What Happened to Clean Coal?

Though CCS is technically feasible, it might be economically smarter to leave the coal in the ground.

Though “Clean Coal” (Carbon Capture and Storage) is technically feasible, it might be economically smarter to leave the one-time “Black Diamond” in the ground.

Though Carbon Capture and Storage —“Clean Coal”— is technically feasible, it might be economically smarter to leave the once Black Diamond in the ground.

For years, the coal industry has championed “clean coal” as an innovation that could reinvigorate the US coal industry and make it competitive as a low-carbon emitting fuel for the future. In 2009, Senators John Kerry, D-Mass., and Lindsey Graham, R-S.C., even wrote a New York Times op-ed piece calling for the United States carbon capture and storage (CCS) to become the “Saudi Arabia of clean coal.” CCS removes CO2 from exhaust and then either puts the CO2 back into the ground for storage or sells the gas via pipeline for other industrial uses, most notably for enhanced oil recovery (EOR).

One thing has stood in the way: clean coal is highly expensive. While the technological process has been shown to be successful, capturing CO2 uses lots of energy —some of which is produced during the process. CCS currently relies on three methods for capturing CO2 and all three, to some degree, currently reduce plant efficiency which adds to the cost of the electricity it produces.

  1. Post Combustion. Coal is burned and the exhaust is scrubbed of CO2. This method is well-adapted for retrofitting existing coal-burning generators. However, research by the DOE and National Energy Technology Laboratory (NETL) suggest that current technology “may increase the cost of electricity for a new pulverized coal plant by up to 80 percent and result in a 20 to 30 percent decrease in efficiency due to parasitic energy requirements.” In other words, some of the energy produced would need to go to maintaining the process itself.
  2. Pre Combustion. Coal is heated in order to release “syngas” — a combination of carbon monoxide, water, CO2, hydrogen, and methane. The syngas is processed through a water-gas shift reaction to convert the CO and H2) (water) into to CO2 and H2 (free hydrogen). There are two processes that produce this reaction; one that works at 400°F to 500°F and the other that works at 550°F to 900°F. Both rely on metallic catalysts which must be replenished periodically. While this process makes CO2 is much easier to capture and is ideal for combined cycle generation, the high energy requirements add about 30% to the price of electricity.
  3. Oxy-fuel Combustion. Coal is burned in oxygen instead of air, producing more heat and also mostly CO2 and water vapor as exhaust. The water is condensed out leaving just the CO2. And while oxy-fuel combustion also reduces NOX and SOX emissions between 60-70 percent and reduces mercury as well, the amount and the purity of oxygen used adds to the production cost of the electricity.

Costs mount in the storage phase include the energy used to compress CO2 and gas storage itself. One estimate is that CCS increases the fuel needs of a coal-fired electricity plant by 25–40%. Storing CO2 in the ground such as in salt mines or deep layers of off-shore basalt adds well drilling costs and water to wash the gas down and fix it to the deep rocks. In the case of oil, while EOR was initially floated as a means to squeeze more oil out of depleted American wells, it lost favor when environmentalists pointed out that it not only used captured CO2 to produce more CO2-producing fuel but that some of that CO2 used to recover oil would escape into the atmosphere —completely negating the whole idea behind CCS. While EOR does push more oil out of the ground cheaply and effectively, it uses CO2 from a process that reduces the efficiency of electric generator plants passes those costs onto electricity rate payers.

One controversial study arose last year pointing out that previous studies ignored how CCS costs escalate due to an energy consuming-feedback loop. Basically, CCS requires a coal generator to divert a portion of their energy output to power their CCS. The more power you produce, the more energy you have to divert to CCS —which cuts the overall efficiency to 16%. In other words, compared to renewables and natural gas, it’s presently more energy efficient to leave coal in the ground.

According to the Center for Climate and Energy Solutions, “CCS technology is just reaching commercial maturity for power plant applications,” which the main reason cost are high and efficiency is low. While that’s a reasonable argument, the irony is that hidden energy costs are not what almost snuffed out two major CCS projects.

