March 12, 2018 Read More →

Little Probability Private Sector Will Invest in Trump Small-Plant Initiative for U.S. Coal


Without support from the private sector, the administration’s latest bid to prop up the flagging coal sector—promoting a new generation of small, modular coal-fired power plants—could fizzle.

It needs private investors to embrace any new technology the Energy Department helps create, build new plants, and start selling coal-fired power into the energy market.

During the CERAWeek conference this week in Houston, Steven Winberg, the department’s fossil energy chief, said one of the agency’s goals is to build the next generation of flexible coal plants, producing around 200 megawatts each.

A 200-megawatt coal plant is on the small end of the spectrum, although some tiny plants generate fewer than 5 megawatts. In recent years, however, dozens of those small plants have shut down, leaving behind only the bigger ones in most of the U.S.—a handful of which crank out more than 3,000 megawatts.

Shaylyn Hynes, a department spokeswoman, told Bloomberg Environment the agency “is currently considering using existing funds to explore high efficiency/low emission technologies, including small modular generation.”

To power plant investor Sean Lane, the idea of building new coal plants of any size seems far-fetched.

“The development of new solid fuel plants is a near impossibility due to challenging wholesale market economics and environmental permitting hurdles,” Lane, executive vice president of governmental affairs at investment firm Olympus Power, told Bloomberg Environment.

Another problem is that, in many markets, capacity is already overbuilt relative to demand, Lane said.

“The bottom line is that demand needs to increase, and electric energy and capacity pricing needs to rise, in order to make such an initiative remotely sensible,” he said.

Smaller coal plants also wouldn’t benefit from the economies of scale that big plants do, said David Schlissel, a director of the Institute for Energy Economics and Financial Analysis, a sustainable-energy research group. A small plant would still need to build lots of infrastructure and comply with environmental regulations.

Schlissel said he’s seen no evidence that a smaller coal plant is more flexible than a larger one.

“What’s good about gas plants is, they can follow load,” Schlissel told Bloomberg Environment. “If loads go up, or solar or wind generation goes down, they can crank up the power. But coal plants’ ramping rates are so slow that it takes hours for the power level to rise. And it’s the same thing going down.”

Schlissel said, “I just don’t see any regulated utility, any merchant company, or any serious investor putting their own money up for this kind of scheme.”

More ($): Scant Investor Interest in Trump Idea for Smaller Coal-Fired Plants

Comments are closed.