APPA Detailed Study on Effects of Switching From Coal to Natural Gas For Electricity Generation – Not a "Bridge Fuel" Strategy

The American Public Power Association (APPA) has released a detailed, 95-page study titled Implications
 (4.8 MB PDF) that analyses the costs, required rule changes, and risks of replacing a major portion of the coal fired electricity in the United States with natural gas. APPA is the national service organization for the nation’s more than 2,000 community- and state-owned not-for-profit electric utilities serving 45 million customers.

Unlike the declaration of casual pundits, established “energy gurus”, or natural gas supportive politicians, the challenge is substantial. It will require major long term investments financed largely by debt capital that will need to be repaid by collecting fees over many decades. Based on the assumptions made and documented in the study, the capital cost of the conversion would be approximately $735 Billion. That cost specifically does not include any predictions on the cost of the natural gas fuel or the effects of a change in the supply and demand curves at various times of the year.

The study authors noted that a strategy requiring that kind of capital investment cannot legitimately be described as using natural gas as a “bridge” fuel to a post fossil fuel energy supply system; the entities making the long term investments will expect that the newly built infrastructure will generate revenue for a long enough period to repay the capital and associated interest payments. The study authors remind readers that pipelines, power plants, and storage facilities are often financed over a 20 to 30 year period.

Here is a graph showing how the study summarized the various costs associated with the conversion. (Note: The study also included some additional operational costs like training and management of the fuel purchasing function, but those costs would be incurred over time and are not properly considered to be capital investments.)

In addition to the cost of the conversion, the study pointed out numerous complexities and challenges that would accompany the shift. It talked about the effects of balancing the flow of gas in the pipes to the demand for electricity, the importance of revisiting and perhaps revising the curtailment plan used in the event of a limitation on gas supplies, the potential impact of major storm damage similar to the damage caused by the hurricanes of 2005 (Katrina, Rita, and Wilma), and the need for small utilities who are used to managing the slowly changing nature of the coal market to become more expert in the dynamic daily trading associated with natural gas.

As I was reading the section on nominations and balancing (page 72-75), I thought about how this aspect of natural gas supply management would work in a system where gas fired generation is assigned to provide reliability for a growing installed base of unreliable, weather dependent power sources like wind turbines and solar collectors. The pressure variations in the system piping and the rapid changes in production that can come as a result of major weather systems would need mitigation strategies and perhaps some additional storage volumes to provide surge volume.

The study describes the technical reasons why utilities normally choose to build new facilities as replacements for existing coal facilities instead of attempting to convert the existing facilities to burning gas. It also explains why the seemingly simple option of operating already built, but underutilized, gas turbine combined cycle plants at a higher capacity factor to replace coal fired electrical generation is much more complicated than it appears from a high level point of view.

The organization that commissioned the study is not in the fuel business; it is a group that represents community and state-owned non profit utilities that have a chartered mission to serve the electrical power needs of their customers. From the press release announcing the study publication, here is the organization’s stated reason for commissioning the investigation and working to ensure that the findings it reveals make it into the energy policy conversation.

“There is a significant body of regulation underway and the potential for new regulation or legislation that will impact coal plants in particular,” said Mark Crisson, president and CEO of APPA. “This study raises questions and concerns about the significant hurdles utilities would face converting from coal to natural gas in the face of these regulations. Other studies have addressed supply. We commissioned this study because we are concerned about just how utilities would extract, store, and move natural gas to where it is needed in a reliable, sustainable, affordable and environmentally sound way. It strongly suggests that policymakers will need to take a fresh look at the regulations and incentives to make sure the problems identified in this study are addressed going forward,” Crisson concluded.

At some point in the not too distant future, I hope that the vendors of smaller reactor plants will have made enough progress in their design and licensing efforts to enable a similar study to be undertaken to determine the potential costs and benefits associated with replacing coal fired boilers with nuclear steam supply systems. Many of the fuel supply and infrastructure challenges associated with replacing coal with natural gas would be non-issues.

Instead of replacing a relatively inexpensive solid fuel that can be delivered by train and stored by piling it in the open air with a more expensive gaseous fuel that requires new delivery pipelines and is very difficult to store locally, we would be replacing an inexpensive solid fuel requiring frequent deliveries with a significantly cheaper, cleaner, and more concentrated solid fuel that only needs to be delivered every 18-24 months. Instead of replacing one CO2 emitting technology with another one that releases about 50-70% of the CO2 per unit power, we would be replacing a major air pollution emission source with one that has no local emissions at all.

If you have time and want a better understanding of how natural gas is extracted and delivered from sources to customers in the US, I highly recommend reading the full study. It was a real eye opening experience.

