A balanced portfolio of fuels is required for cost competitive and reliable power generation. All fuels should be included in a power generation portfolio, including coal. While some may question that coal will remain an important fuel for power generation for decades to come, I see coal as essential to the future of power generation. This brief newsletter will outline why coal will likely remain in the world’s energy portfolio well into the future.
Let’s start with the northeastern U.S. The first week of January was amongst the coldest the country has seen for a long time. Even Hilton Head Island, SC experienced snow that lasted days without melting. The PJM Interconnection showed peak power demand in the range of 138,000 Megawatts. During this period of high electricity demand, PJM depended on more coal generation than any of the other single energy source. In fact, the exact display from the pjm.com web-site is shown on Figures 1 and 2 below, coal generated electric doubled the generated electricity from natural gas.
Figure 1. January 4th, 2018 electric generation from pjm.com web-site
Figure 2. Overview of generation and the forecast for the next day.
This is the “Real World” of electric power generation. Economical and practical Bulk Power storage solutions may come someday, but until Utility Scale Bulk Power storage systems become available, electricity must be generated just as it was in Thomas Edison’s time:
Electricity must be generated the instant that it is needed.
The two previous Energy Newsletters focused on “Energy” and “Heat Engines”. As previously highlighted, 80% of the energy that ensures a high quality of life in the U.S. is derived from fossil fuels used in “Heat Engines”. Affordable and abundant Energy is essential for our modern society to thrive. Productive societies utilize a lot of energy. Energy for manufacturing products, providing jobs, ample food production, climate controlled homes and offices, fueling commerce and freedom to travel. General-Electric and electric Utility Industry advertisements of the 1950’s and 1960’s captured the impact that abundant electrical power had on quality of life:
“Live better Electrically”
Investor owned utility companies contributed to public education on energy including, how it was generated. Even as a teenager in the 1950’s, I knew that most of our electricity was generated from coal. Major steam generation equipment manufacturers such as B&W, Combustion-Engineering, Foster-Wheeler & Riley Stoker were well known to the general public. The electric utility industry even introduced a mascot, “Reddy-Kilowatt” (shown in Figure 3) to promote and educate the public on the generation and use of electricity.
Figure 3. “Reddy Kilowatt”
One of my favorite advertisements from those days is the B&W advertisement (Figure 4) for nationally distributed business magazines. In fact, this 1954 advert provided part of the inspiration to start a continuing education course at Williamson, to do our part in providing education on Thermal Power Plants.
Figure 4. 1954 Advertisement by Babcock & Wilcox on the importance of Heat-Engines
True in the 1960’s and true now. I would also add to our discussion that our better lives are made possible through the use of “Heat-Engines” as described in the previous Williamson Energy issue.
Figure 5. Correlation of Human Development and Energy Consumption.
Not shown in Figure 5 above is China, which is currently improving the quality of life of its citizens through increasing the nation’s per capita energy consumption to approximately 107 million BTU’s. While China consumes more total energy than the U.S., its large population results in its per capita energy use of only about one third of America’s.
Figure 6. Another correlation of energy and human development. This one is from the Exxon-Mobil Web-site with data from the World Bank.
Across the globe there are about a dozen respected organizations staffed with very smart engineers forecasting future energy demands and determining which fuels best meet the need. I’m particularly impressed with the forecasts of large oil and gas companies such as Exxon-Mobil and BP. They are staffed with thousands of brilliant engineers charting current day investments in exploration and production that will provide payback decades into the future. Therefore, when these oil and gas companies provide projections into the future, I have great respect for them. Sure, projections are to a degree an educated guess, but they are supported by data and enormous confidence for investments into the future. Forecasts from BP, Exxon-Mobil, IEA, the World Bank, and the EIA are provided in Appendix 1 for readers whom may desire further information.
