Southeast US witnesses decline in coal-fired power

A new report from the US Energy Information Administration (EIA) suggests that the use of coal-fired generators in the southeast US has been declining.

Declining coal use in southeast

The southeast region has witnessed the largest shift between coal and natural gas in terms of both the overall generation levels and the relative fuel mix. This shift has been caused by lower natural gas prices, a concentration of highly efficient natural gas-fired generators, and the high cost of shipping coal from production regions.

The Southeast includes three large, vertically integrated utility systems as well as a patchwork of smaller service territories. While these systems do not dispatch, or run, generation units through auctions like regional transmission organisations, they still generally choose which units to run based on the fuel costs associated with operating them.

During the spring of 2012, electric units fired by all types of coal were backed down. This timeframe coincided with the point at which natural gas prices in the region were at their lowest point in a decade. Although coal-fired power generation rebounded modestly in 2013, as natural gas prices rose above 2012 levels, they nonetheless have remained subdued. Coal is still contributing less than 50% of regional generation this year, which is a dramatic shift from 2001 – 2009.

The US EIA’s electricity monthly update report suggests that in 2001, coal accounted for just short of 60% total power generation in the southeast.

Transportation costs rise

Although coal from the Powder River Basin (PRB) and the Central Appalachian Basin has traditionally been used by power plants in the south east, distance has played a factor in causing transportation costs of coal to rise. Cheap coal sources from the PRB must travel a distance of over 1600 miles.

While the delivered cost of fuels for natural gas has declined, the delivered cost of bituminous coal and sub bituminous coal has increased. Since 2003,sub bituminous coal has modestly increased from just under US$ 2 per million British Thermal Units (MMBtu) to just over US$ 2 per MMBtu, while bituminous coal, sourced primarily from eastern mines, has increased from below US$ 2 per MMBtu to just under US$ 4 per MMBtu.

Southeast favours gas

Despite a certain volatility seen in delivered natural gas costs, they have now been hovering at or below US$ 4 per MMBtu since 2011. Natural gas-fired units in the southeast have therefore been able to take advantage of these lower prices, which in turn has led to the drop in coal-fired output in the region. The southeast is also home to a concentration of highly efficient natural gas combined-cycle plants, which means that the region can take advantage of the lower natural gas prices to displace a large amount of coal-fired power generation. 

Edited by Sam Dodson

Read the article online at: https://www.worldcoal.com/coal/22112013/coal_fired_power_declines_in_us_southeast_287/