-fired power plants, and the water they use is not secured. This is true for the Jim Bridger plant too. And here’s where it gets very interesting.

While coal-fired power plant operators are now searching for new sources of water (and they will come up dry), the folks at the Jim Bridger plant are considering integrating carbon capture and storage (CCS) technology in an effort to reduce carbon emissions. This is a foolish endeavor being pushed by the Biden administration because CCS technology requires even more water — water we don’t have to spare.

In some cases, integrating CCS technology into a coal-fired power plant could require as much as 35% more water than is already necessary.

The bottom line is that even with CCS technology, you can’t make coal “clean,” and without uninterrupted water supplies, you can’t make it work. It’s that simple.

And this is why you will continue to see a very calculated move away from coal in the U.S.

Last year, only about 11% of energy consumption in the U.S. came from coal. By the end of the decade, that number is likely to fall to about 5%, with water shortages being the primary instigator of this reduction — not climate change mandates or overzealous tree huggers.

As energy investors, we not only have to pay attention to energy policy but also environmental conditions that could negatively impact the value of water-intensive power production technologies. And coal is definitely at the top of that list. 

Natural gas and nuclear energy also require very large amounts of water to operate safely and securely. Solar and wind, however, do not.

While water resource shortfalls have been a relatively new concern for power plants, they will not go gently into that good night. And with more water restrictions coming, I predict that renewables will get an even bigger boost in the coming years.

And the bottom line is that we’d be fools not to capitalize on this.

That’s why I put together this short presentation on a new solar technology that not only uses a very small amount of water when compared with coal and natural gas but also just a very small amount of water compared with conventional solar technologies too.

This technology can be integrated into our energy economy at a fraction of the cost of conventional solar, and it doesn’t even require costly transmission and distribution infrastructure.

You can learn more about the technology and the company behind it here.

To a new way of life and a new generation of wealth…

Jeff Siegel

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Jeff is the founder and managing editor of Green Chip Stocks. For more on Jeff, go to his editor’s page.

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