The U.S. Department of Energy (DOE) wants to develop so called “Coal-Based Power Plants of the Future” according to a recent Request for Information. Well, not exactly. To be precise, the DOE is seeking information “that may culminate” in the operation of such a coal fired power generating plant. No funding opportunity here--at least not yet. But commercial operation is still sought by 2025.
The DOE's information request pertains to a “highly efficient” plant (over 40 percent efficiency) that is also modular or small (50-350 MW). The hope is that manufacturers would be able to sell these new designs both here and abroad. It should have load following capability and be carbon-capture ready. It must be at least 75 percent fueled by coal. A commercial system would (hopefully) be ready within 10 years. A detailed explanation of how this coal plant of the future would use or capture carbon should be included as well.
The DOE also wants to know if the plant would operate off the grid and whether it provides other products than electricity, like steam for example. The DOE also wants to know levels of prospective employment, as well as listing all financial and regulatory impediments. And when answering please keep the reply to a succinct 10 pages.
A reader might be excused for remarking that fossil fueled electric power generating plants with those characteristics already exist. But they burn natural gas. And we seem to have a lot of that fuel. And it's cheaper and cleaner than coal. But no matter.
The real question is, "Will there be a market for the DOE’s preferred coal plant design in say ten years from now?" The electric utility industry in the US already faces an anemic sales growth outlook. And unless electricity sales pick up or in the rather unlikely event renewables actually turn out to be hazardous to the public's health--there will be no domestic market for the DOE's latest efforts to support the coal industry in its inevitable decline.
The DOE’s coal plant announcement practically coincided with California's Energy Commission ruling that required all new homes built after 2020 to have either solar panels or be connected to a neighborhood solar panel installation.
California will also change the state's electricity tariff structure with "time of use" rates. By more accurately conveying daily movements in power prices, these are designed to encourage consumers to adjust usage or perhaps add power storage devices like batteries. The idea is to move demand away from daily usage peaks, when electricity is most expensive, and encourage more usage when power reserves are more plentiful and prices are lower.
As for economics, the California Commission claims that panels add $40 per month to a hypothetical mortgage but would be expected to save $80 in monthly electricity expenses. One of the local electric companies worried that given the expense, mostly affluent consumers will install solar--leaving the utility with a less affluent customer mix that relies heavily on the grid--while more affluent customers pursue other, non-grid related electricity options.
So who pays to keep the grid running? Capital goes where it’s well treated. The electric utility industry is a declining business. It faces customer defections to a newer (and perhaps) cheaper technology that is also far more environmentally friendly. Vital services that are no longer economic tend to be government run, things like police, fire, sanitation and water departments in municipal or state governments.
California tends to lead the rest of the country in terms of environmental issues. The Federal government is unlikely to in any meaningful way stop this momentum.
The modular coal plant initiative was, to us, the right idea circa 1985. Nuclear was in the doldrums and gas prices were volatile. This idea comes too late--assuming that there will be an initiative beyond the formal request for information.
These initiatives from the US DOE appear to be a form of tentative policy/technology support. Suggesting that new "clean coal" technology is on the horizon is a message with considerable resonance to voters in say Kentucky or West Virginia. But by the 2025 target date, electric power markets will have moved on and coal usage as a boiler fuel in power generation may be beyond revival.
|Leonard Hyman & William Tilles for OilPrice.com|