Financing Clean Coal is a Mess

The Southern Company’s Kemper coal plant in Dekalb, MS, is currently under investigation by the Securities and Exchange Commission on charges that the plant’s owners underestimated and misled the public on the length of the plant’s construction. The project is over 2 years behind schedule and $4 billion over budget. The plant currently costs $6.6 billion and has paid back $368 million in federal tax credits. In addition to a suit filed by 186,000 Mississippi Power consumers, EOR company Treetop Midstream Services is seeking $100 million and punitive damages for fraud saying the delayed project has failed to deliver the CO2 it was promised.

The Texas Clean Energy Project (TCEP) was planned as an Integrated Gasification Combined Cycle (IGCC) project using coal gasification located in Penwell, Texas. Begun by Summit Power in 2010, the $1.9 billion TCEP received $118 million in DOE funding with the understanding that Summit Power would be able to secure lenders and investors to finance the rest of the project. Six years on, costs of grown to $3.9 billion, and TCEP is no where closer to attracting investment. In an April special report, the DOE pointed out that “coal-based power plants have higher capital and operating costs, making investments in other sources of energy more appealing.” In particular, cheaper natural gas generators, wind farms, and solar arrays.

One other line stands out from that April report. Christopher Smith, Assistant Secretary for Fossil Energy points out in a memo that when DOE made the agreement with TCEP that “there were no commercial-scale CCUS electric power projects anywhere in the world”, and that such risk-taking required some flexibility. Sure, that’s understandable and to be fair, it’s possible that once the technology is mature it might not perform quite as poorly. However, the point here has been made resoundingly clear by the market: big gambles on complex and unproven coal-fired CCS plants are not worth the expense or the financial risk. Nobody wants to mess with it.

Texas Electricity Consumer Questions—TDU Charges

Occasionally, folks ask some good questions when they’re shopping for electricity. Our Texas Electricity Consumer Questions Series tries to clear up the confusion and answers those questions so you can be a better informed consumer.

Generating electricity is only half its cost. Getting it to you is the other.
Photo by Ladyheart at Morguefile.com

From J. in Sharyland— “Are there any REPs that don’t have high TDU charges?”

We understand your frustration, J., but remember that REPs don’t have TDU charges —consumers do. Here’s why:

TDU’s own and maintain the local network of transmission and distribution lines. TDUs must offer access to their wires to all REPs on a non-discriminatory basis under standard terms and conditions set by the PUC. REPs sell the electricity to their customers.

Electricity consumers live within a TDU company’s service territory and receive their electricity via that utility’s wires. The consumer buys the electricity from an REP but must pay for the transmission and distribution of that electricity over the local wires to their home.

TDU delivery charges depend on where the consumer lives, who their TDU is, and the PUC-approved rate their TDU can charge them based on their electrical usage.

TDU service territories in ERCOT are divided into 5 main service areas which are based on the original investor owned utilities (IOU) from before deregulation. These IOUs are:

Texas-New Mexico Power Company (TNMP)
AEP Texas Central
AEP Texas North
Center Point Energy
Oncor

Sharyland Utilities territory mainly straddles Oncor and AEP Texas North.

Some background—
Back in March 2015, Sharyland Utility residential customers saw a 25% increase in their TDU charges. The increase stemmed from Sharyland’s rate case application to the PUC to increase it’s rates following its merger with Cap Rock Energy. The new service territory was then known as “SU-CapRock”.

Unfortunately, settling the whole mess turned into a game of “kick the hornet’s nest”. The PUC and all concerned parties are still working to sort it all out. Sharyland’s delivery rates remain among the highest in the state.

Celebrate Your Independence —You’re Free to Choose!

alamo-fireworksThis coming January 1 will mark the 10 year anniversary of the end of the reign of the old incumbent Texas utilities and the opening of competition among new retail electricity providers.

