Coal continues to clobber wind

Just when you thought coal was down for the count, here’s a report from London’s Financial Times. “British coal production looks set to grow for the first time since 2001, thanks to higher prices and power generators’ new-found appreciation of domestic coal supplies.” Coal production in the UK mostly has been falling since the 1950s.

Despite international attempts to demonize coal, nothing trumps economics. Coal continues to be the worldwide low-cost electricity producer. Those dusky diamonds deep down in the ground continue as the world’s most important source of electric energy. The greens be damned, coal is still king.

The FT reports, “The renaissance of UK coal is the result of a steep rise in world coal prices, caused by soaring oil and gas prices and a growing demand for electricity in the developing world. It is once again profitable to mine many of the UK’s deposits, and power companies are increasingly choosing local coal because of shortages in the international market.”

Coal is relatively more expensive in the UK than in many other countries, particularly the US. Nonetheless, it is the least-cost fuel for Britain, and the most dependable source of fuel for electric generation. The UK, like the US, can deliver its own fuel to generating plants, without fear of disruption or unanticipated price spikes. Dorothy Thompson, the head of Drax, the largest coal-fired power plant in Britain, burning Yorkshire coal, told the FT, “The logistics are cheaper and easier to manage” burning local coal.

In the US, the Energy Information Administration reported, coal production and consumption has steadily increased, despite the hype about renewable energy. EIA reported that coal consumption in 2007 in the electric generating sector increased by 2%.

Most of the story about electric generation in the US has been focused on wind power. But wind, while growing rapidly, remains a tiny fragment of total electric generation, according to EIA, far less than hydro and biomass (wood waste) in terms of so-called renewable generation.

Wind’s growth is also dramatically limited by the US power grid, as Matt Wald reported in the New York Times. Wald, who has covered energy issues as long as I have (that means we are both geezers), noted that the US transmission grid is a major limiting factor for wind power. “The dirty secret of clean energy,” he wrote, “is that while generating is getting easier, moving it to market is not.”

That’s right. The US infrastructure for renewable energy – specifically wind and solar – is limited. The infrastructure is built around the ability to move coal and nuclear power – and big hydro – to load centers. That’s not going to change anytime soon, so it looks to me that nasty old coal, with all of its environmental baggage, will continue to be the winner in the US generating market. As Deep Throat (the late FBI official Mark Felt) told Woodward and Bernstein in the Watergate scandal, “Follow the money.” That’s good advice when looking at future trends in power generation.

Coal is money. Wind is chump change.