President Trump has promised to help the U.S. coal industry make a big comeback. To do that, his administration is looking to go small.
The Department of Energy specifically plans to establish competitive funding opportunities for small and modular coal-fired power plants, according to a top agency official.
“If we’re successful with these small modular coal plants…that could be a paradigm shift,” Steve Winberg, assistant secretary for fossil energy at the DOE, told Axios this week at an energy conference in Houston.
The number of operating coal plants in the U.S. has been on a steady decline over the past several years. Most coal plants in operation today are large and incapable of powering up and down in response to changes on the power grid. Winberg said smaller coal plants would fit better into an evolving electricity system with increasing amounts of intermittent wind and solar power.
The DOE's funding opportunity for this technology would be “competitive and require a cost share,” Axios reports. The agency plans to issue a request for proposal on initial designs, officials said, but didn't give a timeline. President Trump's 2019 DOE budget request calls for a 50 percent increase in funding for high-efficiency coal plants and small modular units.
The problem is, small modular coal plants are largely unheard of, and they may never make economic sense, according to analysts.
Economies of scale
“The larger the coal facility, the larger the heat rate and the efficiency, the better the emissions profile, and the cheaper it is to operate across the board," said Alex Gilbert, co-founder of the energy research firm SparkLibrary.
Larger plants have better pricing power to bring in large shipments of coal, as well as lower maintenance costs per unit of energy, he said. "Also, your pollution control costs are going to be much lower with a larger unit, because you have economies of scale with pollution control technologies."
Small coal plants do exist in the U.S. Out of 844 operating coal units in 2016, 184 had capacities of less than 50 megawatts, according to the Energy Information Administration. However, the combined capacity of these smaller units represents just 1 percent of the U.S. coal fleet. The majority of these units -- and almost all of those under 20 megawatts -- are combined-heat-and-power projects. These smaller plants are also, on average, about six years older than the rest of the fleet.
The average size of a coal generator in the U.S. today is around 350 megawatts and range up to 1,435 megawatts, according to EIA data. U.S. coal-fired power plants typically have multiple generators, putting the average plant size around 760 megawatts.
The U.S. and other countries transitioned to bigger coal plant designs in previous decades because of the improved economies of scale, said Gilbert. Developing nations have tended to build smaller coal plants for financial reasons, but even that's starting to change. China in particular is replacing its smaller coal units with larger, more efficient ones, which is actually a local air pollution success story, he said.
Small doesn't mean nimble
Furthermore, small doesn't necessarily mean more flexible.
"Just because you build a smaller coal asset, it is not clear to me that it would be a more nimble as assistant secretary for fossil energy Steve Winberg seems to be implying," said Joshua Rhodes, a postdoctoral research associate at the University of Texas at Austin Energy Institute. "I am not seeing the advantage of this over smaller natural-gas turbines or natural gas reciprocating engines, which require much less balance-of-system infrastructure."
Wade Schauer, research director for Wood Mackenzie's Americas power and renewables group, came to the same conclusion.
"In theory, smaller coal plants are more flexible than massive baseload plants, but they're nothing close to quick-start gas turbines, internal combustion reciprocating engines, or batteries," he said.
It's also hard to see how small high-temperature and high-efficiency coal plants could be cheaper than large ones, Schauer added.
Modular construction may add complexity
Then there's the question of what a "modular" coal plant would look like.
That term typically refers to small modular reactors (SMRs) for nuclear power, where the reactor is built in a factory and shipped to the construction site. This approach significantly reduces complexity. "It also makes it so that you can have a standardized factory producing the reactors," said Gilbert. "Standardized reactor design is one of the big issues with the existing nuclear fleet.”
"But with a coal plant, it’s unclear what the modular part of the plant would be," he said. "What is the part being built off-site and then transferred on-site? [...] The elements of a coal plant don’t have the same complexity as a reactor, and so it’s not going to make as much sense to standardize [coal plant] production in a factory."
Taking a modular approach could actually be a more difficult way to build a coal unit, according to Matt Preston, research director for Wood Mackenzie's North America thermal coal markets. "Coal is not homogeneous, so a plant that burns one type of coal may not be efficient burning another type of coal, complicating modular construction," he said.
A potential benefit to building small and modular designs is the ability to build more quickly, said Gilbert. But even if this technology pathway is realized, deployment speed is highly unlikely to change the outlook for the coal industry.
Trying to build coal during an energy transition
If the DOE succeeds in helping small, modular and efficient coal technology come to market, it would be a very niche market compared to the overall coal industry, said Gilbert. Most utilities would have no interest in deploying this kind of technology because of cost issues, and even if it wasn't cost-prohibitive, it would be a public relations headache.
"Trying to build a small coal unit while you have the rest of the energy transition going on would be very difficult," he said. It would also be a prime target for environmental groups.
"The Sierra Club's Beyond Coal campaign has been very successful at killing coal early on, precisely because before the plant is built is when you have the most leverage," said Gilbert.
The DOE budget request for 2019 calls for developing three technologies by fiscal year 2022 that "improve the average heat rate (i.e., efficiency) of a typical plant in the existing fleet by 5 percent from the 2017 baseline of 30 percent." By the same year, the agency seeks to "complete at least two designs of advanced high-efficiency (greater than or equal to 42 percent on a higher heating value basis), low-emission, coal-fired, small-scale and/or modular units that have flexible operating capacity to meet baseload and load-following requirements needed for the evolving grid."
The proposal boosts funding for these technologies, which have been pitched as part of the Trump administration's efforts to push "clean coal." Meanwhile, the DOE budget would cut funding for carbon capture, utilization and storage -- the technology typically thought of when referring to "clean coal" -- by 80 percent.
In light of this shift, the call for small modular coal plants might actually be political cover, said Gilbert. It's like they're "introducing this new idea that might reinvigorate the coal industry, when in reality [they're] actually going to be pulling funding from the thing that could save the coal industry.”
According to Wood Mackenzie's Preston, there are new ideas such as chemical looping, or perhaps combinations of technologies that could meet the DOE's coal efficiency targets. "After all, it is one of the DOE's functions to spur development of new technologies," he said.
But this work really should have been started 20 years ago, he noted.
"Environmental rules that unintentionally discouraged new technology, coupled with deregulated power markets, short-circuited investments in research to improve coal plant efficiency and design in the U.S.," said Preston. "Now, with cheap gas and renewables, as well as negative public opinion, it is difficult to see how a coal-related process can be competitive, even if technically feasible."
This story was updated to clarify EIA data on the size of coal plant generators versus power plants.
