November 23, 2020

Building a new coal-fired power plant? Consol proposes ambitious test to counter coal's dim outlook

Building a new coal-fired power plant? Consol proposes ambitious test to counter coal's dim outlook

It has been seven years since the last major new coal-fired power plant started making electricity in the United States.

The U.S. Energy Information Administration, in its most recent annual outlook, forecast that zero new coal plants will be built in the country through 2050.

But Consol Energy Inc., whose underground coal mining complex in Greene and Washington counties is the largest in North America, is working to design a power plant and have it operating by 2027.

Not just any coal-fired power plant. One that can run on wet waste coal from Consol’s mining operation, capture its climate-warming emissions and spur the development of a deep underground carbon dioxide storage hub in southwestern Pennsylvania.

The Cecil-based company said it could begin construction by 2024.

“We’re not inclined to stand still in light of the trends that you are seeing,” said Daniel Connell, Consol’s senior vice president of strategy. “We’re inclined to get out in front of it and innovate and transform. We know that we need to do that in an overall sustainable way.”

The proposed plant is far from certain, but the ambitious — some say unrealistic — vision is laid out in detail in early design studies that Consol has performed with federal grants meant to boost the outlook for coal.

The company’s project is one of four that will split an estimated $80 million in federal funding, the U.S. Department of Energy announced in late October, to advance the design to a stage where an investment decision is possible.

Consol’s idea is to build a 300-megawatt plant in the vicinity of the Pennsylvania Mining Complex using a modular, high-efficiency, low-air pollution technology called pressurized fluidized bed combustion.

A benefit of the technology is its ability to run on a range of fuels — including the 3 million tons of fine wet waste coal that Consol sends to disposal ponds each year after it washes and processes its mined coal at its central preparation plant in Greene County.

For the company, using coal waste means turning an environmental liability into free fuel.

The proposed plant could also run at least partially on wet biomass — chopped up grasses and young trees — so Consol is anticipating a large-scale agricultural operation on land it owns or neighboring farms. Because vegetation pulls carbon dioxide from the atmosphere as it grows, burning it for electricity in a facility that captures its carbon emissions means the full planting-to-power-generation cycle could take in more greenhouse gases than it puts out.

Consol intends to outfit the plant with a system to remove about 97% of the carbon dioxide from the exhaust that goes up the smoke stack, compress it and pipe it to wells that would inject the gas into deep underground rock layers for permanent storage.

No such transportation and storage network exists in the region — or any nearby state — at the moment.

But Consol says in the project studies that “several parties are interested in exploring options for establishment of a ‘regional sequestration hub’ ” in southwestern Pennsylvania, including an undisclosed “major company” that could accept CO2 from the region’s concentration of industrial facilities with Consol’s power plant potentially serving as the anchor tenant.

Mr. Connell said Consol’s geological research as part of its design study will provide a broader public benefit by helping to define the possibilities for underground carbon storage in the region.

Those environmental attributes — carbon capture and storage, biomass fuel, beneficial reuse of waste — would put Consol in a position to qualify for substantial state and federal subsidies that would be necessary if the pilot plant is to make any financial sense.

A federal carbon storage tax credit, known as 45Q for its section in the tax code, is worth $50 per ton of CO2 sequestered underground if the plant can begin construction prior to Jan. 1, 2024.

Consol expects the plant to capture — and need to store — 2.4 million tons of CO2 per year.

Consol could also be a major buyer of the on-site electricity that the plant generates. The mining complex has an energy demand worth about half of the plant’s proposed output, and the rest would be fed into the regional grid.

Still, the company acknowledges, “Capital costs are expected to present the greatest commercial hurdle.” The plant’s “overnight” price tag is estimated at $2 billion.

There is another reason Consol is in a hurry: The majority of its current coal output goes to feed domestic power plants, and the fleet of U.S. coal-fired power plants is retiring.

In Pennsylvania, for example, six power plants still burn conventional coal — down from 23 in 2004, according to the state Public Utility Commission. The youngest of the plants is 48 years old. Two of the six have already committed to switching to cheaper, cleaner natural gas, and the others are expected to retire by the end of the decade.

As the world moves to zero out greenhouse gas emissions by midcentury in an attempt to avert the most catastrophic effects of climate change, Consol has a strong incentive to come up with ideas to preserve a role for its product.

A new generation of coal-fired power plants “must have a relatively fast timeline to commercialization,” the company said, “so that new plants can be brought online in time to enable a smooth transition from the existing coal fleet without compromising the sustainability of the coal supply chain.”

‘Foot in the door’

Edward Rubin, an engineering professor at Carnegie Mellon University and a prominent expert on carbon capture and storage, called Consol’s proposal “a foot in the door” for future coal development.

The Department of Energy funds a wide array of research and development so the future electricity system has plenty of fuel and technology options to ensure it is both cost-effective and resilient.

“We’re basically building an insurance policy, a portfolio of things that may or may not be useful in the future — though they try to choose things that look most promising,” Mr. Rubin said.

Consol’s proposal “certainly looks as interesting and credible as lots of other things that have been done in the past,” he said.

Still, a defining feasibility factor for any carbon capture project is cost, and unless government policy establishes a price on carbon emissions, it will be hard for the technology to take root.

“There is no market for any carbon capture technology without a policy driver to reduce carbon emissions,” Mr. Rubin said. “No matter how cheap you can make a carbon capture system, it will always be more expensive than not having to use one at all.”

Rob Altenburg, director of the statewide environmental nonprofit PennFuture’s Energy Center, was more skeptical about Consol’s proposal.

“My bet is this plant never gets built, not without serious government subsidies,” he said. “Investors are not going to line up behind this deal.”

The capital costs are exorbitant compared to competing energy sources, Mr. Altenburg said, and other financial projections are unrealistically optimistic.

For example, Consol expects that once it is up and running, the plant will operate at full capacity 85% of the time. But existing coal plants with proven technology have historically only run about 65% of the time.

Even assuming that one demo plant could be built in a Goldilocks spot where all of the pieces fall into place, he doubted the technology could be scalable.

“The thing is, there just isn’t any need,” Mr. Altenburg said. “In a lot of places in the nation, it is cheaper to build new solar than run existing gas, and gas is already cheaper than coal.”

The next step

Consol’s next step is to develop a detailed front-end engineering and design study. The recently announced federal funding will cover about 80% of the cost, Consol CEO Jimmy Brock said during the company’s most recent call with investors.

The study will take 2½ years and focus on both honing the design of the power plant and better characterizing the geological opportunities for storing carbon nearby, said Mr. Connell, the senior vice president.

Part of the process will include selecting a site for the plant and preparing the volumes of environmental information that will be necessary for permits.

At the end of the 30 months, the company hopes to have enough definition of the project and its economics to decide whether it is worth an investment.

Laura Legere: