North American electricity producers have chosen to build up their gas-fired generation capacity over the past several years. Fortunately, at least for the short term, they still have access to a relatively large supply of domestic natural gas. Energy analysts, however, are expressing concerns about the potential for severe supply restrictions in the near future. Those concerns are contributing to increased prices and price volatility in the gas market. Most energy experts are now forecasting that $6 and $7 dollar gas is here to stay.
North America has vast domestic coal resources, which provide us with an opportunity to enjoy the same increases in efficiency and environmental benefits as have been experienced in Europe, where coal-fuelled CHP is employed. As many of North America’s current generation facilities are nearing the end of their designed life spans, plans to replace them are being readied. Additionally, the burgeoning demands for inexpensive and reliable electricity require that many additional generation facilities be constructed.1
Denmark provides strong support for district heating à‚— this high-efficiency, multi-fuel CHP plant is situated at Avedàƒ¸re photo: Lars Sundshàƒ¸j, DONG Energy A/S
Coal-fuelled CHP facilities can help mitigate the carbon emissions typically associated with conventional coal-fired generation, providing a transitional tactic until such time when carbon capture and storage (CCS) options have been more fully researched, demonstrated and deployed.
Global coal reserves
Coal has been used throughout the world for many generations because it is an abundant and inexpensive resource. For these reasons, coal will likely remain a primary energy source for many years to come. Globally, there is approximately 160 years worth of coal reserves remaining at current use rates. In comparison, optimistic studies suggest that there are approximately 60 and 40 years respectively of gas and oil reserves. When looked at solely from a North American perspective, the gap increases substantially. Coal, oil and gas reserves stand at approximately 230, 12 and 10 years respectively.2
Historically, coal has been a source of stable and inexpensive energy. Beginning with its early uses in Wales and China several thousand years ago, through to the contemporary use of over 6 billion short tons (~5.5 billion metric tonnes) each year, coal has been a constant and reliable source of energy for human society. Coal’s abundance and the development of increasingly efficient means of mining and transportation have ensured that its price has remained low relative to other energy sources. For example, the average delivered price of coal at utilities in the United States is US $1.61 (~ € 1.15) per MMBtu, whereas the price at Henry Hub, the pricing point for natural gas futures contractsà‚ traded on the New York Mercantile Exchange, for natural gas is US $8.60 (~ € 6.25) per MMBtu.3
While this coal price has remained essentially stable over the past few decades, the price for natural gas has varied from below US $2 (~ € 1.45) to over US $13 (~ € 9.45) per MMBtu in the same time period. Such variability in fuel prices can make it difficult to establish or maintain budgets.
The geopolitical instabilities associated with key natural gas producing areas also contribute to price volatility. In early 2006, world media outlets reported on the Russianà‚—Ukrainian dispute over natural gas prices and the brief cessation of Russian gas exports to the Ukraine. Many headlines referred to Russian actions as a new form of ‘gas weapon.’ Compounding this issue is the fact that over half of the world’s natural gas reserves are found in Russia, Qatar and Iran. The Iranian push to develop nuclear technologies makes security of gas supplies from the region less than certain.
Data from the US Energy Information Administration (EIA) shows that since the implementation of the Clean Air Act in 1970, US coal generation has nearly tripled. At the same time, the emission of criteria air pollutants from coal-fuelled electricity has been cut by one-third. Additional advancements in efficiency and emissions reductions will be achieved through the use of newer technologies, improved emissions reduction equipment and CHP.
Although fuel availability, geography and unique social, economic and political circumstances have been the primary drivers affecting Europe’s commitment to CHP, there are lessons learned that can be applied to North America. In particular, the successful experiences of Denmark and Germany provide useful insights into the economic and environmental benefits of deriving both heat and power from coal-fuelled CHP facilities.
Coal, biomass, CHP and Denmark
According to the European Energy Agency, Denmark has achieved one of the highest rates of market penetration for CHP electricity in the European Union. In 2004, combined heat and power represented a 50% share of Denmark’s gross electricity production with 46% of that coming from coal. This type of broad market penetration was encouraged by strong government policies, including tax incentives, subsidies and public support for district heating.
Denmark constructed its first CHP plant in Copenhagen as a means of supplying heat and electricity to a hospital in 1904. The 1920s and 1930s saw a rapid expansion of this technology. Before 1950, municipal incineration and electricity generating plants (fuelled by coal, coke, wood and peat) supplied Denmark’s district heating networks. Fuel consumption shifted to cheaper oil during the 1960s and by 1972 more than 90% of the energy demand was met by imported oil.4
With the 1973 oil crisis, Denmark adopted its first energy plan, which focused on energy security, energy savings and oil substitution. It also led to the establishment of a target to have CHP meet 25% of the country’s heat demand by 1995 and a shift to coal as the primary fuel. This resulted in the conversion of about 60 oil plants to burn coal, increasing the coal usage from 20% to 90%. With the discovery of oil and natural gas in the North Sea in 1979, and increased public concern about the environment, the Danish government issued directives to switch toward alternative energy sources such as biomass, natural gas and wind power.
