Should the U.S. Build More Coal-Fired Power Plants?

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For decades, the coal industry has hummed quietly along, producing half of the electricity used in the U.S. We’ve kept ourselves out of the media, comfortable with our role as one of the country’s key energy resources. We “knew” that, despite the occasional bit of bad press, no one would ever seriously consider getting rid of coal-based energy.

Something has changed.

The constant harangue from environmental groups is no surprise. They don’t like coal and they’ve pushed for decades to block it at every turn. But we’re now also facing increased pressure from elected officials and policy makers, including some who are publicly vocal in their opposition to coal.? I was recently shocked, as I sat listening to a webinar on CO2 mitigation strategies, to hear a federal government employee give a far more strident, climate change/anti-coal presentation than the spokesperson from the Natural Resources Defense Council (NRDC) who followed him.

Recent rulings and announcements by the EPA are also indicative of government’s increased pressure on the coal industry.? In March, for example, EPA announced that it was putting hundreds of mining permits on hold to re-evaluate potential impacts on wetlands and streams. Subsequent Agency announcements noted they did not expect any problems with the “overwhelming majority of (those) permits.” But the ripple that the initial announcement sent through the media made it clear that things were not as they had once been.

What brought this issue home for me was a telephone call from an AP reporter on April 6th. He wanted a comment on Interior Secretary, Ken Salazar's claims that wind-based energy could be used to replace " most, if not all, of the coal-fired plants " in the USA. The Secretary had stated that we could generate over 1 million megawatts of electricity from ocean winds; roughly equivalent to the energy produced by 2,000, five hundred megawatt coal-fueled plants. I was accurately quoted in the article as being skeptical of the Secretary's information.

Salazar has since clarified his comments (although his clarification received far less press). However, his initial statement invites a comparison of coal vis-à-vis wind generation and opens the door to a more fact-based assessment of the risks and current status of wind power development.? So I’m accepting that invitation and providing a few facts for you to consider when you hear that we can replace our coal capacity with wind.

A 2005 report by E.ON Netz – one of the largest suppliers of wind energy in the world – stated that wind generation could only replace traditional power stations to a "limited extent.” They argued that since wind power has a “limited load factor even when technically available,” utilities need to maintain permanently online back up generation “with capacities equal to 90% of the installed wind power capacity … to guarantee power supply at all times." In the same report, they stated that “Wind power feed-in can only be forecast to a limited degree” and that further use of wind energy would require massive investments in new transmission infrastructure to avoid electrical grid congestion and system failures. Describing their experience with wind generation, they stated that periods of extreme cold and high summer heat correspond to "stable high-pressure weather systems,” (translation: the wind doesn’t tend to blow when energy demand is at its greatest). This assertion was proved out by DOE statistics 1 on the 2006 California heat wave . From July 13 to 23, 2,500 MW of installed wind capacity was unable to provide more than 325 MW – a 13% or lower capacity factor.

In other news, the British Wind Energy Association was forced last December by the Advertising Standards Authority to drastically scale back their claims on the amount of carbon reduced by wind installations. It appears that they were basing their calculations on coal plant emission rates that had been out of date since the early 1990’s. They are now predicting carbon savings from new wind farms will be half the size of their earlier predictions (430 g of carbon per kWh, instead of 860). This is a clear recognition by the wind industry that coal-based energy has rapidly improved its environmental record and that to meet their claimed carbon reductions we will need to build twice as many turbines.

We have been hearing since the mid-1980s that wind energy will be less expensive than coal in “ a few years .” At that time it is also expected that wind will no longer require the massive subsidies it currently enjoys. However, a March 28th New York Times article stated that “a modern coal plant” without CCS produced electricity at 7.8 cents per kWh. Energy from a wind turbine “in favorable” conditions would cost 9.9 cents per kWh. When necessary conventional backup is included, the price jumps to “just over 12 cents … more than 50 percent more expensive” than coal without CCS. International Energy Association (IEA) estimates suggest CCS impacts on electricity will be 2-3 cents/kWh (this will drop to 1-2 cents/kWh over the next two decades as the technology improves and becomes better understood).

In that scenario, coal with CCS could cost 9.8 to 10.8 cents/kWh; about 15 percent less than wind “in favorable” conditions. Of course those favorable conditions require that the wind is blowing at the right speed, the turbine is located in the perfect spot and at the right height, etc.? If the wind slows (or blows too hard), if the turbine can’t be located in the best location, prices go up. Add in the cost of subsidies – like the 2.1 cents/kWh energy production tax credit – and new transmission lines and the real cost of wind goes even higher.

In the final Environmental Impact Statement for the Cape Wind project (Nantucket Sound, MA), comments state that the lowest cost site has an “estimated cost of energy (of) $122/MWhr, twice that of the current market … after the full benefit of tax and RPS incentives.” Later comments suggest that there is a potential for further revenue receipts from “capacity payments and ancillary services,” meaning the cost of energy for the project operator could be mitigated. Capacity payments may ensure viability for the project. However, they will also raise the overall price for final rate payers.

The cost of wind energy is especially pertinent as wind is also beginning to encounter strong resistance from the environmental community. The Cape Wind project has provoked widespread protest from a variety of environmental groups and has actually pitted environmentalists like Bobby Kennedy against groups like Greenpeace . In another example, Senator Dianne Feinstein (D-CA) has worked to place hundreds of thousands of acres of California desert out of reach of wind and solar developers by designating the area as a national monument. As environmental regulations become increasingly strict for wind, prices will grow.

This is only a short list of facts that must be considered. Secretary Salazar’s comment indicated that his plan was to rely on offshore wind resources. However, Energy Information Administration (EIA) data indicates that capital costs for offshore installations are double those of land-based installations, jumping from $1,400/kW to $2,800/kW. Those numbers are sure to go even higher as recent news indicates developers of wind turbines prefer building for onshore applications.? Articles in the New York Times , The Guardian , The Boston Globe , Cape Cod Times , and New Energy all indicate G.E., Shell (Anglo-Dutch),?and Vestas are avoiding or abandoning the development or funding of offshore turbines and/or installations (and in some cases wind energy altogether) due to poor economic performance and unexpected environmental concerns. Other developers, like Siemens are also described as focusing the majority of their efforts on the “ less risky onshore market .” A just published Cambridge Energy Research Associates (CERA) report unflinchingly stated that capital costs for offshore wind developments will rise by 20 percent "over the next few years" and without the continuation of substantial government subsidies, the European offshore wind industry would be at "risk."

All forms of electricity – all forms of human activity – have some impact on our environment. What we need is a rational and reasonable attempt to measure potential costs and risks against potential gains. Where one technology has real benefits, it is worthwhile to recognize them. Where there are costs, we can also recognize those. Unfortunately, the discussion surrounding coal vs. wind has digressed to a frenzied and directionless state. It typically relies on feeling and angst far more than fact and reason.

In allowing the discussion to sink to this level, we’ve lost site of the main goal – providing the country with affordable, secure, and clean energy. It's time to reclaim the discussion and as more information is made available, it is increasingly clear that coal remains an essential means of meeting that goal.

Jason Hayes, is Communications Director for the American Coal Council

1 -ACC Member only content - see Bezdek: U.S. Electricity Markets: Drivers, Challenges, and Opportunities