Chapter 9: Coal (PDF)
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9. Coal The next three chapters cover the representation and underlying assumptions for fuels in EPA Base Case v.5.13. The current chapter focuses on coal, chapter 10 on natural gas, and chapter 11 on other fuels (fuel oil, biomass, nuclear fuel, and waste fuels) represented in the base case. This chapter presents four main topics. The first is a description of how the coal market is represented in EPA Base Case v.5.13. This includes a discussion of coal supply and demand regions, coal quality characteristics, and the assignment of coals to power plants. The next topic is the coal supply curves which were developed for EPA Base Case v.5.13 and the bottom-up, mine-based approach used to develop curves that would depict the coal choices and associated prices that power plants will face over the modeling time horizon. Included are discussions of the methods and data used to quantify the economically recoverable coal reserves, characterize their cost, and build the 67 coal supply curves that are implemented in EPA Base Case v.5.13. Illustrative examples are included of the step-by-step approach employed in developing the supply curves. The third topic is coal transportation. It includes a description of the transport network, the methodology used to assign costs to the links in the network, and a discussion of the geographic, infrastructure, and regulatory considerations that come into play in developing specific rail, barge and truck transport rates. The last topic covered in this chapter is coal exports, imports, and non-electric sector demand. The assumptions for the coal supply curves and coal transportation were finalized in June 2013, and were developed through a collaborative process with EPA supported by the following team of coal experts (with key areas of responsibility noted in parenthesis): TetraTech (coal transportation and team coordination), Wood Mackenzie (coal supply curve development), Hellerworx (coal transportation and third party review), and ICF (representation in IPM). The coal supply curves and transportation matrix implemented in EPA Base Case v.5.13 are included in tables and attachments at the end of this chapter. 9.1 Coal Market Representation in EPA Base Case v.5.13 Coal supply, coal demand, coal quality, and the assignment of specific types of coals to individual coal fired generating units are the four key components of the endogenous coal market modeling framework in EPA Base Case v.5.13. The modeling representation attempts to realistically reflect the actual options available to each existing coal fired power plant while aggregating data sufficiently to keep the model size and solution time within acceptable bounds. Each coal-fired power plant modeled is reflected as its own coal demand region. The demand regions are defined to reflect the coal transportation options (rail, barge, truck, conveyer belt) that are available to the plant. These demand regions are interconnected by a transportation network to at least one of the 36 geographically dispersed coal supply regions. The model’s supply-demand region links reflect actual on- the-ground transportation configurations. Every coal supply region can produce and each coal demand region can demand at least one grade of coal. Based on historical and engineering data (as described in Section 9.1.5 below), each coal fired unit is also assigned several coal grades which it may use if that coal type is available within its demand region. In EPA Base Case v.5.13 the endogenous demand for coal is generated by coal fired power plants interacting with a set of exogenous supply curves (see Table 9-24 for coal supply curve data) for each coal grade in each supply region. The curves show the supply of coal (by coal supply region and coal grade) that is available to meet the demand at a given price. The supply of and demand for each grade of coal is linked to and affected by the supply of and demand for every other coal grade across supply and demand regions. The transportation network or matrix (see Excerpt from Table 9-23 for coal transportation matrix data) also factors into the final determination of delivered coal prices, given coal demand and supply. IPM derives the equilibrium coal consumption and 9-1 prices that result when the entire electric system is operating, emission, and other requirements are met and total electric system costs over the modeling time horizon are minimized. 