Aside: I found a footnote on page 77 of the study to be particularly intriguing. Still existing portions of the largely repealed Power Plant and Industrial Fuel Use Act of 1978 require that new natural gas or petroleum fired baseload power plants self-certify to the Secretary of Energy that they can burn coal or another alternate fuel as a primary fuel source. (The act defines “baseload” as a plant having a capacity factor of 40% or higher.) The self certification must confirm that the proposed gas fired plant:
(i) has sufficient inherent design characteristics to permit the addition of equipment (including all necessary pollution devices) necessary to render such electric powerplant capable of using coal or another alternate fuel as its primary energy source; and
(ii) is not physically, structurally, or technologically precluded from using coal or another alternate fuel as its primary energy source. (See Public Law No. 100-42 and 10 CFR 501.60, 61.)

Can anyone explain to me the design provisions that must be included in a gas turbine combined cycle plant to enable it to meet the above requirements? I am aware of the technical possibility of coal gasification – is that the method that is assumed for this conversion? End Aside.

About Rod Adams

5 Responses to “APPA Detailed Study on Effects of Switching From Coal to Natural Gas For Electricity Generation – Not a "Bridge Fuel" Strategy”

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  1. katana0182 (Dave) says:

    The study paints a dismal picture. (Well, except for gas producers and pipeline operators.) They stand to make a killing – a real killing.

  2. Jason Ribeiro says:

    Rod, legalese is not my forte but as I skimmed through some of the contents:
    …it appears that a company can file for a permanent waiver of the requirement. I’ll bet if the legal fees are cheaper, utilities might not be worried about the technical requirements.
    Count me as skeptical of IGCC. Perhaps these guys would know:

  3. Rich says:

    Perhaps this will provide you with insight as to why there is a push on NG. It is only cheap (now) because they can’t sell it. The doubling in price of NG in the 90’s was from all of the utilities adding NG peaking turbines when NG was “cheap and will stay cheap.” Even the utility I worked for got sucked in.
    PSE&G in NJ often uses coal gasification to run their gas turbines – they need to just to maintain gas pressure on cold winter nights.

  4. paul_houle says:

    I think the “alternative fuel” option for gas turbines can be satisfied by feeding the pipleline system “Syngas” made from coal.
    Gas-from-coal was a big industry circa 1900 or so. I know there was a big coal gas plant in Manchester, NH, my hometown, to feed the needs of a large textile factory and supporting city. People are still arguing in Ithaca, NY about the fate of the old coal-gas plant: there has been a major remediation effort to remove coal tar residue from the soil around the old building, which is across the street from an elementary school and a swimming pool. There’s an outbuilding that was part of the facility that now belongs to the school district. The school district wants the building destroyed so that the liability it represents is eliminated, but preservationists think the building has historic value.
    Syngas made a comeback in the 1970s, when there was a lot of concern about energy and people were considering far-out ideas like Space-based Solar Power Satellites. Syngas is definitely possible today, but it would be (i) expensive and (ii) bad for the environment. Back in the 1970s, people were imagining large “coalplexes” in the mountain states that would ship synthetic gas and liquid fuels by pipeline to the rest of the country.
    A related technology that’s got a little more traction is the “integrated gasifier”, which is a front-end that can be attached to a gas turbine that pyrolyzes coal or biomass and feeds hot fuel gases into the turbine. This was researched in the 1970’s and is in many of the alternative energy books because it works better on biomass than coal. From what I gather, it’s a favorite for “clean coal” technology: there are even high-tech versions that take pure oxygen as input so there’s no nitrogen in the exhaust, so the carbon dioxide that comes out can be compressed and disposed of. I’m aware of a few recent small-scale installations of the technology, but my last literature scan showed the signs of “technology porn” here: cost numbers, for instance, haven’t been updated since 1970s research papers.
    The gasifiers are vertically oriented cylinders that are similar in size to the gas turbine, so I could certainly imagine ‘upgrading’ an existing turbine, but the two gas turbine installation I know intimately are in buildings that aren’t a square inch bigger than they have to be and are on lots with very small footprints; you’d also have to add in room for a good sized pile of coal and machinery to handle it — that’s the really amazing thing about petroleum fuels delivered by pipeline… you can move a lot of mass in without ever really noticing it; whenever I lift diesel tanks to fill my tractor, I think of how must of us forget that our cars consume their own weight in fuel every year.

  5. Steve Darden says:

    Rod, thanks heaps for your brief on the APPA study. It is really difficult to imagine a more wrong-headed US energy policy than promoting/forcing wholesale replacement of fossil fuel generation with fossil fuel generation.
    Instead of wasting the estimated $735 billiion, what do you think it would it cost to repower the 335 GWe of coal with mass-manufactured modular nuclear boilers? First, we don