No matter how the US presidential turns out, coal plant owners will have some decisions to make. That is, they are already retiring their facilities that were built in the middle of last century but they may want to convert others to gas-fired plants, or those that can co-fire both gas and coal.
“The best options for coal-to-gas conversion are 50-plus year old units, less than 300 megawatts in capacity and generally early generation sub-critical utility boilers,” writes Jude Clemente for Forbes. “These are the least efficient and most costly to operate and have the lowest overall capacity factors in the coal fleet, most located in the eastern U.S. …
“Fuel switching is an attractive option for utilities that must maintain a certain capacity in their fleet,” he continues.
The U.S. Energy Information Administration has said that coal use has declined by 33% in the last decade and that it would fall another 31% under the Clean Power Plan. Natural gas, mostly, takes its place.
If the ruling that mandates cuts in carbon emissions of 32% by 2030 is tossed, then the best that the coal sector could hope for is that some utilities would keep certain coal-fired plants alive. That, in turn, would curb the growth of natural gas by 11 percent from today, says the energy agency.
But not all parts of the country are created equal. Clemente writes that the western US may be best suited for such conversions given that pipeline capacity there is constrained. The southeast and midwest could, in theory, make good locations for such technology given that they source their coal from the Appalachian region that has higher Btu content but greater coal prices, making natural gas a bit more attractive.
That said, natural gas prices could rise for a number of reasons, which notably include greater demand on it: more gas-fired utilities, alternatively-fueled cars and greater exports in the form of liquefied natural gas. “For example, we could be exporting over 13 Bcf/day by 2020, up from basically 0 in 2015. This is some 17% of current U.S. production,” Clemente writes.
Furthermore, Cleveland-based First Energy filed an Integrated Resource Plan for its Mon Power and Potomac Edison plants with the West Virginia Public Service Commission in December 2015. The goal was to identify the resources necessary to meet the companies’ future energy and capacity obligations in a cost effective, prudent, and reliable manner. One possibility it is considering is converting some coal plants to natural gas.
It remains unclear just how expensive such a retrofit would be, as opposed to building a gas-fired plant from scratch. It is also unclear whether this strategy would meet the standards of the Clean Power Plan. Some experts say it is both easier and cheaper to build a combined-cycle natural gas plants from scratch than to convert older coal plants to gas facilities.
What about co-firing coal and natural gas? The co-firing would amount to 70% coal and 30% gas.
“Co-firing has several benefits. It provides fuel diversity and ensures our Mon Power coal units can continue to produce low-cost electricity while supporting both the abundant low-cost natural gas supply prevalent in the region and proven coal reserves,” says Todd Meyers, FirstEnergy spokesperson. “Co-firing with natural gas could also reduce emissions by reducing the amount of coal burned, which could help our fleet comply with future federal and/or state environmental regulations.”
As for Appalachian Power, which does business in West Virginia, Virginia and a tiny slice of Tennessee, coal had provided 74% of the electricity in 2012. It’s 60% right now and it is expected to be 53% in 2025, when wind and solar will provide as much power as natural gas at roughly 16 percent.
Nationally, American Electric Power — the owner of Appalachian Power — has retired roughly 5,750 megawatts of coal-fired generation. Duke Energy, FirstEnergy Corp, Southern Co. and NRG Energy. are making similar moves. Nearly 18,000 megawatts of coal was retired in 2015, according to government data.
“We are taking advantage of natural gas’s current low prices and lower emissions,” says Jeri Matheney, spokeswoman for Charleston, W.V.-based Appalachian Power, which is a unit of American Electric Power. “In fact, with gas so low right now, we’re using our gas plants much more than we thought we would a few years ago.”