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Cost of Coal Power Plants

Written by Dr. Madeleine Roberts
Published on January 12, 2024
Research Highlights

MO uses coal for 66% of net energy generation.

Economics, environmental regulation and policy, and grid reliability factor into decisions to retire aging coal power plants.

The U.S. relies less on coal today for electricity.

Electricity is produced from two types of fuel sources.

  • Dispatchable energy sources produce power at any time due to a constant supply of fuel, including coal and natural gas.
  • Non-dispatchable sources include solar and wind. Pairing with a storage technology is required to make this energy dispatchable.

Coal provided 66% of MO 2022 net energy generation, fourth-highest in the U.S. (EIA 2023).

  • Coal power is declining due to increased operational and maintenance costs for aging plants and as costs of other technologies, mainly natural gas, have fallen (EAC 2023).

Regulation on emissions of coal power plants causes utility companies to continually reassess their plants. Proposed EPA regulation (111(d) of the Clean Air Act) would set deadlines for retirement or addition of carbon capture to coal plants. 7 MO coal power plants could be affected by these potential regulations.

Securitization, a type of loan refinancing, makes power plant retirement less costly to ratepayers. Read more on MO securitization policy in our Science Note, "Missouri Electricity Bill Reduction Assistance Act”.

The Inflation Reduction Act (2022) extends the Investment Tax Credit (ITC) and Production Tax Credit (PTC) to apply to renewable energy project costs, including wind, solar, and storage technologies.

  • Projects located in an “energy community”, that includes communities with retired coal mines or coal-generating facilities, are eligible for additional bonuses.

 

Utility providers have calculated the future costs of current and new energy facilities.

The “going forward cost” and the levelized cost of electricity (LCOE) are used to compare the costs of continuing to operate a coal power plant and other sources of electricity.

  • “Going forward cost” describes future fuel cost, operations and maintenance costs, and going-forward routine capital expenditure costs, not including the initial capital investment or additional technology that could be added to the facility.
  • LCOE includes lifetime costs of building, operating, and maintaining a new facility divided by its lifetime energy production. Fossil fuel facilities include the fuel cost; wind and solar have $0 fuel costs.

Ameren coal power plants, wind, and solar facilities are used as examples of the expected costs of operating and maintaining energy facilities in MO (Table 1, Ameren IRP Ch 4 and 6, 2023). Ameren also provides LCOEs for building, operating, and maintaining new facilities. These costs are reflective of other sources (Soloman 2023, NREL 2023, NETL 2022).

Table 1. The costs of operating and maintaining existing MO energy facilities (“Going Forward Costs”) and the predicted cost of building, operating, and maintaining new facilities (LCOE). New solar and wind facilities are listed with and without ITC/PTC tax credits.  Data from the 2023 Ameren Integrated Resource Plan (IRP).

Every coal plant in the country costs more to operate than either new wind or solar, except for one advanced coal power plant in Wyoming, Dry Fork Station (Soloman 2023).

Economics, environmental regulations and policy, and overall grid reliability are factors in decisions to retire coal power plants (Ameren IRP 2023).

  • Most MO coal plants have been in operation since the 1960-70s. In 10-15 years, Ameren projects that their facilities will be unsafe to operate (Personal communication, Ameren).
  • Using diverse fuel sources is considered to be the safest, most risk averse option by the energy industry (Personal communication, Ameren).

 

MO coal plants must adopt emission control technology to comply with federal regulations.

Emission control technologies can be added to coal power plants, called retrofitting. Common pollutants, control technology, and cost estimates for adding to a coal power plant are (Personal communication, Ameren):

Cost estimate for post-combustion CC installation on an existing power plant does not include the costs of transport and permanent storage of the carbon product (Personal communication, Ameren; DOE 2023, CRS 2022).

  • The capture of the CO2 is energy intensive, reducing a coal power plant’s overall energy capacity by as much as 20% (NETL 2023).
  • Pre-combustion CC is used in an integrated gasification combined cycle power plant (LCOE of $111.5-182.30/MWh) (NETL 2023).

LCOE to retrofit Labadie Energy Center with SCR, scrubber, and CC is $130/MWh, including the initial capital investment but not including operations and maintenance or transportation and storage of the carbon product (Personal communication, Ameren; NETL 2023).

 

References

Electricity Advisory Committee (2023) Urgent Needs to Reliably Facilitate the Energy Transition Recommendations for the Department of Energy. Department of Energy. https://www.energy.gov/sites/default/files/2023-10/EAC%20Recommendations%20-%20Urgent%20Needs%20to%20Reliably%20Facilitate%20the%20Energy%20Transition%20October%202023_0.pdf

Ameren (2023) Integrated Resource Plan. https://www.ameren.com/missouri/company/environment-and-sustainability/integrated-resource-plan

Congressional Research Service (2022) Carbon Capture and Sequestration (CCS) in the United States. Library of Congress. https://crsreports.congress.gov/product/pdf/R/R44902

Energy Information Administration (2023) Missouri State Energy Profile Missouri Quick Facts. Department of Energy. https://www.eia.gov/state/analysis.php?sid=MO

Department of Energy (2023) Pathways to Commercial Liftoff: Carbon Management. https://liftoff.energy.gov/wp-content/uploads/2023/06/20230424-Liftoff-Carbon-Management-vPUB_update3.pdf

National Energy Technology Laboratory (2022) Cost and Performance Baseline for Fossil Fuel Energy Plants. Department of Energy. https://netl.doe.gov/energy-analysis/search?search=BaselineStudiesVol1

National Energy Technology Laboratory (2023) Eliminating the Derate of Carbon Capture Retrofits- Revision 2E. Department of Energy. https://www.osti.gov/biblio/1968037

National Renewable Energy Laboratory (2023) 2023 Electricity ATB Technologies and Data Overview. Department of Energy. https://atb.nrel.gov/electricity/2023/index

Soloman M, Gimon E, O’Boyle M, Paliwal U, Phadke A (2023) Coal Cost Crossover 3.0: Local Renewables Plus Storage Create New Opportunities for Customer Savings and Community Reinvestment. Energy Innovations. https://energyinnovation.org/publication/the-coal-cost-crossover-3-0/

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