Mon April 15, 2013
Study: Most Coal-Fired Power Plants Can't Compete Against Natural Gas
A new study estimates that 65 percent of current coal-fired power plants won’t be economical to run in the near future.
It’s been a common refrain when reporting on the coal industry: the fuel isn’t as competitive as it used to be because of low natural gas prices and increased environmental regulations. But the new study by researchers at Duke University's Nicholas School of the Environment quantifies the effects of natural gas and government regulations on the coal industry.
Lincoln Pratson is the study’s lead author. He says at current prices, just under a tenth of coal-fired power plants are more expensive to run than the average natural gas plant. But even if natural gas prices rise in the coming years, stricter regulations mean gas will still be more economical than coal.
“When you factor in the cost of meeting the stricter EPA regulations, it keeps natural gas cost-competitive with coal-fired power plant generation, even with natural gas being several times higher than coal,” he said.
That stands even if natural gas is four times more expensive than coal, when factors like a plant’s efficiency and the necessary pollution controls are considered.
The most expensive condition the study modeled was a scenario where natural gas was five times more expensive.
“And under those conditions, you would still have something like 20 percent of the current coal fleet capacity still being more expensive to use to generate a megawatt hour of electricity than the least-cost natural gas plant,” Pratson said.
The model is based on a number of assumptions, and Pratson says one factor is that the study assumed that if a plant exceeds an emission threshold, it would require a new control system to bring it into compliance. And even though in some cases one control can reduce two different types of pollutants, the study assumes separate emissions control systems would be needed.
Pratson says factors that could turn the tide back in favor of coal would be if the natural gas industry becomes more heavily regulated, and prices skyrocket, or if new technology allows coal plants to become much more efficient than they are now.