NEWS RELEASE                                   MAY 2009

New Coal Plants with 15 Year Life Are Economically and Environmentally Attractive

Recent reports to the contrary, new coal-fired plants are both economically and environmentally attractive compared to operating existing coal-fired plants or replacing them with alternative energy generation.  This is the conclusion reached by McIlvaine Company in its new “CO₂ Decisions” which is one of the Decision Trees in Power Plant Air Quality Decisions.

Existing coal-fired plants are expensive to retrofit with the equipment needed to reduce conventional pollutants and are not well suited for CO₂ capture.  Immediate replacement of all coal-fired plants in the U.S. with new coal-fired plants is the best choice for both the economy and the environment.

Environmentalists oppose new coal-fired plants because they anticipate a life of 50 years. Permits could be set so that the life would be based on a cumulative CO₂ emission tonnage.  This would insure closure or investment in carbon capture at a much earlier date.

The big mistake in energy analysis has been to overlook new coal as a short-term fix.  First of all, it would make a huge contribution to greenhouse gas and air pollutant reduction.  Second, it would be a big economic stimulus.   An analysis of this potential is displayed at: Sustainability Universal Rating System http://www.mcilvainecompany.com/SURS/subscriber/Default.htm.

Coal-fired plants could operate for as few as 15 years before replacement with alternative energy and still be the best short-term solution.  Here is recent cost data on two new coal-fired facilities. One is starting operation and the other was put on hold.

Therefore it can be concluded that the depreciation cost for a new plant is around one cent/kWh based on 25 year life.  Even at a life of 12.5 years, the cost would only be two cents/kWh.  New plants would use 25 percent less coal and operate with less maintenance than old plants, so there is a big reduction of the 90 percent of electricity cost which is not depreciation.  Thus, the total electricity cost would not rise if new plants replaced old ones.

With CO₂ capture and sequestration it is possible to operate these plants for 50 years.  The plant would operate for some period before the CO₂ capture investment is made.  The initial annual depreciation would only be 5 percent of the electricity price.  The cost of CO₂ capture would add substantially to the capital and operating cost, but this might not occur until the new plant had already been operating for 10 or 20 years.  This has an economic benefit based on “net present value”.

It will not be cost effective to add CO₂ capture to old plants.  However, new plants can be designed to operate initially without CO₂ capture but leave room for later addition of capture systems.

Cost of alternatives to coal are pegged at anywhere from 20 percent to 100 percent more than coal.  Existing coal plants are anticipating environmental retrofit costs of $400/kW or increases of 0.2 cents/kWh of depreciation.  

EIA in its new forecast is projecting a 20 percent increase in coal-fired power generation by 2030.  This equates to 360,000 MW of capacity.  A very optimistic outlook from an environmental perspective would be cutting this in half to 180,000 MW.  Therefore, at a minimum the U.S. should immediately embark on 180,000 MW of new coal-fired plants and replace an equal number of existing coal-fired plants.