N C S L L e g i s l a t i v e S u m m i t

A u g u s t 1 1 , 2 0 1 3 Jeff Bloczynski, Associate Vice President of Economic Analysis

American Coalition for Clean Coal Electricity

The Impor tance o f Coa l fo r E lec t r i c i t y

Generat ion

T o p i c s

Coal facts

Generat ing economics

Mit igat ing e lect r ic i ty pr ice vo lat i l i t y

Elect r ic re l iab i l i t y

Cleaner coal

Greenhouse gas regulat ions

What next?

2

C o a l F a c t s

3

Nationally, the amount of coal-fueled generating capacity is

second only to natural gas, yet more electricity is produced

from coal than any other source.

Source: SNL Energy and U.S. Energy Information Administration (EIA) Electric Power Monthly.

G e n e r a t i n g E c o n o m i c s

4 Source: Fuel commodity and delivery prices from SNL Energy, Fixed and Variable O&M costs from EPA, assumes 85% capacity factor,

7,000 Btu/kWh heat rate for Natural Gas CCGT and 10,000 Btu/kWh heat rate for Coal.

The relative cost of electricity from coal and natural gas change

with the market cost of fuel.

All-In Generating Cost by Technology and Fuel

Coal cheaper than gas

Gas cheaper than coal

Coal and gas in competition

G e n e r a t i n g E c o n o m i c s

5

Coal prices have a history of stability relative to natural gas prices,

which have nearly doubled from the historic lows of 2012.

Source: SNL Energy.

Market Price for Commodity Fuels

G e n e r a t i n g E c o n o m i c s

Natural gas prices are among the most volatile of any commodity.

Based on the current market, gas prices that were $3.62 per

MMBtu in July 2013 are as likely to rise to $6.08 as fall to $2.46 in

August 2014.

6

C o a l m i t i g a t e s h i g h e n e r g y p r i c e s

7

Coal reduces the risk of high electricity prices by reducing exposure

to volatile natural gas prices. Coal generates more when gas prices

rise, and less when they fall.

Source: U.S. Energy Information Administration.

Monthly Electricity Generation and Fuel Cost by Source

C o a l s u p p o r t s g r i d r e l i a b i l i t y

8

• Coal-fired power plants typically maintain over two months of fuel

on-site, while natural gas generators receive fuel “just-in-time.”

• Most natural gas power plants do not have “firm” fuel supply

agreements, opting for the cheaper “interruptible” rates that may

leave them without fuel during periods of high demand.

• The mismatch between the “gas day” and the “power day” in

energy markets can require natural gas generators to estimate

how much fuel they will need up to two days in advance.

• Increasing amounts of intermittent generation (solar, wind) can

require quick-response from natural gas “peaking” power plants

if they are suddenly unavailable, further taxing the gas supply

infrastructure.

C l e a n e r C o a l

9

• Emissions per kilowatt-hour of sulfur dioxide (SO2), nitrogen

oxides (NOx), and particulate matter (PM) from coal-fueled

power plants have been reduced by 89.5 percent over the

period 1970-2012.

• Approximately $110 billion has been invested through 2012 to

achieve these emission reductions.

• By 2015, over 90 percent of U.S. coal-fueled electric

generating capacity will have installed clean coal technologies

and other advanced emission controls to reduce emissions of

SO2, NOx, PM, mercury, acid gases, and non-mercury metals.

N e w S o u r c e P e r f o r m a n c e

S t a n d a r d s f o r G r e e n h o u s e G a s e s

10

• In 2012, EPA proposed NSPS limits for greenhouse gas emissions of 1,000

lbs. CO2 per MWh, applicable to both new coal and new natural gas power

plants.

• New coal plants cannot achieve this rate without carbon capture and

sequestration (CCS) technology.

• The President directed EPA to re-propose NSPS by Sept. 20, 2013.

• ACCCE commissioned a study to determine emissions rates that could be

achieved by efficient new coal-fueled power plants.

Subcategory CO2 Emissions Rate

Supercritical (bituminous and subbituminous) ~1,915 lb/MWh

Supercritical (lignite) ~2,150 lb/MWh

Ultra-Supercritical [Emissions rate subject to change]

[~1,900 lb/MWh]

IGCC ~1,915 lb/MWh

Achievable Emission Rates For New Coal Units

C C S S t a t u s

11

• There currently are no commercial-scale CCS deployments for

coal-fueled power plants.

• The first CCS-enabled power plant is scheduled to come

online in 2014 (Mississippi Power’s Kemper County IGCC).

• Financed in part with $270 million from U.S. Department of Energy (DOE) as a

CCS demonstration project.

• CCS R&D funding has dwindled.

• In 2009, DOE invested $692M for the coal program which focuses on CCS,

with an additional $3.4B in stimulus funding which supported CCS

demonstration projects primarily.

• In the President’s 2014 budget, no money has been requested for CCS

demonstrations.

• CCS is projected to be expensive to build and operate.

• Estimates range from $43-$95 per tonne CO2 (raising generating costs by

36% - 84%).

W h a t n e x t ?

12

• If NSPS requires CCS for new coal units, the industry might

face a catch-22:

• CCS will not develop into a viable, proven technology until

new coal plants demonstrate its effectiveness through

trial-and-error, but…

• …new coal plants will not be built if they are required to

commit to an unproven technology.

• A regulation seemingly intended to spur CCS deployment may

have the unintended consequence of stalling it.

• A NSPS standard that requires CCS amounts to a ban on new

coal power plants.

W h a t c a n y o u d o ?

13

EPA is expected to re-propose the greenhouse gas NSPS on

September 20, and has promised to consult with states in

finalizing the rule. If the rule requires CCS for new coal units, you

can:

• Contact state environmental agencies and utility commissions

to voice concerns about the implications for electricity cost

and reliability.

• Talk to EPA and the Administration.

• Tell them that EPA should not set NSPS based on CCS

because that would ban new coal plants and kill CCS.

• File comments with EPA on its re-proposal.