
| Longview Power LLC President and CEO Jeffery Keffer, left, stands with Rep. David McKinley, R-W.Va.; Sen. Shelley Moore Capito, R-W.Va.; U.S. Department of Energy Secretary Rick Perry and Sen. Joe Manchin, D-W.Va., at the Longview plant. During the visit, Perry said the plant is a model of "reliable clean coal technology." |
A federal plan to support the development of small-scale coal-fired power plants has puzzled some in the energy sector but may move the administration closer to fulfilling one coal producer's list of political priorities.
The U.S. Department of Energy plans to help companies develop smaller, higher-efficiency coal plants, according to remarks made by government officials at a recent industry conference. The proposal was met with skepticism from some, as economic factors in the U.S. have increasingly pushed coal out of the market.
The federal government's plan to support high-efficiency plants shifts funding from carbon capture research and development to early stage research advancing efficiency technology for coal. Energy analyst Alex Gilbert, co-founder of the SparkLibrary research platform, said any serious and credible attempt to support coal's future has to include carbon capture, as climate change remains a "number one impediment to building new coal plants."
"I really don't see any major incentives for a company to want to pursue this," he said.
The efficiency and profitability of large coal plants disappear for a smaller one, Gilbert said. Impracticality for most grid applications aside, he said anyone who tried to build a new coal plant would also likely face political and public relations hurdles.
John Coequyt, Sierra Club's global climate policy director, confirmed the organization would challenge a new coal plant but said he was largely not worried that many companies would pursue the risky, lengthy and costly process of permitting and developing one.
"The way I read this, this is the Trump administration retreating from actual efforts to advance the coal industry to things the DOE can absolutely do, which is shift [research and development] money to this particular idea," Coequyt said.
Matt Preston, Northern America coal markets research director for Wood Mackenzie, pointed to a new but small coal plant being built for the University of Alaska Fairbanks that will provide heat and power. He said that there, the plant makes sense, because it would be too expensive to get natural gas to the site, but such small, specific applications are unlikely to do much to offset a secular decline in coal consumption in the U.S., where a natural gas plant can be built for a "very small fraction of the cost" of a new coal plant.
"There's a place for that, but to build it like distributed energy, there are efficiency issues," Preston said. "There's a reason why coal plants are so big — because of economies of scale. If you try to move one railroad car of coal versus 100, there's a huge difference in price."
Joe Bowring, president of monitoring analytics for the PJM Interconnection, was recently asked about the proposal and said he was skeptical the net revenue requirement for small coal plants would be low enough to compete with natural gas. With existing technology, he said there is "no reason a rational investor" would build a new coal plant in the historically coal-heavy PJM market.
Helping coal

Murray Energy Corp. CEO Robert Murray talks about the future of coal at his office in Ohio. Murray said he advised President Donald Trump on energy issues during his campaign, and he has been an avid supporter of the president. |
While it left some scratching their heads, the policy lines up with the priorities of some in the coal sector.
"Develop clean coal combustion technologies, but not carbon capture and sequestration, which is neither practical nor economic," Murray Energy Corp. CEO Robert Murray wrote in prepared remarks for an industry conference Feb. 1. "High energy, low emission, coal-fired combined cycle and other technologies deserve government support of their development."
The same idea appeared on a list of 14 policy priorities "to preserve and protect the United States coal industry" Murray Energy gave S&P Global Market Intelligence in October 2017. In January, The New York Times reported Murray sent a similar wishlist to the White House months earlier that contained some of the same priorities, ranging from replacing members of the Tennessee Valley Authority to repealing the Clean Power Plan.
The Associated Press reported that Murray, a significant donor to Trump's campaign, had asked Energy Secretary Rick Perry to invoke emergency rules that would prevent the closure of coal-fired power plants in America, another priority on Murray's late-2017 list. The administration said it did not have the authority to do so, but in the months following, Perry did push the Federal Energy Regulatory Commission to provide incentives to certain power plants for providing baseload power, an effort it rejected.
The 2019 Energy budget request calls for at least two designs of small-scale or modular, advanced, high-efficiency, low emissions, or HELE, coal power plants that have "flexible operating capacity to meet baseload and load following requirements needed for the evolving grid." In recent comments on a potential Clean Power Plan replacement, numerous utilities expressed concerns about efficiency standards required for coal plants because recent market dynamics forced their coal assets to follow demand for electricity instead of running at a stable rate.
Officials at Longview Power LLC have also been pushing for replacing older coal-fired units with cleaner, more efficient plants such as its facility in Morgantown, W.Va. In late 2017, while world leaders gathered to talk about a global climate agreement, a Peabody Energy Corp. executive speaking at a U.S.-sponsored panel said HELE coal plants represent the "best common-ground approach with the widest appeal" for meeting global energy demands and emission reduction goals.
