Chinese Closing 4 Remaining Coal Burners Near Beijing

Here’s the story from Bloomberg:

Beijing, where pollution averaged more than twice China’s national standard last year, will close the last of its four major coal-fired power plants next year.

The capital city will shutter China Huaneng Group Corp.’s 845-megawatt power plant in 2016, after last week closing plants owned by Guohua Electric Power Corp. and Beijing Energy Investment Holding Co., according to a statement Monday on the website of the city’s economic planning agency. A fourth major power plant, owned by China Datang Corp., was shut last year.

The facilities will be replaced by four gas-fired stations with capacity to supply 2.6 times more electricity than the coal plants.

The closures are part of a broader trend in China, which is the world’s biggest carbon emitter. Facing pressure at home and abroad, policy makers are racing to address the environmental damage seen as a byproduct of breakneck economic growth. Beijing plans to cut annual coal consumption by 13 million metric tons by 2017 from the 2012 level in a bid to slash the concentration of pollutants.

Shutting all the major coal power plants in the city, equivalent to reducing annual coal use by 9.2 million metric tons, is estimated to cut carbon emissions of about 30 million tons, said Tian Miao, a Beijing-based analyst at North Square Blue Oak Ltd., a London-based research company with a focus on China.

Coal emissions are killing more than half a million Chinese people a year.  The Chinese government now realizes it must do something, and do it fast, or there will be no more country to govern.

Also, don’t think for a minute that China is going coal free.  6 of the largest 10 coal-fired power plants in the world are in China, and they remain open.  The smallest of them has a capacity of 4600 MW.  The largest coal burner in the US is the Bowen Plant in Georgia, with a capacity of only 3499 MW.

But make no mistake, China is no longer relying on coal for new energy.  The Beijing plant closures are symptoms of rapidly accelerating trend.  This is more bad news for the US coal industry.

ISOs/RTOs Operate in Secret, Take Care of their Own

Larry Shapiro at IEEFA has an excellent new post on the secretive cartels that control who can connect to the US electrical grid, how much we pay for our electricity, and who gets energy and who doesn’t.  Readers of The Power Line know how I feel about PJM Interconnection.

Here’s what Mr. Shapiro says:

A fact little known to most Americans is that the grid they rely on for electricity is controlled by quasi-public organizations whose lavishly paid executives and board members conduct business in deep secret.

Independent system operators, or ISOs, work almost entirely behind closed doors, even though their every action affects public electricity customers of all stripes—residential, business and public sector.

I call them quasi-public because so much of what they do so profoundly affects the utility-consuming public, even as their corporate structure and inner workings are shrouded in mystery. ISOs in effect are public agencies exempt from public scrutiny—and, as a sadly predictable result, quasi-public corporations gone wild.

A little background: ISOs run the electric grid region by region across the United States. Some cross state lines. Those include PJM (whose initials are derived from its footprint: Pennsylvania-New Jersey-Maryland) and MISO (Midcontinent Independent System Operator: 11 Midwestern states and part of Canada). Others, such as NYISO, the New York Independent System Operator, are confined to one state.

The Federal Energy Regulatory Commission (FERC) mandates that each ISO ensures that enough electricity is generated across the grid to avoid blackouts. FERC also charges each ISO with making sure electricity is fed into the grid at competitive prices and that the appropriate power-generation mix is in place.

Who knows, though, if any of this is happening?

Who knows, indeed.

Before Enron-backed laws were passed by the US Congress deregulating the US electrical system, all power companies were confined to operate within single states.  State regulators had direct access to all of the vertically integrated power companies they regulated.  Because these companies were monopolies and had no competitors, there was no reason for hiding this information from the public.

Now, claiming confidentiality of competitive secrets, power companies and RTOs/ISOs hide all their internal documents from public scrutiny.  Also, because all power company business is done in fragmented “markets” ISOs have grown huge bureaucracies of lawyers, engineers and paper shufflers to oversee the complex mess.

And as Mr. Shapiro points out, these bureaucrats don’t come cheap:

NYISO’s tax filings—which by law are public because the organization positions itself as a tax-exempt nonprofit—hint at just how well the people who control ISOs are compensated. According to the NYISO’s 2013 tax return, Stephen G. Whitley, its president and CEO, was paid $1,804,749 that year. I’m not saying Whitley didn’t deserve that much. His is specialized work and his average workweek was said to be 60 hours. It’s still a lot of money. The members of the NYISO’s part-time board of directors also did okay. For working a reported 12 to 16 hours per week, they took home from $55,167 to $156,500 in 2013. Nice work if you can get it.

Add to these very good personal payouts the fact that board members choose their board cronies—without public review—whenever there’s an opening, and you have a system that ensures perpetuation.

All these salaries are passed on to rate payers.

Did Charles Patton Really Say That?

I was just reading an article by Sarah Tincher in The State Journal about a meeting in Beckley earlier today where people got together to talk about compliance with EPA’s rule 111(d).

At the end of the article I read the following quotes from Appalachian Power CEO Charles Patton:

“Just to say we’re going to stop using these power plants and invest in wind mills and solar panels and have our customers pay for it is just – it’s crazy,” he said. “The other thing is renewables — they’re important part of portfolio but the wind doesn’t blow all the time and the sun doesn’t shine all the time.

“We need some sort of fossil based or nuclear power,” he added. “As we saw during the Polar Vortex, the wind didn’t quite blow the way it was forecasted to. It’s important to keep that in mind.

I think Mr. Patton is a pretty smart guy.  He was either very poorly prepared or he was deliberately misleading his listeners.

Look at what really happened during the 2014 polar vortex cold spells:

For the second time in two weeks, wind power once again kept consumers’ energy costs down as extreme cold drove energy prices to record highs across much of the eastern U.S.