That means for ten years, consumers in the Lone Star State have been free to choose what kind of Texas electricity plan works for them. That means for ten years, consumers throughout the ERCOT region haven’t had to wait for regulators and utility bean counters to strike a bargain in a closed room on how much you were going to pay for your electricity. Nor have you had to conform to a one-size-fits-all kind of service. Instead, energy consumers have enjoyed the ability to select plans that fit their needs backed by great incentives and convenient services such as monitoring your usage and paying your bills on-line.

In short, you’re free to choose your electricity plan and provider. Don’t think its a big deal? Just ask consumers in the 35 states that don’t have electricity choice if they like being tied to one utility when rates go up or isn’t interested in improving customer satisfaction. Ask them if they like their utility thinking of them as just one more part of “the load”.

So this July 4, fire up your grills, set off the fireworks, and reaffirm your freedom to choose! Ten years of Texas electricity choice remains revolutionary!

Texas Electricity Hits New Wind Milestone on Thursday

The Texas electricity grid is often looked at as the paradigm for wind energy for an electricity grid. And in many ways, that’s absolutely true. Texas achieved another milestone on Thursday night,  Continue reading “Texas Electricity Hits New Wind Milestone on Thursday” »

Texas Deregulated Electricity Primer

I saw this nice little article in the Texas Monthly today as a primer of things customers should know about deregulated electricity in Texas. It’s a great premise,  and the three things they listed are certainly things Texas customers need to understand, but I’d definitely expound on a few things that Texas electricity customers should be aware of when looking for electricity providers. Continue reading “Texas Deregulated Electricity Primer” »

Champion Energy Wins Customer Satisfaction Award for 2015

After falling to Green Mountain Energy last year in the annual J.D. Power & Associates award for customer satisfaction, Champion Energy has regained the top spot in the coveted customer survey. Congratulations Champion Energy Services! This marks Champion Energy’s 5th finish Continue reading “Champion Energy Wins Customer Satisfaction Award for 2015” »

Energy Future Holdings to Sell ONCOR

As I’ve stated for years, the bankruptcy of Energy Future Holdings has been inevitable. It was coming ever since the bottom dropped out of the natural gas market due to innovations in fracking. And finally, it looks like we can finally see how the Texas electricity market might look once the inevitable finally happens and we survey the surviving landscape. Continue reading “Energy Future Holdings to Sell ONCOR” »

Excellent DMN Article Highlights Confusion in Texas Electricity Shopping

In a recent article in the Dallas Morning News, Mitchell Schnurman does an outstanding job of highlighting several of the existing challenges with navigating the Texas electricity market. As someone who has operated a website for electricity in Texas for five years that prioritizes consumer advocacy, I’ve long been beating the drum that the best way to maximize customer savings is through customer education. Unfortunately, it is shocking just how many people really don’t understand how our electricity market works. This is an article that really helps drive home that necessity.

The Texas electricity market can be confusing, and things like minimum usage fees or the differences between fixed and variable plans can be easily overlooked or ignored by customers shopping for different plans available in the market. That is until their bills hit their mailboxes. Schnurman is correct, many of the fees that customers will be tagged with are hidden in paragraphs of legalese and contract fine print and can be difficult to identify if someone isn’t well informed on exactly what to look for when comparing electricity plans.

For example, I work in this space. I know that when I’m shopping for an electricity plan, I need to look first at the plan’s kWh rate, as well as the length of the contract term (I don’t shop for variable plans). Then I need to check the contract cancellation penalty (just in case I decide to leave). Next on the list is the minimum usage charge, both how much that charge is and the electricity thresholds where that charge activates. Next I check the EFLs (electricity facts labels) to see if the electricity company has any other listed items for which they can charge, as well as the plan’s Terms of Service. After that, I check out company reviews from previous customers and see if anything stands out, such as poor customer service or a company with lots of complaints for not mailing out bills consistently…anything that might be a red flag. Finally, I would see if there are any benefits, such as sign-up bonuses or rewards programs that might sweeten the deal.