Taking our exploration into global energy needs a step farther, if we look at the growth in the quality of life in developing countries (depicted in Figure 7), the future need for available energy, particularly in Asia, becomes even more vital. A fact that many renewable energy proponents often overlook, is that developing nations will require significantly more energy to provide steel, aluminum, manufactured products, mobility, and the comforts and conveniences that we currently enjoy. This expanded energy need will require a far higher energy production output to meet the demand. The real question then becomes, where will the energy come from?
Figure 7. Primary Energy forecast for the future by the International Energy Agency. The center of massive energy utilization in 2040 is guessed to be in Asia.
Figure 8 depicts the long-range forecast from BP. The analysis is similar to forecasts made by Exxon-Mobil, IEA, EIA and other well-respected energy experts:
Figure 8. Energy Forecast by Fuel Type by British-Petroleum (BP). The note on 30% coal use to 2040 was added by the author.
Recalling the electric generation need during the first cold week in January 2018, the pjm.com web-site provided not only real-time data on total power generation, but also a breakdown of the amount of power generated from renewable sources. Those that have driven through western PA as well as other states have seen the massive wind turbines. We have all heard the advertisements suggest that “Green Power” generates most of the electricity we use. While attractive to the environment, the cold hard fact is that renewable energy generation accounted for less than 6% of the energy need during January 2018.
Figure 9. Renewable Generation on January 4th, 2018 at 0500 AM. Note, the previous figure showing 6,596 MW was a little later in the day, still in the magnitude of 5-6% of the total generation.
Competitive economics generally drives the consumption of a specific fuel. In the case of natural gas, it is driven by pipeline capacity and the priority of capacity reserved for domestic home heating. For Thermal Power plants, the production cost of electricity is about 80-85% of the fuel cost for clean coal plants. The fuel cost component for highly efficient natural gas combined cycle turbines is about 90-95% fuel cost.
Hence, to produce affordable electricity requires affordable fuel. Figure 10 shows the volatile cost of natural gas over the last decade or so.
Figure 10. The History of Natural Gas Prices 2006-2012 $/million BTU’s
Coal prices per million Btu are forecasted to remain constant through 2050 as shown Figure 11 below. The data is depicted in heat content per million Btu’s and in U.S. Dollars:
Figure 11. Projected Fuel Costs of Natural Gas and Coal to 2050
America is thought of as being the “Saudi Arabia of Coal”. We have more reserves in coal energy within our borders than Saudi Arabia has in oil energy. Coal fuel is one of the most abundant fuels found on the planet and our nation is blessed with this treasure in quantities greater than any other nation. Our coal reserves that will last for hundreds of years until new scientific breakthroughs are possible for renewable power and electricity storage. The simple fact is the lower the cost of primary fuel for heat engines, the lower the cost of electricity production.
I mentioned having respect for corporations that have committed huge investments in energy production for the future. Let me add three manufacturing companies that have shown faith in coal power by their investments for the future: Mitsubishi of Japan which has merged with the coal fired power generation equipment manufacturer Hitachi, Doosan in South Korea which has purchased/merged with Babcock Energy of the UK, and BHI, also of South Korea, which has acquired the rights to manufacture large steam generating equipment designed by Foster-Wheeler. Of course, China also has large steam generating company manufacturers that are providing power generation equipment in Asia.
Thermal power plants remain important to the U.S. The Williamson continuing education course “Introduction to Thermal Power Plants” will be informative on many more details of how “Heat-Engines” work and plant tours to see these modern marvels in energy up close.
Richard F. (Dick) Storm, PE, CEM
Williamson class of 6W2
Appendix 1 / References
The continued future demand for coal is not just an opinion of Dick Storm, it is documented by many respected organizations, publications and energy supply companies:
Energy Information Agency Data and Charts (U.S.A. Dept. of Energy)
ExxonMobil Charts of energy demand 2017-2040
International Energy Agency IEA/International Energy Outlook
Forbes Magazine, Dec. 2017 article on Chris Cline, ”The Last Coal Tycoon”
Bloomberg News on the Arctic Blast of December 2017
PJM Interconnection Markets and Operations
Coal and natural gas cost forecasts to 2050