The D.C. Circuit’s CSAPR ruling reinforces the benefits of planning ahead and keeping options open. A diverse portfolio strategy reduces risks and costs.
A new future for small coal-fired plants.
10 MW older urban coal-fired power unit in the Upper Midwest or Great Lakes region that produces electricity, steam and chilled water. The unit has minimal environmental controls and thus produces a substantial amount of SO 2, NO X and PM-10, along with CO 2. Given emerging environmental and social issues, continued operation as an uncontrolled coal unit is no longer an option. Given the unit’s locational importance, shut down is only a remote consideration.
As with most such units, three alternatives are being examined. First, the existing coal boilers could be refurbished and modern environmental controls could be added. Second, the unit could be repowered with natural gas. Third, the unit could be repowered with raw biomass.
The capital required for the coal refurbishment alternative is estimated at $50 million, including $30 million in environmental controls. Coal prices have been unusually volatile over the past couple of years; a future cost of $5/MMBtu is assumed. This results in an annual fuel bill of roughly $16 million. The total cost, excluding any environmental adders, is estimated at approximately $28 million/year. With coal refurbishment, the unit will continue to emit 350,000 tons of CO 2 per year. If two environmental adders are considered, one for CO 2 and the other for RECs, the cost increases to $38 million/year.
The capital required for natural gas repowering is considerably higher than coal refurbishment. Of course, this depends a great deal on unit specifics, particularly site conditions and location. In this example, the cost is estimated at $100 million. Natural gas prices have been extremely volatile over the past few years with prices ranging from $3 to $12/MMBtu. In this example, natural gas going forward is assumed to cost $7/MMBtu—$2/MMBtu more than coal. This results in an annual fuel bill of roughly $22 million. The cost, again excluding environmental adders, is $43 million/year. With natural gas repowering, the unit will emit 140,000 tons of CO 2 per year. If the two environmental adders are considered, the cost increases to $48 million/year.
The capital required for raw biomass repowering is also considerably higher than coal refurbishment. Again, this depends a great deal on site conditions. In this example, the cost is estimated at $150 million because of site constraints and the need for feedstock diversity. Given the illiquidity and newness of the biomass market, the cost of raw biomass is difficult to estimate. In this example, biomass going forward is assumed to cost $1/MMBtu less than coal. This results in an annual fuel bill of roughly $13 million. The cost, again excluding environmental adders, is $45 million/year. Unlike the coal and natural gas alternatives, this cost remains at $45 million/year even if the two environmental adders are considered.
Although the details and the precise figures will certainly vary, this example is quite representative of the situation for much of the 12,000 MW of small coal capacity in the Upper Midwest and Great Lakes region. On a straight economic basis and excluding environmental adders, coal remains the economic choice. Natural gas and raw biomass repowering are