Is Coal a Fuel of the Future?

Few reasonable people can dispute that the U.S. Environmental Protection Agency (EPA) is conducting a war against coal. If you doubt that conclusion, just look at the large number of new regulations affecting coal-fired power plants that have been proposed in rapid-fire succession by the EPA.

The rapidity with which they have emerged and the short time allowed for implementing corrective action have made it virtually impossible for utilities to respond rationally, forcing them to consider shutting down plants and removing them from service.

The good news is that older and less-utilized coal-fired power plants can be retired without seriously affecting the availability of affordable electricity, provided that the EPA doesn’t force the retirement of coal fired power plants too quickly. The bad news is that EPA regulations also threaten newer plants and deter the building of modern, highly efficient ultrasupercritical coal-fired power plants to replace the older, less efficient plants that are retired.

Count the Losses

A number of studies have attempted to quantify the number of plants that would be closed over the next 10 years as a result of new or more stringent versions of EPA rules. An analysis by the Federal Energy Regulatory Commission (FERC) suggested 40 GW could be closed that “could have drastic consequences for many parts of the country.” Other published estimates range from 30 to 70 GW of plant closures. It’s not surprising that the EPA has no idea how many plants and jobs will be lost as a result of this new round of regulations.

A recent analysis, Predicting U.S. Coal Plant Retirements, by POWER magazine, developed a rational approach for identifying plant closures and found that many existing older plants could be closed without seriously affecting the availability of electricity. This is the best analysis I have seen on this subject. This analysis identified 305 units built before 1960 that didn’t have flue gas desulfurization and selective catalytic reduction.

Because capacity factor is an indication of how intensively a power plant is utilized, low capacity factors would suggest that plants could be retired without affecting the availability of electricity—provided that new peaking units are built to supply power during peak periods, such as on hot summer days where air-conditioning increases electricity usage.

Out of the 305 plants built before 1960, as described above, 167 have capacity factors of 50% or less. If all 167 plants were closed, only 4.2% of generation in gigawatt hours would be lost from coal-fired power plants. Similarly, 85 plants have capacity factors of 40% or less, and if all these plants were closed, only 1.1% of generation in gigawatt hours would be lost. Even if all 305 plants were closed, only 11.9% of generation in gigawatt hours would be lost from coal-fired power plants, and this represents only 5.8% of our annual demand for electricity.

There are reasons why some of the 305 units would be repowered or have air quality equipment installed and therefore not be considered for retirement, but it’s clear that a large number of the 305 plants built before 1960 could be retired without affecting the availability of affordable electricity. New EPA rules with respect to once-through water cooling and wet ash handling, will also threaten units built after 1960 with closure.

In other words, a rational business case can be made for closing a significant number of older coal-fired power plants in an orderly manner.

The War Is Not Over

The EPA war against coal, therefore, goes beyond what could be decided on the basis of a rational business decision.

In addition to promoting the closure of coal-fired power plants, the EPA’s war against coal deters the building of new, efficient coal-fired power plants and thereby threatens the availability of affordable electricity.

As President Obama said, companies could build coal-fired power plants, but they would go bankrupt. In January 2008, Obama told the San Francisco Chronicle, “Under my plan of a cap and trade system, electricity rates would necessarily skyrocket. … Coal power plants, natural gas, whatever the plants were, whatever the industry was, they would have to retrofit their operations. That will cost money. They will pass that money on to consumers.”

Sensible Choices

If it weren’t for EPA regulations, ultrasupercritical coal-fired power plants would be logical replacements for retired coal-fired power plants. Currently, the overnight cost for building an ultrasupercritical power plant is approximately $2,800 per kW. This is a little more than twice the cost of a natural gas combined cycle (NGCC) power plant.

While the cost of natural gas is low, as it is now, it’s likely that NGCC plants will prevail. When the price of natural gas increases, ultrasupercritical coal-fired power plants could be the preferred choice.

Ultrasupercritical coal-fired power plants operate at very high temperatures and pressures. They are substantially more efficient than existing subcritical coal-fired power plants. The average existing subcritical plant has a thermal efficiency of 33%. The first ultrasupercritical plant in the U.S. in now under construction and is designed to have a 42% thermal efficiency.  Advanced ultrasupercritical plants are expected to have a thermal efficiency of around 47%. This is over 40% more efficient than existing subcritical coal-fired plants.

China is building around twenty ultrasupercritical coal-fired power plants. Japan has also built several ultrasupercritical plants. Even Europe, with its extreme environmental rules, is building ultrasupercritical units.

Interestingly, advanced ultrasupercritical coal-fired power plants will have about the same carbon dioxide emissions as natural gas units.

While it’s entirely feasible to retire significant numbers of existing coal-fired power plants and have NGCC units taking up the slack in the near term, it will be necessary to build ultrasupercritical coal-fired power plants to provide the baseload, low-cost electricity needed for a sound U.S. economy.

Coal and natural gas will be the fuels of the future—if we are to have a plentiful supply of low-cost electricity.

Donn Dears is a retired senior executive at General Electric and now writes about issues of interest to the energy industry. He is also the author of Carbon Folly, a book (available at Amazon.com) that explores the impact on the economy of the U.S. if carbon emissions were to be reduced by 80%.  Dears blogs on energy issues at http://dddusmma.wordpress.com.