Coal-based Energy to Be Phased Out Completely by the End of 2025
- nd2howe
- Apr 2
- 3 min read
As part of its compliance with Washington State’s Clean Energy Transformation Act (CETA), Puget Sound Energy (PSE) will transfer ownership of its remaining stake in the Colstrip Generating Station in Eastern Montana to NorthWestern Energy effective December 31, 2025. PSE, along with all other Washington energy providers, will no longer be able to include coal in its fuel mix portfolio starting in 2026 in accordance with the timelines set forth by the CETA. And while coal made up just 6.5% of PSE's fuel mix portfolio in its latest published report from 2023, it will mean utilities across the state will need to find alternative renewable sources of power to make up the difference and continue to meet Washingtonians accelerating energy demand.
PSE's Stake in Colstrip: A Historical Overview
Established in the 1970s and 1980s, the Colstrip Generating Station consists of four units. PSE acquired its ownership stake in Units 3 and 4 in 1998, marking a substantial investment in coal-based energy production. These units collectively contributed approximately 700 megawatts (MW) to PSE's generating capacity, making Colstrip the largest power-generating facility in PSE's portfolio.
As recently as 2018, coal accounted for 36% of PSE's electricity fuel mix, with the Colstrip being the primary source of this coal-derived power. In just 8 years, PSE will have completely replaced around one-third of its coal-fueled power profile with renewables.
Decision to Divest: Motivations Behind PSE's Move
Several factors influenced PSE's decision to sell its stake in the Colstrip plant:
Regulatory Changes: In 2019, Washington State enacted the Clean Energy Transformation Act (CETA), mandating the elimination of coal-fired electricity by 2025. This legislation compelled utilities like PSE to transition towards cleaner energy sources.
Environmental Concerns: The Colstrip plant has been identified as a significant source of greenhouse gas emissions, ranking among the top emitters in the U.S.
Economic Considerations: The increasing competitiveness of renewable energy sources, coupled with potential future costs associated with carbon emissions, made continued investment in coal less economically viable.
In line with these factors, PSE signed an agreement on July 30, 2024, to transfer its ownership in Colstrip Units 3 and 4 to NorthWestern Energy, effective December 31, 2025.
Replacing Colstrip's Output through Wind Energy
To compensate for the phasing out of coal-derived power from Colstrip, PSE has a 20-year power purchase agreement to acquire 350 MW of wind energy from the Clearwater Wind Project located in Eastern Montana. The Clearwater project has been operational since early 2024 and has a total annual generation capacity of over 750 MW. The good news for electricity consumers is the cheap cost of harvesting wind energy. On average, onshore wind energy carries a levelized cost of energy between $30 and $60 per megawatt hour vs. between $60 and $120 per megawatt hour for coal-fueled energy. The logic is straightforward: wind energy is free and happens to have relatively low operational and maintenance costs, whereas coal requires mining, transportation, and burning. Add on to that the complexity and aging infrastructure of coal plants, and we can clearly see why it is more expensive to produce.
Conclusion
As Washington prepares to sever its final ties with coal-fired electricity, the transition from Colstrip to renewable sources like the Clearwater Wind Facility symbolizes more than just a change in fuel—it marks a commitment to a cleaner, more resilient energy future. For Puget Sound Energy, the decision to divest from Colstrip wasn't just regulatory compliance—it was a forward-looking strategy grounded in economics, environmental responsibility, and the evolving energy landscape.
Wind power, with its lower costs and zero emissions seems to be a solid investment for our power providers here in the PNW. While challenges remain in meeting growing energy demand, the foundations are being laid. And as the turbines of Clearwater spin across the plains of Montana, they signal a new era of sustainable power flowing into homes across Washington. The age of coal is ending. The age of renewables is here.
Comments