Will the U.S. Ever Build Another Big Coal Plant? RSS Feed

Will the U.S. Ever Build Another Big Coal Plant?

The coal industry is contracting as plants retire and utilities replace them with natural gas and renewables

About 16 percent of the U.S. coal fleet has retired in the past five years, but don’t expect major new coal-fired plants to fill that void.
The federal government counts four new coal projects on a list of planned power plants nationwide. Three of those face long odds, and none will be able to replace the millions of tons in lost coal demand resulting from recent retirements, even as the Trump administration has vowed to revive the ailing industry.

The developer of a proposed 320-megawatt unit in Wyoming is facing jail time after pleading guilty to stealing government cash. A Kentucky coke plant that would have generated electricity as a byproduct has been scrapped. And a planned $2.1 billion plant in Georgia has idled.

The sole U.S. coal facility under construction: a tiny plant being built by the University of Alaska, Fairbanks.

The dynamic amounts to an existential crisis for the U.S. coal industry. While coal still accounts for roughly a third of U.S. power generation, the industry is slowly contracting as plants retire and utilities replace them with natural gas and renewables. American Electric Power Co. Inc., one of the country’s largest coal-burning utilities, recently announced plans to build a $4.5 billion wind farm in Oklahoma (Energywire. July 27). PacifiCorp, another coal-centric power company, has similar plans to upgrade its wind fleet while slowly transitioning away from power plants fueled by the black mineral (Climatewire, April 6).

Utilities entered 2017 with plans to retire 4.5 gigawatts of coal—or 2 percent of 2016 U.S. coal capacity—and add 11 GW of natural gas and 8.5 GW of wind, according to figures from the U.S. Energy Information Administration.

The trend has prompted a series of rescue efforts. West Virginia Gov. Jim Justice (R) has proposed a $15-per-ton subsidy for utilities burning Appalachian coal (Greenwire, Aug 8). In Congress, there is an effort afoot to expand tax credits for power plants that use carbon capture and sequestration (CCS) (E&E Daily, July 13). Both efforts hint at coal’s long-term challenges and the reason for the dearth of planned coal plants.

“There are two big risks for coal generation right now. One is gas prices stuck at low levels for a long time. Second, developers take on a lot of environmental risk in the future,” said Travis Miller, who directs utilities research at Morningstar Inc. “So environmental risk might not be a risk for four years, obviously referring to the presidential administration, or eight years.

“But when you’re building 30- to 50-year-type assets,” he added, “they’re certainly a high risk for carbon.”

Congress’ plans to increase tax credits for plants that sequester carbon could go a long way toward addressing the environmental challenges. A bill sponsored by Sen. Heidi Heitkamp (D-N.D.), would expand the tax credit for power plants that sequester carbon in geologic formations from $20 per ton to $50 per ton. Power plants that use carbon emissions for enhanced oil recovery, where carbon is injected into oil reservoirs to stimulate production, would see the credit increase from $10 per ton to $35 per ton. The credits would be available for new and existing facilities alike but would be capped once 75 million tons of carbon has been captured.

The proposal has generated an unusual amount of bipartisan support, attracting liberals like Sen. Sheldon Whitehouse, a Rhode Island Democrat interested in cutting carbon emissions, as well as coal-state Republican Sens. Shelley Moore Capito of West Virginia and John Barrasso of Wyoming.

“Sheldon obviously cares about climate. He knows, looking at international reports, that you can’t achieve CO2 goals unless you look at CO2 sequestration and utilization,” Heitkamp said in a recent interview. “And the coal industry understands that if we’re ever to see new development or maintain the existing development, that regulatory environment needs to be stabilized, and we need to do it through technology.”


Industry observers called the tax credits substantial. But although utilities have had some success applying carbon capture to existing power plants—like NRG Energy Inc.’s Petra Nova facility in Texas—it remains unclear if the subsidies would be enough to tempt power companies to consider building a new facility.
The experience of the Kemper County Energy Facility in Mississippi, a $7.5 billion plant designed to gasify coal and capture the emissions, remains fresh in many utility executives’ minds, observers said. Southern Power Co. recently decided to abandon CCS and convert that plant to natural gas after repeated construction delays and cost overruns.

Read full article at Scientific American