A Good Case for Coal-Fired Generation Right in our Backyard

A Good Case for Coal-Fired Generation Right in our Backyard Last week I had the pleasure of touring the  Longview Power Project, which is located just north of Morgantown near the Pennsylvania border. At a cost of approximately $2.0 billion, Longview is the largest privately-funded project in West Virginia history. Longview came on line in December 2011, and generates 770 megawatts (MW) of power, or about 695 MW net of the service station requirements (i.e., the electricity consumed on site). Several features of this state-of-the-art coal plant are noteworthy:

  • It is a  merchant plant. Unlike the plants owned by investor-owned utilities such as Mon Power (First Energy) or Appalachian Power (American Electric Power), Longview is owned by an independent power producer. (The plant is operated by  GenPower.) An investor-owned utility owning and operating this plant would be assured of cost recovery, as the output would be sold to the “captive” ratepayers of the utility, and ratepayers would bear the costs of the plant’s operation through their electric bills. In the case of Longview, however, the investors are taking the risk that the output of the plant can be sold into the market at a price that covers its costs, and (hopefully) produces a profit.
  • Longview is  profitable. This plant uses the latest in supercritical pulverized coal (SCPC) technology, and thus operates at efficiency levels far greater than virtually all other coal plants in the nation’s fleet of coal plants. The efficiency is generally reflected in the “heat rate” at which the plant converts energy into electricity. While the average net heat rate of coal plants across the country is 10,600 Btu/kWh, the Longview plant has a heat rate of 8,728 Btu/kWh. That means the plant has lower operating costs, which is important given its status as a merchant plant. If the plant were inefficient and “out of the money” or “above market,” its output could not be sold in the wholesale power markets, and Longview’s investors would lose money.
  • Longview is  cost-competitive. The output of Longview is sold into the regional wholesale power market, the  PJM, which is short for Pennsylvania-Jersey-Maryland.PJM is a regional power market that coordinates the movement of wholesale electricity in all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia. Its headquarters are located in Valley Forge, PA, about 20 miles northwest of Philadelphia. PJM essentially creates the marketplace where buyers and sellers of electricity meet, and is also responsible for operating and maintaining the region’s transmission network and “keeping the lights on,” at least at the transmission level. In its role as the market maker for wholesale electricity, PJM essentially dispatches all the power plants in the region, in order according to their variable operating costs, until supply equals demand (which establishes the market-clearing price). For example, nuclear plants, which have very low operating costs, are dispatched first, while “peaking” natural gas-fired plants (typically simple cycle combustion turbines) or older, inefficient coal plants are dispatched at the margin. PJM system operators will work their way up the dispatch cost curve until market equilibrium is achieved (i.e., supply equals demand). That is why the efficiency of Longview is so important. Because of the low-cost characteristics of Longview – its heat rate of 8,728 Btu/kWh is far superior to the average of the coal plants in the PJM of 11,000 Btu/kWh – it ranks very high in the dispatch order and the plant is virtually “in the money” 24 hours a day, 7 days a week.
  • Longview is relatively “ clean.” Longview is equipped with state-of-the-art air emissions reduction technology. These systems include:

A Good Case for Coal-Fired Generation Right in our Backyard Low NOX burners with overfire air and selective catalytic reduction (SCR) technology
Hydrated lime injection system to reduce acid mist
Removal of particulate matter (PM) through 99% efficient fabric filter baghouse

  • SO2 removal through 98% efficiency wet flue gas desulfurization system (FGD). Although the combined effect of these systems achieves significant removal of mercury, it is noteworthy that the plant would  not meet the requirements of the EPA’s new Mercury and Air Toxic Standards (MATS) rule if it were to be licensed as a  new facility. As an  existing source, however, Longview easily clears the standard of the top 12% cleanest emitters.
  • Longview is a “ mine mouth” project, and thus fuel arrives by overland conveyors directly from a nearby mine 4 ½ miles away. Less than two hours passes from the time the coal is mined until it reaches the bunker at the plant. This mine mouth supply reduces the delivered cost and avoids the impacts associated with trucks, rail or barges. The mine is operated by MEPCO, which is based in Morgantown, WV. MEPCO is the largest independent coal operator in the region, with about 800 employees. MEPCO has a long-term contract to provide coal to Longview, which consumes about 275 tons per hour, or about 2.3 million tons annually. MEPCO also provides coal to two nearby First Energy plants (Hatfield’s Ferry Power Station and Fort Martin Power Station) under long-term coal supply agreements.
  • Longview provides about 100 good-paying  jobs. In addition to the employees at Longview, the MEPCO coal mine producing the coal for Longview employs over 210 miners.

A Good Case for Coal-Fired Generation Right in our Backyard The Longview Power Project is an impressive facility, and makes a strong case for a continuing role for coal in the nation’s electricity future. In the face of historically low natural gas prices, which have resulted in depressed wholesale electricity prices, Longview is still in the money, and is returning profits to its investors. More important, this relatively clean facility is displacing older, dirtier generating units, thereby achieving a lower carbon footprint for the region’s electricity supply. Longview is succeeding in the competitive PJM power markets, thanks to its high-efficiency supercritical pulverized coal technology. With its extensive air quality control systems, Longview easily meets all currently effective emissions requirements (although it would not meet the EPA’s limits for CO2 emissions once the greenhouse gas regulations become effective for new sources).

A Good Case for Coal-Fired Generation Right in our Backyard The Longview story stands in sharp contrast to the dozens of coal plants throughout the country that are scheduled to be retired in the next few years. While most of the coal industry blames the extensive plant closures primarily on the “job-killing EPA,” the fact of the matter is that most of these plants are being closed due to simple economics: with natural gas prices at historical lows, inefficient coal plants simply cannot compete, and the dispatch stack at PJM (and similar market forces) are forcing retirement of plants that have long outlived their useful lives. Longview proves that coal – and relatively “clean” coal at that – can compete, if the electric utility industry chooses to invest in the latest generating and emissions reducing technologies.

A Good Case for Coal-Fired Generation Right in our Backyard