Positive Events for New Coal-fired Plants

Gas Price Exceeds $9/MMBtu

The analysis above which shows how unlikely is the drop in price of natural gas, also supports the case that the price will average well above $9/MMBtu and may well reach $20/MMBtu. The last time oil reached the present price levels there was a sudden rush to coal. In 1974 utilities ordered more than 60,000 MW of new coal-fired plants. The rush was similar to the 1999 rush to gas.

But shortly after this 1974 rush the price of oil fell sharply and the new coal plants were delayed or canceled. No quick fall in oil prices is anticipated this time around since the price is not based on arbitrary withholding of supplies. The odds are better than five to one that the price of natural gas will stay above $9/MMBtu and the 70,000 MW of new coal-fired capacity projected by DOE will be a conservative forecast.

Co-firing, Ethanol, Hydrochloric Acid

Changes to existing coal-fired plants could cause net reductions of CO₂ by 35 percent. Replacement of these plants with new super critical boilers and the incorporation of other technology could make a net 55 percent reduction.

Net CO₂ emissions with incremental technology additions including credits as a percent of an existing coal-fired boiler without changes are shown in Figure 7.

FIGURE 7.  CO₂ EMISSIONS – NET REDUCTIONS

Technology	Base CO2 Emissions %	Efficiency improvements	Co-firing biomass	Waste heat for ethanol	Hydrochloric acid by product	Reduction from the combination %
Existing Coal-fired boiler	100	10	5	15	5	35
New ultra super critical coal-fired boiler	70	30% is already achieved	5	15	5	55

 

These are net reductions and take into account the CO₂ emissions from the whole process of oil exploration through refining and gasoline transportation as opposed to ethanol production using the coal plant waste heat. The elimination of chlor alkali plants and their resultant CO₂ contribution is included.

The CO₂ reduction costs of either retrofitting existing coal plants or the construction of new super critical plants is very low compared to renewable energy alternatives or to CO₂ capture and sequestration. Furthermore all the technology is in place.

These opportunities to reduce CO₂ net generation from coal by 55 percent by replacing an old coal plant with a super critical boiler making ethanol and hydrochloric acid is very promising. It could result in as much as 200,000 MW of new coal capacity while reducing net CO₂ emissions. So the net addition of new coal plants would be 530,000 MW under this scenario (replacement of 330,000 MW of existing plants and addition of 200,000 MW of new plants).

Great River is moving ahead with the 66 percent efficient Spiritwood plant. It is already operating the Coal Creek plant which supplies all the heat needed at Blue Flint Ethanol. Others are sure to follow.

The odds are less than one to nine that the industry will take full advantage of this opportunity, but this would still result in 60,000 MW of new capacity absent other events. The odds are that this will cause a 20 percent increase in coal capacity absent other drivers, so we have estimated the odds at two to one rather than a greater certainty that at least a 60,000 MW addition will be achieved. Based on the rush to new coal plants in Europe this is a very conservative estimate.

High Electricity Demand

The DOE reference case showing 100 GW of new coal-fired capacity including 29 GW of coal gasification and 4 GW equivalent of coal-to-liquids by 2030 is based on demand increase as follows:

·         Residential            1.0%/yr

·         Commercial          1.7%/yr

·         Industrial                0.l%/yr

The basis of this forecast is shown at http://www.eia.doe.gov/oiaf/aeo/pdf/appa.pdf

We believe the odds are six to one or greater that demand will meet or exceed the DOE base case.

Renewables Supply Limits

The problems with renewables were reviewed above under “Renewable Energy Costs Fall to Less than 200 Percent of Coal”. There is presently a shortage of wind turbines and no sign that renewables can compete for base load generation in the next 15 years

Nuclear Supply Limits

This is covered above under the negative “Nuclear Impact is Major.”

Coal is Less than Half the Cost of Alternatives

This subject is covered from the negative aspect above under “Renewable Energy Costs Fall to Less than 200 Percent of Coal.” Coal plant costs are rising. There has been a 50 percent increase in the installed cost of coal-fired generation since 2006. Coal prices have also risen, so the levelized costs have risen. But the prices of alternatives have risen at least proportionally, so the odds are better than five to one coal will remain less than half the cost of alternatives.

Rate payers will not support doubling electricity costs to reduce greenhouse gases.

This is covered above from the negative aspect under “Economics are Ignored.”

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