For eight decades, Memphis has bought its electricity from the Tennessee Valley Authority, the nation’s largest public utility and a key part of Franklin Roosevelt’s New Deal to lift a region out poverty.
But that arrangement could change as renewable energy costs fall.
The city’s municipal utility, TVA’s largest customer, has launched a study to explore whether it can save money by breaking away from TVA, possibly by developing or buying renewable energy sources like solar and wind.
Memphis’ move, encouraged by environmentalists who have laid out a roadmap for transformation, comes as other large cities in Tennessee—including Nashville and Knoxville—are encouraging TVA to transition faster to renewable energy.
The other cities aren’t yet threatening to abandon TVA, but their mayors are raising concerns with the utility, and they have pledged to support the emissions-cutting goals of the Paris climate agreement.
TVA’s energy mix and plans make its progress on cutting emissions uncertain. It has a lower carbon footprint than many utilities right now, but it envisions only modest improvements in the next 20 years.
It’s also under pressure from activists to phase out nuclear power, which is carbon-free but generates radioactive waste and raises questions about safety.
It all adds up to growing pressure on the TVA to change direction, said Stephen Smith, executive director of the Southern Alliance for Clean Energy, which closely follows TVA and advocates for renewable energy.
S. David Freeman, whose long career in public power included running the TVA board after being appointed by Jimmy Carter, compares the moment to the Allied forces landing at Normandy during World War II: “Memphis is Normandy. We have a foothold there.”
“The next move is how do we kill those monster (TVA) coal and nuclear plants,” said Freeman, a nonagenarian native of Chattanooga, and now a consultant with Friends of the Earth, which sees Memphis as the beachhead for forcing change within the TVA. “It’s going to take a while.”
TVA Is Making Progress, But Is It Fast Enough?
TVA arose from the Great Depression, building hydroelectric dams and turning the 652-mile long Tennessee River into a navigable channel for commerce.
After World War II, it turned to coal and later nuclear power and now serves 10 million people in seven states as the exclusive provider of electricity to 154 local power companies.
The TVA has made progress on developing a cleaner power supply in recent years. It has retired coal plants and added solar farms. Earlier this year, it rejected political pressure from the White House and Kentucky’s governor to keep two uneconomical coal plants running and decided it would retire them within five years. It completed a new nuclear reactor at its Watts Bar plant in East Tennessee and is increasing output from its Browns Ferry nuclear plant in Alabama.
Its officials boast about reaching 56 percent carbon-free energy—while also meeting an obligation to provide “least cost” power. And a just-released 20-year integrated resource plan envisions more solar and maybe small-scale nuclear reactors to help the utility get to between 61 and 63 percent carbon-free electricity by 2038.
But some cities and environmental advocates say that the timeline is too slow given the urgency of climate change. They want to see more solar and wind displacing fossil fuel plants sooner, and some, like Freeman, believe nuclear should be phased out, too.
“We don’t need to take those risks anymore,” said Freeman, whose history with the TVA included landmark votes to stop construction on eight nuclear reactors. “We can substitute solar, wind and batteries,” he said.
Memphis: A Plan to Save Millions of Dollars
In Memphis, the municipal utility is conducting an unprecedented examination of its future power needs and where the electricity should come from.
Its new study is partly a response to a report, written by the consulting firm Brattle Group and commissioned by Friends of the Earth, which showed how Memphis Light, Gas and Water could cut its wholesale power supply costs by about a third—roughly between $240 million and $333 million annually—while getting to 100 percent renewable energy by 2050.
To do that, however, the city would have to break away from TVA.
The city’s study will also evaluate ways to improve energy efficiency to reduce energy consumption for the municipal utility’s 421,000 customers.
That energy efficiency piece is important, said Scott Banbury, conservation program coordinator for the Tennessee Chapter of the Sierra Club and a Memphis resident.
While TVA rates are not viewed as high, a lot of Memphis residents have high power bills because their homes are old and drafty, he said. Many of those homes are occupied by low-income residents, combining to create one of the highest energy burdens in the United States, Banbury said.
