Category Archives: Coal

Trump’s Coal Obsession
 To Force Perry, GOP
 To Abandon Free Market

So, it has come to this—Rick Perry, the man who seven years ago couldn’t remember that the Energy Department was one of the government agencies he wanted to eliminate is now essentially going to be entrusted with running the nation’s electricity grid as secretary of the very same department for the next two years.

Or, at least that is the indication from the latest memo (which can be found here) circulating around Washington in the Trump administration’s never-ending effort to rewrite the rules of capitalism, that wonderful free market enterprise the GOP has so often defended in years past. Democrats have frequently been at the receiving end of GOP barbs about the free market, with Republicans warning anyone listening that they were the only thing standing between the country and, that’s right, socialism. See Secretary Perry’s particularly relevant quote below about President Obama from 2012. Oh my, how things have changed.

I think Barack Obama is a socialist. I think he cares for his country – don’t get me wrong about that – but I think he truly misunderstands what this country was based upon, the values that America was based upon, which was free enterprise and having the ability to risk your capital and having a chance to have a return on your investment.

–Rick Perry

Anyway, the general GOP defense of the free market used to run something like this: When cheaper, better products come along, incumbent industries get hurt, some survive and evolve while others go out of business. It’s messy, but that’s what makes America great.

Well, that exact messy transition is under way now in the electric power industry, and not even a two-year grid nationalization, for that in effect is what is being considered, is going to stop it.

Renewable energy is getting cheaper almost by the day and, coupled with storage, offers the much ballyhooed “baseload” power that seems to appeal to Trump and his tag-alongs. At the same time, the administration’s own energy dominance agenda ensures that natural gas will be in plentiful supply and remain low in cost for all the existing and planned new natural gas-fired generating facilities across the country. Those facts can’t be wished away by half truths about resilience and reliability.

Continue reading Trump’s Coal Obsession
 To Force Perry, GOP
 To Abandon Free Market

EIA Is Damaging
 Its Analytical Reputation
 With Coal Forecasts

The pro-coal sentiments of the Trump administration are well known; unfortunately, that boosterism clearly is beginning to seep into the analytical work of the Energy Information Administration. In a late March Today in Energy piece on the EIA website, the organization reprinted three logic-defying graphics on coal’s future role in the U.S. electric generation sector (the three were originally published in EIA’s 2018 Annual Energy Outlook released in February).

The first, as EIA wrote, shows that there will be “virtually no [coal plant] retirements from 2030 through 2050.” Given the 50 gigawatts of capacity that have been shuttered just since 2011, and the 65 GW of additional capacity the administration expects will shut down through 2030, projections of zero further closures beyond that strain the bounds of believability. There is increasing support throughout the business community for a low-carbon future,  and growing numbers of utilities are coming forward with coal phase-out plans (see my earlier stories here and here). The trend is not to maintain that generation capacity, but to close it.

That flat-line projection also overlooks a key point about the age of the U.S. coal-fired generating fleet—a point that EIA itself made last year. The coal generation units in the United States are aging: According to EIA data, 88 percent of the nation’s coal capacity was built before 1990, meaning that in 2050 even the youngest plants would be 60 years old. More telling, EIA said, the coal generation fleet’s capacity-weighted age in 2017 was 39 years. Given that, projecting that there will be no retirements after 2030 simply borders on the ridiculous.

Compounding matters, EIA also projected in a leap of counter-intuititve logic, that as the coal fleet ages, its average capacity factor will climb back roughly to 70 percent—a level not seen since the mid-2000s when the plants were much younger (see the graphic below)—and then maintain that performance all the way through the end of the of its 2050 forecast period. There are two major problems with this projection. First, it ignores age-related deterioration that affects all older plants. Second, it doesn’t take into account the operational changes that have taken place in the utility sector in the past 10 years, notably the surge of new renewable generation resources that have no fuel costs and the shale boom that has pushed natural gas prices down and promises to keep them low for the foreseeable future.

The next graphic (which was taken from an April 2016 Today in Energy article) illustrates the operational changes that EIA’s current projection fails to incorporate. In 2005, coal plants by and large were operated as baseload facilities, running essentially 24/7 all year. Reflecting this, roughly 270 plants that year posted capacity factors of 70 percent or higher. By 2015, this had all changed and fewer than 100 plants recorded capacity factors that high. The system simply doesn’t operate in the same fashion as it did 10 years. Here, the surge of wind generation in the Midwest is a great example. The region’s wind resource tends to blow hardest in the overnight hours and since it has no fuel cost it is dispatched first, ahead of the coal plants that formerly would have provided that electricity.

