Coal’s Share of Electricity Fuel Falls Below 40% in US

Next time you hear someone claim that coal provides 50% of electricity in the US, politely tell them they are wrong.  In fact, next time you hear someone claim that coal provides 40% of electricity in the US, politely tell them they are wrong.

Here is the latest 2011 data taken from the Dept. of Energy’s Energy Information Administration.

12 thoughts on “Coal’s Share of Electricity Fuel Falls Below 40% in US

    • Anne-Marie,

      I don’t know if you have the Obama administration to thank for the decline of coal-fired electricity. This decline is the result of the rising world price for coal and the falling price of domestic natural gas. That fall in the price of gas was largely the result of the expansion of drilling to the tight shales like the Haynesville and the Marcellus over the last ten years. That expansion of domestic drilling was largely the result of the exemption from the Clean Water Act passed by the Cheney administration as part of the 2005 Energy Policy Act. Did I mention Cheney? Guess what company has most of the major patents on chemical mixtures used to hydraulically fracture the tight shales? Yup. Halliburton. Was Cheney receiving money, in the form of deferred salary and bonuses from Halliburton, where he was former CEO, throughout his control of the executive branch from 2000-2008? As another great Republican once said, “you betcha.”

      • I assume you are talking about “exporting the difference” in coal that is not being burned in the US.

        The situation is actually a little more complicated. Here are some basic facts about the situation right now: (1) the Appalachian coal resource is now seriously depleted, with projections of 30 % production decline in the next THREE YEARS, (2) more than half of the coal burned in WV power plants comes from outside the Appalachian basin, mainly from Wyoming, western KY and southern IL (3) there has been massive investment, both private and federal, to expand coal export infrastructure at Seattle to export western coal to China and India which will be coming on line in the next year or two.

        So exports of steam coal will continue to rise, with resulting increases in domestic coal prices. Higher priced metallurgical coal production is continuing to rise in WV, because there are good export connections through Baltimore and Norfolk. WV steam coal simply can no longer compete, because it is too expensive to mine in the Appalachian basin.

        So when you couple this long term trend in coal prices with the recent glut in domestic gas supply, it is inevitable that gas will replace coal in the US generation mix. Until gas export infrastructure is built, which will be happening in the next few years. If you were an investment banker, where would you put your 30 year investments? In gas fired power plants that might be subject to significant fuel price increases? Or in natural gas export facilities to feed a world hungry for gas?

        All of this talk about supply is compounded by the stagnation of electricity demand in the US. This is a new world for the US electrical industry. And for all of us. We have never experienced this situation in our lifetimes. This flat demand is also affecting renewable investment, because without rising demand, the profitability of ALL new generation is in jeopardy.

        But homeowners and small businesses continue to invest in rooftop solar because it is more reliable, and people are more closely connected with managing their own power USE when they are producing some or all of their own power. The highest priority, in terms of investment, should be in demand management and efficiency innovation.

        Grid managers are freaking out right now at retirement of power plants. If we invest in reducing power demand, building on recent trends, those problems go away. We need to re-engineer the whole way of thinking about investment in electricity to be based not on new generation, but on demand management. That is our highest, and cheapest, priority. Then we can move on to smart management of the distribution system, new storage technologies and distributed generation.

    • Yes, Keryn. There is a break down in absolute numbers. EIA only does a percentage breakdown as a comparison between 2000 and 2010. Here is the comparison of coal’s contribution to WV’s fuel mix: 2000: 98.2%, 2010: 96.7%. This is a dangerous commitment to coal in a time when coal prices will be rising for decades, and coal production from the Appalachian basin in projected to decline by 30% in the next three years. And as we have pointed out numerous times on our blogs, WV government “leaders” and the WV PSC are doing nothing to prevent the inevitable train wreck that is WV electric rates. That train wreck is already in progress, as the Legislature has just allowed the PSC to issue ten year bonds to pay for electricity that was used in 2008.

    • The Obama administration has finally decided to start enforcing 30 year old federal laws on air and water pollution, which is beginning to factor the real costs of coal production and burning into the market price of coal-fired electricity, but those changes have been tentative and limited. The big opportunity that the Obama administration has been missing is to transition the US electrical system toward a more distributed system of power generation. Because distributing generation closer to electrical load means putting it right into the middle of cities, this generation must be based upon demand management and rooftop solar generation. Natural gas plays an important role in this process because combined cycle gas electricity generation can be scaled down to very small units and produces none of the mercury, sulfur and particulate emissions of coal. These gas plants will play an important role in power generation between the intermittent generation from solar and wind resources. The fact that gas is so cheap now, should only be accelerating this process of transition to renewable distributed generation.