That combination has invited a discussion around whether TVA is meeting the community’s needs, Banbury said.
What Could Replace TVA Power in Memphis?
Memphis, which would have to give TVA five year’s notice to break away, has some options, according to the Brattle Group report.
The city could develop its own solar resources locally and tap into other grid operators to the west, namely the Southwest Power Pool or the Midcontinent Independent System Operator, for significant sources of wind power.
In the nearer term, the study said, Memphis likely would need some electricity from natural gas, either from an existing TVA plant in the city or by building a new one.
Memphis Mayor Jim Strickland has made comments to local media that support the city’s utility looking into leaving TVA, stressing that it would be for economic reasons related to cost-savings, not because of climate change. Strickland does have an interest in the climate impact, though: He’s part of the Climate Mayors network.
“This ultimate decision is a very big deal, and it is going to have an impact for decades to come,” said J.T. Young, president and CEO of the municipal utility told Memphis City Council members recently, adding that customers’ needs will be “at the center of all our decisions.”
In a written statement, Young said the city utility was conducting the new study to evaluate the optimal mix of “reliable, low-cost power. This process will include the role of renewable energy resources as well.”
Tennessee also has plenty of untapped solar potential. Unlike many other states, it has no renewable energy portfolio standards requiring utilities to use renewable resources. It currently lags in the Southeast region when it comes to solar growth: Out of 13 large utilities in the region, TVA ranked ninth last year on the basis of solar watts generated per customer, according to a new annual report from the Southern Alliance for Clean Energy.
TVA spokesman Scott Brooks acknowledged that many of the hundreds of people and organizations that have commented on the utility’s integrated resource plan have asked for more renewable energy. Those comments are under review as TVA prepares a final plan, due in August.
In the future, “solar energy is certainly going to be a player,” he said. He pointed to TVA announcements that it will be providing solar power for Facebook and Google data centers in the South, as examples. “A lot of that will depend on the demand from our customers and where the industry goes.”
Nashville, Knoxville Add Pressure on TVA
Other larger cities within the TVA service area have been wrestling with how to respond to the climate challenge.
Knoxville and Nashville have both sent letters to TVA as part of a regional clean-energy discussion involving all five of its biggest customers—also including utilities serving Chattanooga, Memphis and Huntsville, Alabama—asking the power provider to do more, local officials said.
Knoxville credits TVA with helping that city meet interim clean energy goals—a 20 percent reduction in greenhouse gases by 2020 compared to 2005 levels, said Erin Gill, director of sustainability for that city. Still, she said, Knoxville’s challenge to TVA “is how do we get to zero carbon faster?”
Nashville is considering a city ordinance that would require local government operations to eventually be powered by 100 percent renewable energy.
Nashville Mayor David Briley has backed a goal to reduce citywide greenhouse gas emissions 40 percent by 2030, and 70 percent by 2050. In an April 8 letter to TVA, commenting on the 20-year power plan, Briley called out TVA’s plan to rely significantly on fossil fuels for the next two decades.
He asked TVA to “create and deploy opportunities for power customers (including cities like Nashville) to expand and accelerate the use of zero-carbon energy sources (with an emphasis on renewables) in order to further reduce the portion of our electricity usage supported by fossil fuels.”
Brooks said TVA would have to work with Nashville’s local power provider “to see how to make that happen. We would certainly do everything we could.”
‘Re-Greening the Valley’
Were Memphis to leave, TVA would lose a customer that uses about a tenth of all the electricity it produces.
“It would seem to me that is going to have a negative impact,” Freeman said. “I am not saying that is our objective. Our objective is to re-green the valley.”
TVA has lost other cities in the past, Brooks said, but none as large as Memphis.
Paducah, Kentucky, pulled out more than a decade ago. It invested in a new coal-fired power plant in Illinois, and its rates soared.
Brooks said Memphis “is within its right to look around, and we think they should.
“They need to do what is best for their customers. We are trying to present a case where we think we are the best value.”