It is also important to note that in 2005 when the coal fleet’s capacity factor was 67 percent (There is a discrepancy between the data in the two EIA graphics, but it doesn’t impact this analysis.), there were only approximately 100 units operating at less than a 40 percent level. By 2015, the number of plants at that level had climbed to almost 200.  Overcoming that drag on the overall fleet’s performance would be difficult, at best.

In short,  getting the system as a whole up to a 70 percent capacity factor is nothing more than a pipe dream. Conveniently, however, these truth-stretching assumptions allow EIA to, you guessed it, project that U.S. coal production will remain essentially flat, at roughly 750 million tons annually, all the way out to 2050 (see graphic below).

Unfortunately, wishing something so doesn’t make it so. Anyone looking for real analysis of what is going on in the coal industry is going to have to start looking elsewhere.

–Dennis Wamsted

 

Another Bad Week,
 Make That Month,
 For The Coal Industry

It’s been a bad week for the U.S. coal industry. On Monday, Michigan-based Consumers Energy announced that it planned to close all its remaining coal-fired generation by 2040; the company already had closed seven of its 12 coal plants in 2016. Then, on Tuesday, Vectren, an electric and gas utility serving parts of Indiana and Ohio, said it planned to retire three of its coal-fired plants and sell its ownership stake in a fourth by 2023; this from a company that just two years ago was dependent on coal for 90 percent of its generation.

But this week is hardly unique. Just last Friday, FirstEnergy said it was going to close or sell the 1,300 megawatt coal-fired Pleasants plant in West Virginia by Jan. 1, 2019 after being unable to convince federal regulators to approve a deal between two of the Akron, Ohio-based holding company’s subsidiaries that effectively would have moved the facility from the open market into rate base, forcing consumers to pay for the plant even if it was no longer economic.

Not to be forgotten, earlier this month, AEP announced plans to slash its carbon dioxide emissions 60 percent by 2030 and 80 percent by 2050 (based on a 2000 baseline, see my story here). And finally, on Jan. 30, PPL announced plans to reduce its CO2 emissions by 70 percent by 2050 (based on a 2010 baseline).

So, in reality, it’s been a bad month, and similar months are likely moving forward.

Continue reading Another Bad Week,
 Make That Month,
 For The Coal Industry

AEP Looks Forward, Beyond Coal, Trump Team Still Stuck In The Past

The rear guard defending the coal industry in the White House and across the mall at the Department of Energy need to put their reading glasses on and spend some quality time with a couple of just-released documents that put to rest any dreams of recovery.

The first, from American Electric Power, is a corporate document filled with congratulatory platitudes and the obligatory cautions about going too far, too fast. But, and this is the key, it acknowledges reality, and lays out a plan for addressing that reality instead of pining for the past. The report, Strategic Vision for a Clean Energy Future 2018 (which is available here), should be required reading for the Trump White House and the administration’s energy-related political appointees.

The forward-looking tone is evident from the outset, with Nicholas Akins, chairman, president and CEO of Columbus, Ohio-based AEP, writing: “We have diversified our generating portfolio to provide our customers with the clean energy solutions they are asking us for.” [Emphasis added] You could easily read right over this, but it’s worth digging into the details a bit.

Continue reading AEP Looks Forward, Beyond Coal, Trump Team Still Stuck In The Past

Trump’s Coal Revival Nothing More Than Talk According to EIA Data

More facts showed up this week telling the same story about coal—the revival isn’t coming.

These new facts (see here for an earlier post about ‘stubborn facts’), courtesy again of the independent Energy Information Administration, show that coal production in the United States totaled 773 million short tons in 2017. This was up 6 percent from 2016, but better keep the champagne corked. The increase was due entirely to exports, a volatile market that is not conducive to long-term growth. To wit, in the five years from 2012-2016, exports swung from a high of 125.7 million short tons to a low of 60.3 million short tons.

In the vastly more important domestic market, particularly the electric power sector, which accounts for 85-90 percent of overall annual coal consumption, demand dropped, falling by a little more than 12 million tons in 2017. And those tons are never coming back: EIA’s latest Short-Term Energy Outlook (available here), its first to include projections through 2019, projects that electric power demand for coal will continue falling, dropping to 629.5 million tons that year, down from 666.4 million tons in 2017.

Continue reading Trump’s Coal Revival Nothing More Than Talk According to EIA Data