Coal use up at some plants with high heat rates

Some of the least efficient US coal plants still have no firm retirement dates, and together are generating more power this year amid an uptick in electricity demand and natural gas prices.

About 50 utility-scale facilities that burn coal had a heat rate above 11,500 Btu/kWh in the first half of 2021, which is considered high, not just above average, according to the US Energy Information Administration (EIA).

Many of the plants, which consumed nearly 27mn short tons (25mn metric tonnes) of coal in January-July, are set to close between 2021-28, company announcements show. Only a handful have retirement dates beyond that.

And there are about 18 facilities with high heat rates that have no scheduled closing dates. In the first seven months of this year, those plants burned nearly 12mn st of coal, up from 10mn st a year earlier, according to EIA data.

Most US coal-fired power plants are running at a higher capacity this year, regardless of their efficiency, as a combination of factors including higher natural gas prices drive up coal generation.

Utility-scale facilities with high heat rates had a sharper percentage increase in coal generation than more efficient plants, dispatching about 37mn MWh from January-July, a 44pc increase from a year earlier, according to EIA data.

Coal power from plants with a heat rate below 10,500 Btu/kWh climbed by 26pc to 246mn MWh. Whether power generators have a high or low heat rate, most are burning more coal "because their gas-fired competitors have to pay more for the fuel than they used to," said Paul McArdle, an economist at EIA.

"It is probably a matter of a rising tide floating all boats," he said.

Natural gas prices have trended higher since late 2020, making coal-fired generation more competitive. The day-ahead Henry Hub price averaged $3.285/mmBtu in January-July, up from $1.756/mmBtu in the same period in 2020.

The higher natural gas prices and a rebound in total generation led to US coal power rising by 30pc in the first seven months of 2021 when compared with a year earlier. More than 80pc of utility-scale facilities had an increase in coal power during that period. That included 39 of the 50 plants with a heat rate above 11,500 Btu/kWh.

Of the 18 least efficient facilities with no set retirement dates, five burn lignite only. Because of its lower heating value, more lignite must be consumed to produce a given amount of power.

Six of the 18 plants used 3.8mn st of Powder River basin (PRB) coal from Wyoming mines in the first half of 2021. And three facilities burned 1.2mn st of coal from Pennsylvania, including the Logan and Chambers Cogeneration plants in New Jersey, the St. Nicholas Cogeneration plant in Pennsylvania and the Merrimack Power station in New Hampshire.

Neither Starwood Energy, which owns the Logan and Chambers facilities, nor Schuylkill Energy Resources, which owns the St. Nicholas plant, responded to a request for comment.

Black Hills Energy said the Wygen 1 plant, which burns PRB coal, has historically had a heat rate above 11,500 Btu/kWh because of its design. It has a small boiler with no re-heater and significant auxiliary loads because of environmental control equipment and an air-cooled condenser.

But the plant plays an important role in the company's long-term capacity needs and provides a reliable, low-cost source of base load generation, Black Hills said.

Other less-efficient plants that burn PRB coal include the Big Cajun 2, John P Madgett, Powerton, Sheldon and Wyodak facilities.

The Nebraska Power Public District tied the high heat rate at its 225MW Sheldon plant to a combination of using PRB coal and a cyclone boiler. No measures are available to reduce the heat rate except through routine maintenance, the utility said.

Cleco Power said suboptimal heat rates can occur at its 1,277MW Big Cajun 2 plant in Louisiana when coal units are dispatched at lower loads. The plant's two units are subject to dispatch directed by the Midcontinent Independent System Operator.

Cleco will retire one of the Big Cajun units in 2025. It has not made any final plans for the other unit.

"There are no specific capital improvements planned at this time to change the plant's efficiency, but Cleco utilizes prudent generation practices in operations to optimize efficiency at all load levels," the utility said.

The coal plants with the lowest heat rates in January-July included the Belews Creek, Elm Road, John Turk Jr. and Longview supercritical plant. West Virginia's Longview plant, which entered service in 2011, had the lowest at 8,900 Btu/kWh. The Turk, Elm Road and Belews Creek plants' heat rates ranged from about 9,200-9,400 Btu/kWh.

By Nick Georgiou