Electricity and natural gas prices skyrocketed to 10 to 50 times normal across parts of the Mid-Atlantic and Great Lakes states as extreme cold drove demand for electric and gas heating to near-record levels late last week. Fortunately, regional wind energy output was strong throughout these periods of peak demand, producing around 3,000 megawatts (MW) on the evening of Jan. 22 when supply was particularly tight, and roughly 3,000 to 4,000 MW for nearly all of Jan. 23 as electricity prices remained very high.

The savings that wind energy provided for consumers last week likely tally in the millions if not tens of millions of dollars, as wind energy reduced consumers’ energy costs in several major ways. Wind energy always provides these savings for consumers, which is why more than a dozen state government, grid operator, and other studies have confirmed that wind energy reduces consumers’ electricity prices.

Mr. Patton doesn’t seem like the kind of guy to come to an important meeting without being prepared.  That leaves only one alternative – he was knowingly spouting false propaganda for his employer, American Electric Power.

China Turning Away from Coal

The US coal industry is facing a wave of bankruptcies.  Nick Cunningham, of OilPrice.com says:

The coal markets have collapsed in spectacular fashion over the last few years due to a perfect storm of factors. U.S. coal producers first had to compete ferociously with shale gas in America’s electric power sector as fracking took off about a decade ago. That forced an array of coal plants to shut down as cheap gas washed over the country. Subsequently a regulatory crack down from the federal government – including forthcoming restrictions on greenhouse gases – further dimmed the growth prospects of coal.

But U.S. coal producers always had the international market, and exports stepped up in concert with falling domestic consumption. Now the foreign buyers are shrinking as well. China, the one country that the coal industry could count on for ceaseless growth in coal consumption, actually burned 2.9 percent less coal in 2014 than it did the year before.

When China, which consumes about as much coal as the rest of the world combined, sees its level of coal burning stay flat or even fall, that raises red flags for the entire industry.

Here are the specifics from IEEFA’s Tim Buckley:

When the largest coal producer in China puts out the kind of numbers China Shenhua Energy Co. just reported, it’s an unmistakable signal that the most populous country on the planet is continuing to step back from coal.

In announcing its 2014 results and its 2015 business targets, Shenhua dropped some bombshells:

  • It sees a 10 percent drop in its domestic coal sales in 2015 (that’s a 47 million tonne reduction to 404 million tonnes).
  • Its capital expenditure plans for coal and power generation in 2015 are down 25 percent over 2014 to $3.2 billion.
  • It expects its ports and rail investment to drop 12 percent year-over-year to $2.5 billion.

The numbers reveal a strategic shift by Shenhua as it reduces its volumes, its operating costs and its capital spending, and the 2015 numbers in particular signal an acceleration in this strategy. These trends are bigger, actually, than Shenhua. The company has a 15 percent share of the Chinese coal market, so it’s a key barometer of the larger picture, and its cutbacks send a clear signal that China is intent on curbing its emissions by a rapid diversification away from coal.

You read that right:  “a clear signal that China is intent on curbing its emissions by a rapid diversification away from coal.”

Gone are the days when Bill Raney, president of the WV Coal Association, can claim that the US doesn’t have to do anything about carbon emissions, because China isn’t.  Gone are the days when Mr. Raney can claim that WV coal miners will be back at work soon exporting coal to Germany and China.

Real world economics have caught up to the coal industry and no amount of US or WV government subsidies can save it.

And where is China turning for energy?  Here it is from Jack Perkowski at Forbes:

According to The Global Status Report, which was released earlier this month by the Renewable Energy Policy Network for the 21st Century, China once again led the rest of the world in renewable energy investment in 2013, spending a total of $56.3 billion on wind, solar and other renewable projects. The report stated that China accounted for 61 percent of the total investment in renewables by developing countries, and that China invested more in renewable energy than all of Europe last year.

Solar Eclipse Not a Problem for German Grid Managers

For the last month, there has been a lot of hyper-ventilating about what would happen to Germany’s electric dispatch system with today’s eclipse of the sun.  Germany has the highest penetration of solar electrical generation in the world, and the media (more than a little of it “fossil-fueled”?) was touting Germany’s “vulnerability” to catastrophe.

So what happened?  As it turns out, not so vulnerable.

Here’s the real world from Reuters:

Electrical grids in Europe claimed success on Friday in managing the unprecedented disruption to solar power from a 2-1/2-hour eclipse that brought sudden, massive drops in supply.

Germany, Europe’s biggest economy, at the heart of the event, boasts the world’s biggest solar-powered installations, which last year supplied 6 percent of national power requirements.

The initial 13 gigawatts (GW) drop in Germany was less than operators had feared and they were able to draw on alternative power sources including coal, gas, biogas and hydroelectric energy pumped from storage.

Grid spokespeople said control rooms were tense. “The mood is concentrated but confident that it will go smoothly,” said Andreas Preuss, spokesman of TenneT peer Amprion, which operates the longest network inside Germany.

“Network frequency is stable, reserve load is being called on,” one of the four high-voltage grid firms, TenneT, said in a live webfeed.

Naturally, grid managers would be “tense” because this is a significant event that they have never experienced before, but there is still lots of non-solar generation capacity to be deployed.  Germany has one of the most extensive and sophisticated load management systems in the world, which was available as well.

WV PSC Files IRP Order

The WV PSC filed an order laying out very modest guidelines pursuant to the toothless, voluntary Integrated Resource Planning law that AEP and FirstEnergy slipped through the WV Legislature back in 2014.

The WV IRP law, and the PSC’s minimal approach, is a far cry from the kind of law supported by WVU Law School professor James Van Nostrand and Energy Efficient WV in the 2012 and 2013 legislative sessions.