Today, more than 70% of the country’s space heating supply comes from district heating systems. For example, the Metropolitan Copenhagen Heating Transmission Company purchases heat from refuse incineration plants and combined heat and power plants to supply 275,000 households over a network of 34 miles of pipes.5
One of the most modern CHP plants supplying this system is the two-unit Avedàƒ¸re Power Station à‚— with a coal and oil-fired unit (Unit 1) built in 1990 and a multi-fuel unit (Unit 2), constructed in 2001. About 12% of the electricity demand in eastern Denmark and heat production for 75,000 homes can be supplied by Unit 1. About 94 short tons (85 tonnes) of pulverized coal or approximately 55 short tons (50 tonnes) of oil are consumed per hour in a boiler outfitted with low NOx burners. There is also a desulphurization facility attached to the plant. As much as 91% thermal efficiency is achieved when the district heat production is at its highest. In periods of low heat demand, two 165 foot (50 metre) high heat accumulator tanks store heating water to provide greater flexibility.
Avedore Unit 2 uses several types of fuel, including natural gas, oil and bio-fuels (straw and wood pellets). It is one of the world’s most efficient CHP facilities utilizing up to 94% of the energy in the fuel. The two gas turbines, 55 MW each, operate as peak load facilities when electricity and heat demand are high. The biofuel is considered to be CO2 neutral and this, along with other measures has helped achieve an overall reduction in Denmark’s greenhouse gas emissions.6
Another example of a Danish coal-fuelled CHP is the Studstrup Power Plant. A CHP facility has been operating on the site since 1968. The current, two unit supercritical plant (converted in 1984) has a capacity of 700 MW and supplies heat to approximately 280,000 people in the surrounding area.à‚ Unit 1 was modified in 1995 to co-fire straw. Environmental impacts have been mitigated by a highly efficient flue gas cleaning plant and the recycling of the by-products and slag. Similar to Avedàƒ¸re, a large pressurized heat storage tank has been constructed at the plant to optimize the production of electricity and heat in response to changing consumer demands.7
History influences Germany’s use of CHP
Germany has also made great strides with coal-fuelled CHP facilities. Over half of Germany’s electricity comes from coal-fuelled generating stations. According to the European Energy Agency, Germany currently has the highest absolute production of CHP electricity à‚— 21% in 2004 à‚— among the EU-15. This has been helped in part by the introduction of a law in 2002 that makes it a statutory duty to provide CHP plants access to the grid and to purchase their electricity.
History has played an important role in the development of CHP in Germany. Following the division of Berlin in 1949, and the building of the Wall in 1961, West Berlin was disconnected from the national grid and forced to become energy self-sufficient. As a result, incentives were introduced to encourage CHP development and district heating. Today eleven CHP plants, one power station, one block-type thermal power station and seven heating stations are operated byà‚ Bewag to supply electricity and heat to Berlin’s 3.5 million inhabitants.8
The largest CHP located in Berlin is Bewag’s 600 MW Reuter West coal-fuelled station, built in 1989. Reuter West was built with low NOx burners, electrostatic precipitators and desulphurization equipment on the site of an earlier station that opened in 1949. It has since been retrofitted with state-of-the-art process controls to improve combustion efficiencies.
Another example of a large coal-fuelled CHP is the Janschwalde Power Plant, owned by Vattenfall Europe. This 3000 MW power plant was connected to the grid in 1981 and is located in what was formerly known as the ‘black triangle’ in East Germany. Operating at full load, it consumes approximately 88,200 short tons (80,000 tonnes) of lignite coal per day from a nearby opencast mine. Heat produced during the electricity generation process is used on site and piped to the neigbouring towns of Cottbus and Peitz, significantly increasing the efficiency of fuel use.
Following deregulation of Germany’s power market in 1998, Vattenfall Europe acquired power generation assets in the former East Germany. In response to increasingly stringent environmental regulations, the company commenced an investment programme to modernize these plants through upgrades and by replacing older plants with modern state-of-the-art facilities. At Janschwalde Power Station, low NOx burners were installed in all 12 boilers, electrostatic precipitators and turbines were upgraded and a flue gas desulphurization plant was constructed. These improvements ensured the upgraded plant met new environmental regulations as well as achieving required CO2 reductions. This plant also co-fires municipal waste which makes up about 3% of its fuel mix.
