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Powering the Future: A Look at Coal's Continuing Role in the Energy Landscape

Explore the economic factors and future projections of coal in the power industry, including generation capacity, consumption trends, fuel prices, and environmental impacts. Gain insights into the challenges and opportunities faced by coal power and its position in the evolving energy mix.

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Powering the Future: A Look at Coal's Continuing Role in the Energy Landscape

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  1. IPED COAL POWER CONFERENCE The Coal Rush Revisited: An Economic Overview of the Continued Interest in the Power Industry’s ‘Old Stand-By’ presented by January 18-19, 2007 St. Petersburg, FL Nicholas P. Guarriello R. W. Beck, Inc.

  2. Coal Today Total 2005 Generating Capacity • 988,000 MW • 32% Coal* • 10% Nuclear • 41% Gas • 13% Renewables • 4% Oil Natural Gas(41%) Coal (32%) Renewables(13%) Nuclear(10%) Oil(4%) * More than 50% of electricity consumed Source: Energy Information Administration

  3. The Aging Coal Fleet 100% 98% 88% 75% 71% 50% 52% 29% 25% 0% >10 Years Old >20 YearsOld >30 Years Old >40 Years Old >50 Years Old Source: Energy Information Administration

  4. Coal’s Future Nuclear(2%) Renewables(9%) Generating Capacity Additions 2005-2025 • Total: 246,000 MW • 42% Coal (102,000 MW) • 47% Natural Gas • 9% Renewables • 2% Nuclear Natural Gas(47%) Coal (42%) Source: Energy Information Administration

  5. Energy Needs Average Annual Percent Growth Rate 2004-2025: Commercial 2.2 Residential 1.6 Industrial 1.0 Total 1.6 Retail Electricity Sales by Sector1970 – 2025 (billion kilowatt hours) History Projections 2,500 Commercial 2,000 Residential 1,500 Industrial Electric Sales (TWh) 1,000 500 0 1970 2005 2025 Source: Energy Information Administration

  6. Coal’s Drivers • High Natural Gas Costs • Security • Abundant • “Made in the USA” • 2005 EPACT Conclusion: Coal will remain 50% of the energy mix

  7. Low Cost Electricity From CoalOver 50% of the Electricity Comes from Coal 10.57¢3% 5.87¢10% 5.92¢94% 6.72¢ 64% 13.95¢17% 6.61¢65% 6.34¢9% 7.48¢70% 5.12¢0% 6.60¢44% 7.23¢61% 5.16¢96% NH 12.53¢ 22% RI 11.97¢ 0% CT 12.06¢ 14% NJ 10.89¢ 16% MA 12.18¢ 23% VT 10.95¢ 0% DE 7.76¢ 54% MD 8.13¢ 56% 8.27¢56% 6.69¢85% 5.87¢69% 7.08¢92% 9.02¢51% 5.88¢94% 6.95¢47% 5.15¢98% 5.92¢94% 6.64¢50% 7.64¢ 78% 11.63¢1% 6.55¢75% 6.13¢85% 5.01¢ 92% 7.19¢58% 6.31¢ 60% 6.85¢61% 6.72¢ 40% 6.30¢50% 7.79¢42% 7.51¢88% 7.43¢63% 6.46¢56% 7.54¢44% 9.14¢39% 8.03¢ 26% 11.72¢8% 8.76¢ 31% 5.01-6.13 6.30-6.72 6.85-7.54 7.64-10.89 10.95-18.33 18.33¢15% ¢ = average retail price per kilowatt hour for 2005 % = percent of total generation from coal for 2000 Source: Energy Information Administration

  8. Fuel Prices to Electricity Generators Projection Actual 9 8 7 Natural Gas 6 5 2004 $/MMBtu* 4 3 Coal 2 Nuclear 1 1995 2000 2004 2010 2015 2020 2025 Source: Energy Information Administration * Includes average cost of transportation

  9. Levelized Cost for New Power Plants in 2012 Fixed Cost Variable Cost 70.00 56.39 60.00 55.78 50.75 50.00 17.03 20.49 40.00 42.76 2005$/MWh 30.00 20.00 39.36 30.25 10.00 13.01 Coal CC IGCC Based on projected capital costs reported by EIA increased by 20% and fuel prices and O&M costs reported by EIA Source: R. W. Beck, Inc.

  10. Levelized Cost for New Power Plants in 2012Including the Cost of CO2 Emissions* Potential CO2 Costs Fixed Cost Variable Cost 70.00 62.10 59.22 57.14 60.00 5.71 3.44 6.40 50.00 17.03 20.49 40.00 42.76 2005$/MWh 30.00 20.00 39.36 30.25 10.00 13.01 Coal CC IGCC Based on projected capital costs reported by EIA increased by 20% and fuel prices and O&M costs reported by EIA * Cost of CO2 emissions at $7 per ton in 2010 – Source: National Commission on Energy Policy Source: R. W. Beck, Inc.

  11. Risk ProfileReflects Fuel Price Volatility 160 Combined Cycle Range 140 Coal Unit Range 106.50 120 100 Combined Cycle Mean 80 Total Power Costs ($/MWh) 70.22 60 60.41 49.41 40 CoalUnitMean 20 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Source: R. W. Beck, Inc.

  12. Risk ProfileReflects Fuel Price and Emissions Volatility 160 Combined Cycle Range 140 Coal Unit Range 115.19 120 100 Combined Cycle Mean 86.34 80 Total Power Costs ($/MWh) 60 60.36 49.41 CoalUnitMean 40 20 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Source: R. W. Beck, Inc.

  13. U.S. Production vs. Consumption 125% Coal 100% Natural Gas 75% Prod. Btu (% of Cons. Btu) 50% Petroleum 25% 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2004 Note: Natural gas statistics excludes natural gas plant liquids. Source: Energy Information Administration

  14. Total U.S. Coal Consumption for Power and U.S. Criteria Emissions, 1970-2001 250 200 Coal Consumption 1970 Level Equals 100 150 100 Criteria Emissions 50 1970 2003 Source: Energy Information Administration

  15. Global Fossil Fuels Outlook • 85% of incremental energy from fossil fuels • Carbon emissions to grow by 60% • India, China will account for 67% of the total increase in coal use worldwide

  16. Coal Challenges • Transmission • Transportation • Technology • Emissions

  17. Currently Proposed, Planned & Under Construction Coal Units New Entrants - Type Co-op Industry IOU Municipal Other Unit Type CFB IGCC PC Source: Global Energy Decisions

  18. Currently Proposed, Planned & Under Construction Coal Units by Municipals/Cooperatives New Entrants - Type Co-op Municipal Unit Type CFB PC Source: Global Energy Decisions

  19. IPED COAL POWER CONFERENCE Questions Nicholas P. Guarriello R. W. Beck, Inc. nguarriello@rwbeck.com (407) 422-4911

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