      While this progress has been steadily picking up steam, this has occurred

        in spite of

      federal and state government policy. Almost all of the initiative has been coming from homeowners and small businesses who are installing rooftop solar systems at an increasing rate. Instead of embracing distributed generation, Obama’s Dept. of Energy and Dept. of Interior are doing everything they can to build the Cheney-designed plan invest hundreds of billions of dollars in a national transmission super grid that is robbing real needed investment from real solutions.

      Don’t believe the coal industry’s propaganda about the Obama administration. It is simply not true. The Obama administration has had very little to do with the decline in the use of coal in the US power industry.

      • Great comment, Bill. I know a bit about DG myself, and I’m not sure I agree with your assertion that Pat Hoffman is pushing a super-grid solution on the masses. THe DOE is pursuing the SmartGrid as a means of continuing the move towards a more distributed energy network–but it’s focusing on energy storage and intelligent meters right now, both of which enable a much higher level of penetration for distributed generation later. In D.C. we spent eight years trying to make natural gas-fired DG pencil out, and it rarely did. And with these new low NG prices CHP projects are actually being cancelled because grid-sourced electricity is also cheaper now, due to the move from “old coal” to combined-cycle GTs. My greatest hope lies in the mothballing of older coal-fired plants, permanently removing them from the domestic electricity mix. New coal plants are enormously expensive compared to everything except new nuclear, and (hopefully) will rarely be approved for rate-based return by state utility commissions. Change is happening, even if it isn’t fast enough.

      • I was referring to this and this when I referred to the Obama administration push to build Cheney’s nationalized grid. The pressure is relentless from FERC, as well, particularly when it comes to taking states’ power over transmission siting away from states, where it currently resides under federal law.

        Your point about storage is well taken. That is the ultimate replacement for gas fired generation in a new renewables based grid. There is a lot of confusion about “smart grid” technologies both in the media and in government propaganda. Most media discussion confuses smart grid technologies with the Cheney high voltage transmission “build out” project. This is exactly what the large power traders and transmission companies like AEP want. The real value added for internet enabled control and management is at the load and distribution level, not bulk transmission. Al Gore and Robert Kennedy, Jr. are some of the worst at creating this confusion.

        The other problem with gas, which all smart investors are aware of, is that the current disconnect on gas prices from other hydrocarbons is likely to be temporary. It is difficult to make a 30 year investment in new generation plants when the price of gas may double or triple within five years. The US basically has no export infrastructure for natural gas right now, but the industry is pushing hard to change that. If the US begins exporting gas in large amounts in the next ten years, and Europe and China are hungry for gas, everything about the domestic natural gas situation will change.

        EIA has a very interesting set of charts here that provides an excellent overview of the situation.

        The EPA’s willingness to enforce the law is certainly a prod to power companies to close their obsolete power plants, but most companies were planning to do it anyway. Even without any pollution control retrofits, these plants are very expensive to run. AEP’s two WV plants that are closing soon, Kammer and Kanawha Station, had effectively become peaker plants (which is crazy for a coal fired plant, because it takes so long to ramp up production) because they can only afford to profitably produce power to sell on the PJM grid when spot prices rise dramatically at peak load.

        I will reply to your other question about coal prices at your other comment, so that we keep these subjects straight.

        Thanks for engaging in this conversation. I have wanted to explore some of these issues in more depth on The Power Line, but they are somewhat off topic from my focus on transmission issues. So a comment discussion is perfect for addressing some of these issues.

  1. Completely off-topic, in a way, but I’d like to compliment both Bill and Anne-Marie for one of the most civil, informative exchanges I’ve ever read on any blog site.

  2. It appears that this little village doesn’t have an idiot, as many online comment forums do. Maybe every village doesn’t need one after all? Who knew! And thanks for digging those stats up, Bill.

    One of the biggest concerns I have with “America’s Superhighway” grid buildout is cost. It is not economical to transport midwest wind resources to both coasts. Since lines built for renewables cannot be exclusive for that resource, once these lines are constructed, new and expanded coal will come online to fill the capacity by undercutting renewables on price. This “superhighway” isn’t just about renewables expansion.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s