CHP in North America
The Department of Energy (DOE), the Environmental Protection Agency (EPA), and the United States Combined [now ‘Clean’] Heat and Power Association (USCHPA) collaborated in 2001 to produce a ‘National CHP Roadmap’ and a commitment to expand total installed CHP from 46 GW in 1998 to 92 GW in 2010. In a February 2007 letter to Secretary of Energy Samuel Bodman, the USCHPA noted that total CHP installations had grown to 83 GW by 2005. They lauded the increase, but then indicated some concern over recent cuts in funding for research and development and the perception that the DOE was losing interest in the programme.
Large-scale, coal-fuelled CHP projects (as seen in the European examples above) appear few and far between in North America. A jointly managed online database of CHP installations à‚— overseen by the DOE and Oak Ridge National Laboratory (ORNL) à‚— indicates that the majority of US CHP projects rely on smaller, on-site, distributed generation setups. Most of these are powered by small gas turbines, fuel cells, and waste- or biomass-fired boilers.9 According to this database, however, there are 230 coal-fuelled CHP installations, averaging 52 MW in size, and totaling almost 12 GW of capacity. Working from this data, coal-based CHP in the US would make up just under 7% of CHP installations.
With the increased interest and commitment to improved energy efficiency and reducing environmental impacts, it is a little surprising that more CHP developments have not been proposed. However, the lack of CHP installations may not be completely out of the norm. Looking at the resistance of some non-governmental organizations (NGOs) to any and all coal-fuelled generation, as well as the clear statements of elected officials that they will work to stop any new coal-based developments that do not have complete carbon capture and sequestration (CCS), there will be a great deal of work ahead of industry, government, and academia to get accurate information out to the broader public.
The expectation that complete CCS will be required prior to the approval of new coal-fuelled plants will ensure that energy costs continue to grow and that the US continues to rely on imported energy, rather than domestic energy sources. Using CHP as a means to improve overall thermal efficiencies on new or updated utility projects and to reduce emissions associated with other district heating needs could act as an excellent transition strategy to the time when CCS technologies have more fully matured.
In spite of being blessed with an abundance of energy resources, North America has not always used its resources efficiently. By expanding coal use over the past several decades and still reducing the emissions of criteria pollutants, we have, however, demonstrated clearly that it is possible to use coal in an increasingly clean manner.
European countries by comparison have had to build energy systems to maximize every joule of energy possible from the fuel available to them. In particular, this approach has been applied to the use of coal for CHP. As a result, both Denmark and Germany attribute some of the significant improvements made in energy efficiency and reductions in pollutants and greenhouse gas emissions to their investments made in coal-fuelled CHP. As long as there is continued commitment to advancing coal-based CHP technologies, they will continue to ensure abundant, affordable and clean energy for their citizens.
Today, North America is relying largely on natural gas for new CHP projects. However, the security and costs of gas supplies are growing less and less sure. Moving forward, three key factors present North America’s coal industry with a golden opportunity to learn from European successes with using coal for CHP and to fill the gaps left as utilities move away from gas. They are: the growing global demand for diminishing natural gas supplies; more stringent environmental regulations demanding improved energy efficiency; and growing concern from the general public about global warming and climate change.
Coal’s relative abundance and the security our vast reserves provide ensure that coal will continue to play a key role in meeting North American energy needs well into the future. Therefore, it makes sense to ensure that coal is used in as efficient and clean a manner as is possible.
Impending regulations, efficiency measures and climate change mitigation strategies will continue to encourage our movement toward the implementation of carbon capture and storage (CCS) in the near future. However, until CCS technologies have matured and found their place in the larger energy market, new construction of generation capacity will need to address the release of carbon into the atmosphere. CHP options in Europe have already demonstrated that coal combustion can be extremely clean and efficient. North American utilities can and should use this knowledge and experience as an effective transition strategy from traditional sub-critical PC plants to ultra super critical plants, gasification and CCS.
Jason Hayes is Communications Director for the American Coal Council, Washington, DC, US.
Paul Newall is owner and operator of Newall Consulting.
1 EIAs ‘International Energy Outlook 2007’ predicts that world electricity demand will increase by 57% from 2004 to 2030.
2 Sources: BP Statistical Review of World Energy, World Coal Institute, EIA International Energy Outlook 2007
3 EIA Annual Energy Outlook, Reference Case prices for 2005
4 Combined Heat and Power Generation and District Heating in Denmark: History, Goals, and Technology, by Henry Manczyk, CPE, CEM, Director of Facilities Management, Monroe County, NY and Michael D. Leach, Senior Administrative Analyst, City of Rochester, NY
5 The Main District Heating Network in Copenhagen, Metropolitan Copenhagen Heating Transmission Company, 2004
8 Bewag, www.fuelcellpark.com/exhibit/haupt1.html
9 https://eea-inc.com/chpdata/ à‚— This database has information to 2005