The Benefits of Natural Gas for Power Generation Relative to Coal Continue to Increase

The Benefits of Natural Gas for Power Generation Relative to Coal Continue to Increase 

No new coal burning power plants are planned in the U.S. due to poor economics and risk of stranded assets. Few have been built in the last few decades. A few better and more efficient technologies were incorporated into the newest coal plants but the economics are still poor relative to gas. Coal gasification and ‘synfuel’ development remain uneconomic. Carbon capture and sequestration are only breakeven economic when combined with CO2 flooding in nearby enhanced oil recovery projects. Other CCS projects have thus far been quite uneconomic. Research continues but often it is pointed out that developing wind and solar at current tech levels is currently more economic than these clean coal technologies with the exception of burning coal in power plants.

In contrast natural gas power plant efficiency, versatility, costs, and carbon footprints continue to improve. Electricity conversion efficiency as measured by the operating heat rate in BTU/kWh (British thermal unit per kilowatt-hour) is the main way to measure overall efficiency. As the EIA article indicates the operating heat rate of gas-fired electricity generation decreased by 7% from 2006 through 2015 while it increased by 1% in coal-fired generation over the same period. In 2006 the avg. heat rate of gas-fired generation was 18% less than the avg. heat rate of coal-fired generation. By 2015 the avg. heat rate of gas-fired generation climbed to 25% less than the avg. heat rate of coal-fired generation. The 1% increase in coal-fired heat rates is attributed to installation of pollution control equipment and operational changes such as more cycling on and off. While pollution control equipment was also added to some gas-fired generation the effects on heat rate are less. Another factor that affects conversion efficiency is the trend in retiring less efficient coal and gas plants and commissioning more efficient plants. This is especially true of the highly efficient combined-cycle gas turbine (CCGT) plants. Between 2006 and 2015 combined-cycle technology plants went from 75% of the gas-fired fleet to 85%. On average the CCTG plants are 25% more efficient than single-cycle gas plants. Over the 2006-2015 period the CCGT generation added was over 37% more efficient than the gas generation retired. In contrast the coal-fired generation added over the same period was just 9% more efficient than the coal-fired generation retired and nearly 28% less than the CCGT gas-fired generation added. Gas plants also require less water for cooling than coal plants - about a third, and less effluent. Also there is not the excessive amounts of fly ash and bottom ash produced by burning coal which presents waste-management issues that have already resulted in significant surface-water pollution.

It should be noted that natural gas peaker plants are often under-utilized by design as generation to quickly ramp-up to cover demand peaks and wind and solar intermittency. Peaker plant efficiency will be reduced by lower capacity factor utilization rates. These plants should be included as part of renewable energy systems where applicable and it is unclear whether they were included in the EIA analysis – I am guessing not – but if they were that would make baseload gas-fired efficiency of gas relative to coal even greater. Quick-start and more recently digitally automated gas peaker plants are the most versatile generation to back up intermittent solar and wind and to cover demand peaks.

There have recently been some preliminary studies of fugitive methane emissions at natural gas power plants (and refineries) that have shown that emissions are higher than previously thought although they are still small and improvements can still be made by reducing leaks, venting, and flaring.  Methane emissions during combustion are miniscule (10-20% of total) and most of the leakage was pre-combustion and likely coming from compressors, steam boilers, steam turbines, and condensers. This indicates that methane leak detection and repair efforts need to continue to keep up the climate benefits of gas relative to coal. 

Fuel costs are always changing and sometimes, mainly in the winter months, coal becomes cheaper than gas and where applicable there is ‘fuel-switching’ from gas to coal in the form of under-utilized coal plants becoming increasingly utilized. With unconventional gas resources such as shales that have predictable reserves and production rates the availability of nat gas can be assured so that prices become more stable and predictable. Having adequate pipeline takeaway capacity, mainly out of Appalachia which will be the main U.S. production region for gas for years to come, also helps stabilize prices, makes them more predictable, and makes producing companies less vulnerable to the negative basis differential (lower prices relative to the Henry Hub standard). This aids long term planning. Company planning becomes more predictable and less risky. The risky practice of hedging future prices becomes less lucrative. 

Below is the EIA graph comparing operating heat rates of natural gas vs. coal plants:

References:

Natural Gas-Fired Electricity Conversion Efficiency Grows as Coal Remains Stable – by Energy Information Administration, principal author Glenn McGrath, Aug. 21, 2017

Study: Emissions From Power Plants, Refineries May Be Far Higher Than Reported – by Joe Rudek and David Lyon, in EDF Energy Exchange/EDF Blogs, March 16, 2017