Coal still offers relatively low cost, strong capacity factors

One of the few bright spots for coal in a report released by the American Public Power Association (APPA) on March 22 is that new coal plants still offer relatively low costs and high capacity factors compared to other sources of electric generation.

The APPA report indicates that natural gas now accounts for 43% of the electric generating capacity in the United States with coal being a distant second at 26% of the capacity. In addition, natural gas and wind power have increasingly become the primary source of new generation being built in recent years, APPA said.

Some good news for coal, however, is that coal-fired economics still remain attractive.

The APPA report looked at the cost on a per-MW basis for new electric capacity deployed between 2010 and 2015. When capacity factors are entered into the equation, only gas-fired generation is cheaper than coal.

The net capacity factor of a power plant is the ratio of its actual output over a period of time, to its potential output if it were possible for it to operate at full nameplate capacity continuously over the same period of time.

Natural gas had the least expensive “adjusted cost per MW” at $3,508. The gas plant cost per MW is only $947 and new gas plant capacity factors were listed at 27%.

Coal was listed with an adjusted cost per MW of $3,952. That was based upon a cost per MW of $2,134 and a 54% capacity factor.

But the report also notes that 90% of the natural gas-fueled capacity being brought online is in the form of combined-cycle units. Combined-cycle units tend to have a much higher capacity factor (42%) than gas-fired generation as a whole. As a result the “adjusted” cost per MW of combined-cycle gas units is only $2,273.

The adjusted cost of other types of generation brought online during the period is far greater than either coal or natural gas, according to the APPA report.

Wind power was listed with an adjusted cost of $6,379; hydro $10,675 and solar $16,855.

In compiling its 2016 edition of “America’s Electricity Generation Capacity,” the APPA relied upon data from Ventyx.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.