Power Engineering - COAL-GEN 2006 kicks off in Cincinnati

17 August 2006 -- Coal is likely to remain the backbone of U.S. electric power generation for decades to come, said Steven Leer, president and CEO of Arch Coal Inc. in a keynote address given to delegates at the 2006 COAL-GEN International conference in Cincinnati on August 16.

"Ninety-five percent of the known Btus in the United States are in coal," he said, making it a secure and reliable source for future power plant development.

James Rogers, president and CEO of Duke Energy, echoed the sentiment saying that his company plans to build a 1,600 MW pulverized coal plant in North Carolina and a 600 MW integrated gasification combined-cycle (IGCC) plant in Indiana. He said the company plans to file later this week an application for an air quality permit with Indiana regulators for the IGCC project.

Rogers cautioned, however, that the "elephant in the room" was climate change and that although more work needs to be done on the science of climate change the "science and political science are aligning" particularly in Washington, D.C. where he expects that legislation on climate change will be in effect by around 2012. Even so, enactment of carbon regulation is unlikely to lead to the end of U.S. coal generation.

"It's our responsibility to work with Congress for a smooth trajectory," he said. In June he was elected Chairman of the Edison Electric Institute.

M. Richard Smith, senior vice president with Bechtel, said that a dark cloud facing the coal development industry was the specter of rising prices for everything from basic building materials to labor. As orders for new power plants continue to mount, delivery lead times continue to stretch into the future and "quality becomes a challenge." He said in some cases prices of major power plant components have risen 20 percent in a single year. Scarce transportation capacity is also complicating the power plant development puzzle. And labor shortages are affecting plans in some markets. Smith said that construction labor expenses have climbed 20 percent in some markets and per diem rates have climbed from zero to $60 a day.

The combination of tough economic factors makes it a "challenge to provide economical coal-fired power plants."

In response to a question, Smith said that Bechtel and TXU are in the "middle of determining the cost" of the utility's new fleet of coal-fired power plants. Published reports said the developer hoped to bring capacity online for around $1,100 per kW.

"TXU will wind up with relatively low cost plants relative to the rest of the industry," Smith said. The company will do that through a combination of selecting the right site, reducing project scopes to the "bare minimum" and by negotiating cost-sharing arrangements with some vendors.

Duke Energy's Jim Rogers said that energy efficiency and conservation would emerge as a "fifth fuel" with regulatory incentives being offered that would encourage end users to take greater control of their energy consumption. Even so, the combined effects of larger homes and increased demand will make it necessary for new baseload capacity to be added.

Arch Coal's Steve Leer said that Energy Information Administration forecasts predict that coal will reach 57 percent of total U.S. electric generation by 2030, with market shares for every other generation source other than renewables showing a decline. That means the current 1 billion tons of coal burned for electricity generation in the United States will need to grow by 500 million to 700 million tons a year to meet the increased demand.

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