US Coal Consumption Up 17% In 2021; also up in Germany, Japan, China, etc.

US Coal Consumption Up 17% In 2021; also up in Germany, Japan, China, etc.

JANUARY 17, 2022

By Paul Homewood

https://notalotofpeopleknowthat.wordpress.com/2022/01/17/us-coal-co...

So much for the myriad claims about going “beyond coal.”

According to a new report from the Rhodium Group, U.S. coal consumption jumped by 17 percent last year compared to 2020 levels.

That’s a huge increase, which Rhodium says was “largely driven by a run-up in natural gas prices.”

Rather than burn gas, which averaged about $4.93 per million Btu last year — more than two times the price in 2020 — many electricity producers chose to burn coal instead.

The surge in domestic coal use is significant for two reasons. First, it proves again that coal remains an essential fuel for electricity producers both here in the U.S. and around the world. Second, it shows that the Biden administration’s pledge to decarbonize the electric grid by 2035 is little more than wishful thinking.

Hate coal if it makes you happy, but the reality is that power producers have relied on it ever since Thomas Edison used it to fuel the world’s first central power plant in Lower Manhattan in 1882.

Indeed, the jump in domestic consumption is part of a surge in global demand for coal, which still accounts for about 36 percent of global electricity generation.

Last month, the International Energy Agency reported that “global coal power generation is on course to increase by 9 percent in 2021 to 10,350 terawatt-hours (TWh) — a new all-time high.” The agency also reported that “coal demand may well hit a new all-time high in the next two years.”

The increase in coal use provides yet more evidence for what I call the “Iron Law of Electricity,” which says that “People, businesses and countries will do whatever they have to do to get the electricity they need.”

That law was on display in November, at the COP26 summit in Glasgow where India, China and other developing countries rejected a deal that called for a “phase-out” of coal-fired power plants. Instead, the final Glasgow agreement called for countries to “phase down” their use of the carbon-heavy fuel.

While Asian countries account for the biggest share of global coal use — China alone uses more than half the world’s coal — the Iron Law of Electricity also applies to Europe and Japan.

During the third quarter of 2021, coal’s share of Germany’s electricity mix increased by 5.5 percent over the same period in 2020. That increase was due, in part, to lower production from the country’s wind-energy sector.

France, which usually gets about 70 percent of its electricity from nuclear plants, is also considering burning more coal to replace some of the juice that it was getting from several reactors that have been shut down for repairs.

Meanwhile, Japan is planning to build some 21 coal-fired power plants with a total capacity of more than 12,000 megawatts over the next decade or so.

https://thehill.com/opinion/energy-environment/589538-as-coal-use-s...

APPENDIX 1

“All-in” Electricity Cost of Wind and Solar in New England

https://www.windtaskforce.org/profiles/blogs/high-costs-of-wind-sol...

http://www.windtaskforce.org/profiles/blogs/cost-shifting-is-the-na...

Pro RE folks point to the “price paid to owner” as the cost of wind and solar, purposely ignoring the other cost categories. The all-in cost of wind and solar, c/kWh, includes:

1) Above-market-price paid to Owners 

2) Subsidies paid to Owners

3) Owner return on invested capital at about 9%/y

4) Grid extension/augmentation

5) Grid support services

6) Future battery systems

Comments on table 1

- Vermont legacy Standard Offer solar systems had greater subsidies paid to owner, than newer systems

- Wind prices paid to owner did not have the drastic reductions as solar prices.

- Vermont utilities are paid about 3.5 c/kWh for various costs they incur regarding net-metered solar systems

- "Added to rate base" is the cost wind and solar are added to the utility rate base, used to set electric rates.

- “Total cost”, including subsidies to owner and grid support, is the cost at which wind/solar are added to the utility rate base

- “NE utility cost” is the annual average cost of purchased electricity, about 6 c/kWh, plus NE grid operator charges, about 1.6 c/kWh

for a total of 7.6 c/kWh.

- “Grid support costs” would increase with increased use of battery systems to counteract the variability and intermittency of increased build-outs of wind and solar systems.

NOTES:

1) NE wholesale grid price averaged about 5 c/kWh, starting in 2009, due to low-cost CCGT and nuclear plants providing at least 65% of all electricity loaded onto the NE grid, in 2019.

https://www.iso-ne.com/about/key-stats/resource-mix/

https://nepool.com/uploads/NPC_20200305_Composite4.pdf

2) There are Owning costs, and Operating and Maintenance costs, of the NE grid

ISO-NE charges these costs to utilities at about 1.6 c/kWh. The ISO-NE charges include: 

 
Regional network services, RNS, based on the utility peak demand occurring during a month

Forward capacity market, FCM, based on the utility peak demand occurring during a year.

Sample calculation; NE utility cost = 6, Purchased + 1.6, (RNS + FCM) = 7.6 c/kWh

Sample calculation; added to utility base = 17.4 + 3.5 = 20.9 c/kWh

Sample calculation; total cost = 17.4 + 5.2 + 2.1 + 3.5 + 1.6 = 29.8 c/kWh

Excludes costs for very expensive battery systems

Excludes costs for very expensive floating, offshore wind systems

Excludes cost for dealing with shortfalls during multi-day wind/solar lulls. See URL

https://www.windtaskforce.org/profiles/blogs/wind-and-solar-provide...

“Added to rate base” is for recent 20-y electricity supply contracts awarded by competitive bidding in NE.

“Added to rate base” would be much higher without subsidies and cost shifting.

Areas with better wind and solar conditions, and lower construction costs/MW have lower c/MWh, than NE

US regions with good wind and solar conditions, and low construction costs/kW, produce at low c/kWh.

NE has poor wind conditions, except on pristine ridge lines, and the poorest solar conditions in the US, except the rainy, Seattle area.

NE has highest on-shore construction costs/kW ($2,400/kW in 2020), produces at high c/kWh

See page 39 of URL

https://www.energy.gov/sites/default/files/2021-08/Land-Based%20Win...