NEW MINE-MOUTH COAL ELECTRICITY LESS COSTLY, AVAILABLE NOW, NOT PIE IN THE SKY, LIKE EXPENSIVE FUSION AND SMALL MODULAR NUCLEAR

NEW MINE-MOUTH COAL ELECTRICITY LESS COSTLY, AVAILABLE NOW, NOT PIE IN THE SKY, LIKE EXPENSIVE FUSION AND SMALL MODULAR NUCLEAR 

https://www.windtaskforce.org/profiles/blogs/coal-electricity-less-costly-available-now-not-pie-in-the-sky

By Willem Post

Wind/Solar electricity is at least 3 times more expensive than coal electricity; a main reason Europe is castrating itself.

US utilities are forced to buy offshore wind electricity for about 15 cents/kWh.

That price would have been 30 cents/kWh, if no 50% subsidies.

Hidden Costs: These are the A-to-Z costs (windmill to land fill) almost all folks are kept ignorant about. 

At a future 25-30% W/S annual penetration on the grid, based on UK and German experience: 

- Onshore grid expansion/reinforcement to connect far-flung W/S systems, about 2 c/kWh

- A fleet of traditional power plants to quickly counteract W/S variable output, on a less than minute-by-minute basis, 24/7/365, which means more Btu/kWh, more CO2/kWh, more cost of about 2 c/kWh

- A fleet of traditional power plants to provide electricity during 1) low-wind periods, 2) high-wind periods, when rotors are locked in place, and 3) low solar periods during mornings, evenings, at night, snow/ice on panels, which means more Btu/kWh, more CO2/kWh, more cost of about 2 c/kWh

- Pay W/S system Owners for electricity they could have produced, if no curtailment, about 1 c/kWh

- Importing electricity at high prices, when W/S output is low, 1 c/kWh

- Exporting electricity at low prices, when W/S output is high, 1 c/kWh

- Disassembly on land and at sea, reprocessing and storing at hazardous waste sites, about 2 c/kWh

Total: 2 + 2 + 2 + 1 + 1 + 1 + 2 = 11 c/kWh

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Offshore wind full cost of electricity FCOE = 30 c/kWh + 11 c/kWh = 41 c/kWh, no subsidies

Offshore wind full cost of electricity FCOE = 15 c/kWh + 11 c/kWh = 26 c/kWh, with equivalent of 50% subsidies

This compares with 7 c/kWh + 3 c/kWh = 10 c/kWh from existing gas, coal, nuclear, large reservoir hydro plants.

Some values increase due to inflation and as more W/S systems are added to the grid.

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Such expensive W/S electricity would have made the US even less competitive in world markets.

Any US tariffs on the European/Chinese supply of W/S systems would greatly increase their turnkey capital costs/MW and their electricity costs/ kWh.

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Here is an example of the lifetime cost of a coal plant

Coal gets very little direct subsidies in the US.

The key is running steadily at 90% output for 50 years, on average, i.e., base loaded.

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Assume mine-mouth coal plant in Wyoming; 1800 MW; turnkey-cost $10 billion; life 50 y; Capacity factor 0.9; no direct subsidies; Wyoming coal, low-sulfur, no CO2 scrubbers needed; efficiency 0.4

Annual production = 1,800,000 kW x 8,766 h/y x 0.9 = 14,200,920,000 kWh

Coal heat value = 2000 lb/US ton x 8600 Btu/lb = 17,200,000 Btu/US ton

Year 1 coal cost = 14,200,920,000 kWh/y x (3412 Btu/kWh/0.4)/17,200,000 Btu/US ton x $15/US ton = $105,639,983/y

Year 1 O&M and other costs = 3 c/kWh. See Note.

Year 1 revenue, 14,200,920,000 kWh x $0.082kWh = $1,164,475,440/y

Payments to bank, $5 billion at 6% for 50 y; amortized at $317.2 million/y x 50 y = $15.86 billion

Owner investment, $5 billion at minimum of minimum of 10% for 50 y

Standard inflation of coal, electricity, O&M at 3.0 %/y

Year 1 electricity price $0.082kWh

Project cashflow for 50 years

Assume 20-y MACRS depreciation, if applicable

Assume no up-front tax credits; assume loan interest deduction from taxable income

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Per google AI, the Owner's initial cash-on-cash yield starts at 6.31% in Year 1. Because the bank debt stays entirely static while operating profits increase via inflation, the cash yield crosses the 10.00% mark by Year 11 ($533.24 Million) and hits 47.52% by Year 50. This shifts the entire 50-year weighted return profile to a 10.77% exact IRR.

NOTE:

Fixed O&M (labor, maintenance, insurance, taxes, land lease)

Variable O&M (water, chemicals, lubricants, waste disposal)

Fixed + Variable, newer plants 2 c/kWh, older plants up to 4 c/kWh

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Traditional Nuclear has similar economics; life 60 to 80 y; CF 0.9 in the US.

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For perspective, China used 2204.62/2000 x 4300 = 4740 million US ton in 2024.

China and Germany have multiple ultra-super-critical, USC, coal plants with efficiencies of 45% (LHV), 42% (HHV)

https://www.sciencedirect.com/topics/engineering/ultrasupercritical-plant