Coals Twilight Gets Expensive

• July 2014

Non-Fuel O&M per MWh Cost Trend for Coal Generators

• With all the discussion about the death of king coal, retirements, and fuel switching, we wondered: What is the overall trend for non-fuel costs for coal plants? Are there regional differences in non-fuel O&M costs? Do units slated for retirement have a different non-fuel O&M trend than those planned to continue running?
• Introduction

2012 Was an Unusual Year

• Cost Trends in the Largest Six NERC Regions
• Non-fuel costs spiked in all regions in 2012 compared to 2011 and 2013, and some spiked much more than others Low gas prices (more combined-cycle dispatch and subsequently less dispatching of coal units) explains some of the difference but not the dramatic cost increases in regions with significant coal capacity (RFC and SERC)
• Notes: Includes all coal-fired steam turbine generating units except pet coke and waste coal-fired units; co-generating units less than 25 MWs which are not subject to EPA CEMS reporting were excluded Sources: Ventyx Energy Velocity Suite; ScottMadden analysis
• 51% Increase
• 111% Increase
• 2012 cost spikes appear driven partly by fixed costs spread over fewer MWhs
• When we look at non-fuel O&M for units not scheduled for retirement, the 2012 spike pattern remains but is much lower than the total fleet, suggesting that a lot of O&M was spent in 2012 on units slated for retirement
• Together, SERC and RFC represent 62% of all coal-fired capacity in North America

Costs Decreased in 2013, Some Less Than Others

• • Cost Trends in the Largest Six NERC Regions
  • While costs for MRO and SERC were lower in 2013 than 2012, they are up substantially since 2010, unlike the other four regions we examined. Could installation of advanced air quality control systems be responsible? Installed NOx equipment has been stable since 2010 for all regions, so it is unlikely this is the cost driver Installed SO2 equipment is up substantially in SERC and RFC but not MRO If advanced air quality control controls are not causing the cost increases in MRO and SERC, then a continued reliance on units slated for harvest is a likely explanation
  • Notes: Includes all coal-fired steam turbine generating units except pet coke and waste coal-fired units; co-generating units less than 25 MWs which are not subject to EPA CEMS reporting were excluded Sources: Ventyx Energy Velocity Suite; ScottMadden analysis

32% 38%

• NOx Control Equipment Installed by Capacity
• SO2 Control Equipment Installed by Capacity