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US to be 'long on electricity,' coal closures may accelerate – DOE official


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US to be 'long on electricity,' coal closures may accelerate – DOE official

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Steve Winberg, the assistant secretary for fossil energy at the U.S. Department of Energy, at last year's Eastern Fuel Buyers conference.
Source: S&P Global Market Intelligence

In the wake of the COVID-19 pandemic, the U.S. is likely to "be long on electricity" for the foreseeable future, and the decline of coal generation could accelerate, a U.S. Department of Energy official said.

Steve Winberg, the assistant secretary for fossil energy at the U.S. Department of Energy, said the U.S. Energy Information Administration's already dire outlook on coal generation is likely to turn out worse than forecast. Winberg was speaking to virtual attendees of the Eastern Fuel Buyers Conference, typically a coal-centric audience that gathers annually at the Disney Yacht Club near Orlando, Fla.

"You can, of course, see the decline in coal. Now what this shows you is that there will continue to be a decline but that it will flatten off some," Winberg said, pointing to a chart from the EIA's 2020 outlook on electricity generation. "I think this might be the best-case scenario. The reason for that is, first of all, we're seeing potential early retirements on coal-fired power plants because of the COVID. Once they shut down, they just may not restart."

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Winberg warned that around the nation, CEOs are rethinking the deployment of their workforce. Winberb said some are talking about cutting back 20% to 25% of their office space and having people work from home or rotating employees.

"Well, if that happens, I think we're going to be long on electricity for the foreseeable future," Winberg said. "We are in very much an oversupply situation because of COVID."

Winberg said the DOE fielded many phone calls from coal-fired power producers and coal mining companies in response to the demand drop resulting from the pandemic. He said they are saying coal is not going to be able to clear the market due to low natural gas prices and growing renewable energy competition.

Longview Power LLC, which operates one of the most efficient coal plants in the country, recently filed for bankruptcy, Winberg noted.

Winberg said the DOE has started discussions with the Federal Energy Regulatory Commission over concerns about grid reliability and stability in the wake of the wave of coal retirements. A brutal winter could be particularly troublesome this year if reserve margins are low, he added.

"We haven't made a lot of progress in terms of convincing people that this is a problem," Winberg said. "That doesn't mean we have stopped because we believe it is. And we think the problem is becoming more acute."

Rep. David McKinley, R-W.Va., also spoke during the virtual conference, suggesting the administration and Congress could make new attempts to support coal. That includes revisiting some past policy proposals such as incentives for utilities with the ability to store 90 days worth of fuel on-site.

"Congress must encourage an orderly but safe recovery from the virus and, in so doing, to increase demand for energy, and it must find the political will to maintain coal as a critical component of our power grid," McKinley said.

Given the low price of natural gas, the prospects of building a new coal-fired power plant present substantial challenges, McKinley said. The DOE has been working on the Coal FIRST, or Flexible, Innovative, Resilient, Small, Transformative, program that aims to build smaller coal plants that emit less carbon dioxide and otherwise would be better situated to compete with natural gas and other energy sources.

"What we're doing at the fossil energy office at DOE is we want to springboard way ahead of where we are with conventional coal-fired generation, and that is our Coal FIRST program," Winberg said. "The grid needs more distributed generation. I think the days of putting up a 1,800 MW or 2,400 MW of coal-fired power plant at one site and then wiring the electricity to the demand centers, I think those days are behind us."

Winberg said the agency plans to have two technology front-end engineering and design study awards related to the program ready by September. Winberg said that by 2040, the agency could have commercially available coal plants available to be installed based on the program's goals.

"Thank you for what you're doing. It's important work," Winberg, a former executive of Consol Energy Inc., said at the end of his session. "I miss seeing all of you and just know that every day I wake up, I'm thinking about what needs to be done to make sure that fossil energy stays in the mix."