The Importance of Coal for Electricity Generation N C S L L e g i s l a t i v e S u m m i t A u g u s t 1 1, 2 0 1 3 Jeff Bloczynski, Associate Vice President of Economic Analysis American Coalition for Clean Coal Electricity
T o p i c s Coal facts Generating economics Mitigating electricity price volatility Electric reliability Cleaner coal Greenhouse gas regulations What next? 2
C o a l F a c t s Nationally, the amount of coal-fueled generating capacity is second only to natural gas, yet more electricity is produced from coal than any other source. 3 Source: SNL Energy and U.S. Energy Information Administration (EIA) Electric Power Monthly.
G e n e r a t i n g E c o n o m i c s The relative cost of electricity from coal and natural gas change with the market cost of fuel. All-In Generating Cost by Technology and Fuel Coal cheaper than gas Gas cheaper than coal Coal and gas in competition 4 Source: Fuel commodity and delivery prices from SNL Energy, Fixed and Variable O&M costs from EPA, assumes 85% capacity factor, 7,000 Btu/kWh heat rate for Natural Gas CCGT and 10,000 Btu/kWh heat rate for Coal.
G e n e r a t i n g E c o n o m i c s Coal prices have a history of stability relative to natural gas prices, which have nearly doubled from the historic lows of 2012. Market Price for Commodity Fuels 5 Source: SNL Energy.
G e n e r a t i n g E c o n o m i c s Natural gas prices are among the most volatile of any commodity. Based on the current market, gas prices that were $3.62 per MMBtu in July 2013 are as likely to rise to $6.08 as fall to $2.46 in August 2014. 6
C o a l m i t i g a t e s h i g h e n e r g y p r i c e s Coal reduces the risk of high electricity prices by reducing exposure to volatile natural gas prices. Coal generates more when gas prices rise, and less when they fall. Monthly Electricity Generation and Fuel Cost by Source 7 Source: U.S. Energy Information Administration.
C o a l s u p p o r t s g r i d r e l i a b i l i t y Coal-fired power plants typically maintain over two months of fuel on-site, while natural gas generators receive fuel just-in-time. Most natural gas power plants do not have firm fuel supply agreements, opting for the cheaper interruptible rates that may leave them without fuel during periods of high demand. The mismatch between the gas day and the power day in energy markets can require natural gas generators to estimate how much fuel they will need up to two days in advance. Increasing amounts of intermittent generation (solar, wind) can require quick-response from natural gas peaking power plants if they are suddenly unavailable, further taxing the gas supply infrastructure. 8
C l e a n e r C o a l Emissions per kilowatt-hour of sulfur dioxide (SO 2 ), nitrogen oxides (NO x ), and particulate matter (PM) from coal-fueled power plants have been reduced by 89.5 percent over the period 1970-2012. Approximately $110 billion has been invested through 2012 to achieve these emission reductions. By 2015, over 90 percent of U.S. coal-fueled electric generating capacity will have installed clean coal technologies and other advanced emission controls to reduce emissions of SO 2, NO x, PM, mercury, acid gases, and non-mercury metals. 9
N e w S o u r c e P e r f o r m a n c e S t a n d a r d s f o r G r e e n h o u s e G a s e s In 2012, EPA proposed NSPS limits for greenhouse gas emissions of 1,000 lbs. CO 2 per MWh, applicable to both new coal and new natural gas power plants. New coal plants cannot achieve this rate without carbon capture and sequestration (CCS) technology. The President directed EPA to re-propose NSPS by Sept. 20, 2013. ACCCE commissioned a study to determine emissions rates that could be achieved by efficient new coal-fueled power plants. Achievable Emission Rates For New Coal Units 10 Subcategory Supercritical (bituminous and subbituminous) Supercritical (lignite) Ultra-Supercritical [Emissions rate subject to change] IGCC CO 2 Emissions Rate ~1,915 lb/mwh ~2,150 lb/mwh [~1,900 lb/mwh] ~1,915 lb/mwh
11 C C S S t a t u s There currently are no commercial-scale CCS deployments for coal-fueled power plants. The first CCS-enabled power plant is scheduled to come online in 2014 (Mississippi Power s Kemper County IGCC). Financed in part with $270 million from U.S. Department of Energy (DOE) as a CCS demonstration project. CCS R&D funding has dwindled. In 2009, DOE invested $692M for the coal program which focuses on CCS, with an additional $3.4B in stimulus funding which supported CCS demonstration projects primarily. In the President s 2014 budget, no money has been requested for CCS demonstrations. CCS is projected to be expensive to build and operate. Estimates range from $43-$95 per tonne CO 2 (raising generating costs by 36% - 84%).
W h a t n e x t? If NSPS requires CCS for new coal units, the industry might face a catch-22: CCS will not develop into a viable, proven technology until new coal plants demonstrate its effectiveness through trial-and-error, but new coal plants will not be built if they are required to commit to an unproven technology. A regulation seemingly intended to spur CCS deployment may have the unintended consequence of stalling it. A NSPS standard that requires CCS amounts to a ban on new coal power plants. 12
W h a t c a n y o u d o? EPA is expected to re-propose the greenhouse gas NSPS on September 20, and has promised to consult with states in finalizing the rule. If the rule requires CCS for new coal units, you can: Contact state environmental agencies and utility commissions to voice concerns about the implications for electricity cost and reliability. Talk to EPA and the Administration. Tell them that EPA should not set NSPS based on CCS because that would ban new coal plants and kill CCS. File comments with EPA on its re-proposal. 13