Around the country, 2013 has seen coal-fired generation rebound but not in North Carolina. EIA data shows that North Carolina is one of just 9 states where coal-fired generation has fallen during 2013.
Coal's decline in North Carolina continues, because Duke Energy is closing 7 of 14 coal plants.
http://www.energycentral.com/generationstorage/fossilandbiomass/news/en/30529365/Duke-Energy-s-Riverbend-power-plant-to-come-down-in-2016?utm_source=2013_11_05&utm_medium=eNL&utm_content=%%merge%20ECMemberID_%%&utm_campaign=GENERATION.
Among the closed coal plants is a plant that opened in 1929 or 84 years ago. That's a reminder that most of the closing plants are at least 40 years old and are inefficient to operate.
Few people unfortunately clearly understand the dynamic and logic of electricity generation, and many incorrect analysis follow (I'm not saying it's the case above).
ReplyDeleteA major mistake is to ponder things just like if there was only one price of electricity. When in truth, they are many depending on what on consider :
- You intend to build a new plant : What is important is the LCOE price, it's what you need to check if you can have good hopes the money you'll gain will pay both the operation of the plant and give a decent return on the capital you're about to invest.
In this regards, gas plant are by very far the most competitive.
- You're selling power on the daily market : What is important is the marginal cost of your fuel (as well as indirect cost of ramping up and down the production). The LCOE doesn't matter *at all*. You will always produce as soon as the market price is lower than your fuel cost. This means that renewable will always want to produce, but also nuclear. But this also means that coal almost always wins against gas in this game, except when gas is at a extremely low price, about $3/mmbtu. This is what explains that in 2013 coal production ramped up after just a small increase in gas price.
- You're wondering if you'll keep operating your plant next year. Once again the LCOE cost is not the one you care about, but neither is the marginal cost alone the answer. You need to earn enough money to pay for the operation, and also likely needed repair, maintenance and upgrade. Here both nuclear and coal tend to have quite high costs, nuclear being worse than coal, and gas is winning comparatively.
So while having had a decent year in term of production level, the expected expenses can be high enough to push for the plant closure, especially if they are maintenance expenses that you have delayed for one year, but can't delay anymore.
Effectively the average market price should be this last cost, but it will temporarily go down to the marginal cost if they are overcapacities.
This is what explain how coal could have a good year in 2013, but still decide many closure in 2014. The fact we see so many coal plants closure means that likely for coal the average market price whilst being above their marginal price was below this third price, that I'd call the profitable operation price.