9.1.1 Coal Supply Regions There are 36 coal supply regions in EPA Base Case v.5.13, each representing geographic aggregations of coal-mining areas that supply one or more coal grades. Coal supply regions may differ from one another in the types and quality of coal they can supply. Table 9-1 lists the coal supply regions included in EPA Base Case v.5.13. Figure 9-1 provides a map showing the location of both the coal supply regions listed in Table 9-1 and the broader supply basins commonly used when referring to U.S. coal reserves. Table 9-1 Coal Supply Regions in EPA Base Case Region State Supply Region Central Appalachia Kentucky, East KE Central Appalachia Tennessee TN Central Appalachia Virginia VA Central Appalachia West Virginia, South WS Dakota Lignite Montana, East ME Dakota Lignite North Dakota ND East Interior Illinois IL East Interior Indiana IN East Interior Kentucky, West KW Gulf Lignite Mississippi MS Gulf Lignite Louisiana LA Gulf Lignite Texas TX Northern Appalachia Maryland MD Northern Appalachia Ohio OH Northern Appalachia Pennsylvania, Central PC Northern Appalachia Pennsylvania, West PW Northern Appalachia West Virginia, North WN Rocky Mountains Colorado, Green River CG Rocky Mountains Colorado, Raton CR Rocky Mountains Colorado, Uinta CU Rocky Mountains Utah UT Southern Appalachia Alabama AL Southwest Arizona AZ Southwest New Mexico, San Juan NS West Interior Arkansas, North AN West Interior Kansas KS West Interior Missouri MO West Interior Oklahoma OK Western Montana Montana, Bull Mountains MT Western Montana Montana, Powder River MP Western Wyoming Wyoming, Green River WG Wyoming Northern PRB Wyoming, Powder River Basin WH Wyoming Southern PRB Wyoming, Powder River Basin WL Alberta Alberta, Canada AB British Columbia British Columbia, Canada BC Saskatchewan Saskatchewan, Canada SK 9-2 Figure 9-1 Map of the Coal Supply Regions in EPA Base Case v.5.13 9.1.2 Coal Demand Regions Coal demand regions are designed to reflect coal transportation options available to power plants. Each existing coal plant is reflected as its own individual demand region. The transportation infrastructure (i.e., rail, barge, or truck/conveyor belt), proximity to mine (i.e., mine mouth or not mine mouth), and transportation competitiveness levels (i.e., non-competitive, low-cost competitive, or high-cost competitive) are developed specific to each coal plant (demand region). When IPM is run, it determines the amount and type of new generation capacity to add within each of IPM’s 64 US model regions. These model regions reflect the administrative, operational, and transmission geographic structure of the electricity grid. Since these new plants could be located at various locations within the region, a generic transportation cost for different coal types is developed for these new plants and the methodology for deriving that cost is described in the transportation section of this chapter. See Table 9-2 for the list of coal plant demand regions reflected in the transportation matrix. 9-3 Table 9-2 Coal Demand Regions in EPA Base Case Plant ORIS Coal Demand IPM Model Region for Which the Existing Code Plant Name Region Codes Demand Region Serves as the Surrogate* 1004 Edwardsport C181 1010 Wabash River C183 10684 Argus Cogen Plant C563 1077 Sutherland C194 1554 Herbert A Wagner C227 1606 Mount Tom C232 1943 Hoot Lake C259 2682 S A Carlson C303 2943 Shelby Municipal Light Plant C339 3319 Jefferies C365 511 Trinidad C131 54407 Waupun Correctional Central Heating Plt C624 55856 Prairie State Generatng Station C637 MIS_IL 56564 John W Turk Jr Power Plant C644 SPP_WEST 56785 Virginia Tech Power Plant C651 56808 Virginia City Hybrid Energy Center C653 7 Gadsden C101 7242 Polk C495 728 Yates C151 991 Eagle Valley C176 10 Greene County C103 10003 Colorado Energy Nations Company C514 1001 Cayuga C180 10043 Logan Generating Company LP C517 10071 Portsmouth Genco LLC C518 10075 Taconite Harbor Energy Center C519 1008 R Gallagher C182 10113 John B Rich Memorial Power Station C520 1012 F B Culley C184 10143 Colver Power Project C521 10148 White Pine Electric Power C522 10151 Grant Town Power Plant C523 1024 Crawfordsville C185 1032 Logansport C186 10328 T B Simon Power Plant C528 10333 Central Power & Lime C529 10343 Foster Wheeler Mt Carmel Cogen C530 1037 Peru C187 10377 James River Genco LLC C540 10378 CPI USA NC Southport C541 10380 Elizabethtown Power LLC C542 10382 Lumberton C543 10384 Edgecombe Genco LLC C544 1040 Whitewater Valley C188 1043 Frank E Ratts C189 10464 Black River Generation C546 1047 Lansing C191 1048 Milton L Kapp C192 10495 Rumford Cogeneration C548 NENG_ME 10566 Chambers Cogeneration LP C550 10603 Ebensburg Power C552 10640 Stockton Cogen C554 WEC_CALN 10641 Cambria Cogen C555 10670 AES Deepwater C556 9-4 Plant ORIS Coal Demand IPM Model Region for Which the Existing Code Plant Name Region Codes Demand Region Serves as the Surrogate* 10671 AES Shady Point LLC C557 10672 Cedar Bay Generating Company LP C558 10675 AES Thames C560 NENG_CT 10676 AES Beaver Valley Partners Beaver Valley C561 10678 AES Warrior Run Cogeneration Facility C562 1073 Prairie Creek C193 10743 Morgantown