New papers examine coal, wood pellet cofiring at US power plants

By Anna Simet | September 29, 2017

Two recently published papers explore cofiring wood pellets with coal at U.S. power plants.

If the U.S. wants to begin replacing coal with wood pellets at power plants, the government must provide incentives similar to the ones that solar and wind currently receive, according to University of Georgia researchers.

University of Georgia’s Bin Mei and co-author Michael Wetzstein of Perdue University recently published a paper that examines costs associated with cofiring wood pellets and coal, incorporating fluctuating prices of each and conversion costs.

The authors point out the significant capital investments required to build typical coal-fired power plants, which are designed to operate 20 to 50 years, and in most cases, aren’t economical to abandon and replace with cleaner technology prior to the end of their useful lives.

According to the researcher’s findings, drawn from looking at optimal timing scenarios for burning coal and coal/wood pellet mixtures at a Georgia power plant, cofiring “isn’t commercially viable option in most cases.” While lower-level (less than 15 percent wood pellets) cofiring could have been feasible from 2009–‘11, when wood pellet prices were lower, the researchers concluded that a subsidy of $1.40 per MMBtu to the 10 percent mixed fuel or a tax of $1.50/MMbtu on coal would prompt conversions of coal-only power plants to cofiring, and a subsidy of $0.45 per MMBtu to the 10 percent mixed fuel or a tax of $0.50 per MMBtu on coal would maintain existing cofiring power plants in the status quo.

Given an average cost of $0.12 per kilowatt-hour, or $35 per MMBtu in the U.S., the cofiring subsidy or coal tax represents about 4 percent of the electricity rate, according to the researchers. Alternatively, a minimum subsidy of 45 cents per MMBtu for cofiring, or a minimum tax of 50 cents per MMBtu on coal-only, could maintain existing cofiring power plants in the status quo, which represents about 1.3 percent of the electricity rate.

Another recent paper on the topic, by FutureMetrics Inc., initially investigates strong correlation between the CO2 being released from fossil fuel combustion and the rapid warming of the atmosphere and oceans, and outlines a strategy to substitute sustainably produced biomass-derived solid fuel for coal.

The FutureMetrics paper acknowledges that the fuel cost her megawatt-hour is higher for pellets versus coal—between about $30 and $70 per MWh (3 to 7 cents per KWh), but points out that the simple cost of coal generation does not include the external costs associated with the carbon emissions that are causing the rapid changes to the earth’s integrated systems. “The cost of CO2 emissions is not a cost that is made visible and realized by the emitter without policy and regulation,” the authors state. “If society considers the cost of carbon emissions and the resultant impacts to current and future generations, then policy should be crafted that influences the transition to a much less carbon intensive power sector.”

Such a policy could include putting a price on carbon, FutureMetrics suggests—at $50 per metric ton, a carbon tax removes about half of the gap in cost between coal and pellets. “Internalizing the costs of the current and future impacts of adding net new  carbon to the  atmosphere means higher cost baseload generation  versus business-as-usual…with a gradual glide path from 100 percent coal to 100 percent pellets over a decade or more at selected critical baseload power plants, markets can adjust. Well-crafted policy can support the internalization of carbon emissions costs while minimizing the impact of those costs on economic well-being.”

The paper also notes that coal power plants can cofire wood pellets with relatively minor modifications, and do not need to use most or all wood pellets, such as the U.K.’s Drax Power Station, a widely looked at example in cofiring discussions. “Cofiring at low ratios and ramping up the ratio over time allows a gradual transition,” it states, adding that, under assumptions laid out in the paper, cofiring lowers the gap between the fuel cost per MWh generated between pellets and coal—at a 10 percent cofiring rate, the increased cost of generation is less and one penny per kWh.