That’s a lot of steps for shopping for an electricity plan, and I’m certain that a majority of folks shopping for electricity do not go through as rigorous a research protocol as myself. But they should. It’s just like buying a car, the customers that come in the most informed have a better chance of walking away with a much better deal on an automobile. Which is what makes some of the comments by Kenneth Anderson frustrating in the DMN article.

We’re almost 15 years into deregulation in Texas, and many people still don’t know the difference between the TDPS (companies who are responsible for maintaining the poles and power lines) and REPs (the electricity companies who bill you each month). And while the PUC has a point in talking about not wanting to do anything (such as an apples to apples plan to allow easier electricity comparison) to deter the competition of the market, there are certainly things they can be doing to increasing the knowledge base of Texas shoppers. For example, they could change the rules for how plans are presented, highlighting and forcing companies to put the information that most directly impacts a monthly bill front and center when trying to sell their plans, instead of burying it pages into an EFL or the Terms of Service, specifically Minimum Usage charges and thresholds. Many electricity companies in the past have billed customers based on the historical usage of their addresses, as opposed to their actual usage. Having that information front and center for customers to look up to understand an address’s past usage and how it relates to computing a minimum usage charge would be helpful as well.

The point is, that there are a number of ways to make this process easier to understand for customers and better equip them for taking advantage of everything the Texas electricity market offers. And this can all be done without endangering the competition that makes this market greater. In fact, in my opinion, it is the deep pockets of electricity companies and their substantial lobbying budgets that prevent many changes, not the fear of curbing competition between providers. But regardless of the cause, the best solution is for Texas consumers to educate themselves and find the best deals.

Critical Peak Rebate Programs. What Are They?

Critical Peak Rebate programs are likely to become a new hot trend in the world of Texas electricity.  So what are critical peak rebate programs, and what do they mean to you? Lets take a look. Continue reading “Critical Peak Rebate Programs. What Are They?” »

Reliant’s New Unlimited Electricity Plan: A Closer Look

Recently Reliant Energy announced a new electricity plan for Texans, the Reliant Predictable 12 Plan. As the Houston Chronicle outlined, the plan calls for customers to sign a one-year electricity contract at a flat, monthly rate, regardless of electricity usage. This kind of plan is normal in other industries, specifically cell phone service providers, but it is the first of its kind in the Texas electricity space. I’m no stranger to questioning some of Reliant’s past electricity plans, so I figured it was worth the time to take a closer look at this new “unlimited plan.”

The Plan

On the surface, the plan is pretty straightforward. Customers will pay a flat fee to Reliant every month to receive unlimited electricity service. So whether they use five or five thousand kWh in a month, their bill will be the same. The appeal (or the demographic Reliant claims to be appealing to) might be older folks on a fixed income, or perhaps younger college graduates who have to make very careful budgeting plans each month. Customers visit Reliant’s website, input their address, and select the Reliant Predictable 12 Plan. They will be then be given a monthly estimate, presumably based upon the historical usage of the building in question, and possibly some other factors. Easy enough, right?

The Results

I’ll caveat this portion by saying two things: 1) The price given by Reliant when I input my address is very likely just an estimate of my monthly rate 2.) It’s impossible for me to know what anyone else’s estimates would be without putting in their addresses. That being said, what I can certainly do is analyze that plan with my own address. I live in a two-thousand square foot town-home, fairly new construction, and with a 2 year old A/C unit that is on the lower end of energy efficiency. Here were my results:

Your Predictable 12 amount is $150.00 per month.

Average Monthly Use 5000 kWh 4000 kWh 3000 kWh 2000 kWh 1000 kWh 500 kWh
Average Price Per kWh 0.03 0.04 0.05 0.08 0.15 0.30

Now, lets explain what that means. The math is simple, just multiply the kWh by the Average price to get your monthly average. The first thing that should jump off the page is that the 1000 kWh plan is LITERALLY the exact same price per month as the 500 kWh user. Use 500 or 1000 kWh? Who cares, pay Reliant $150. In fact, if you stretch the math onward, you’ll see that 4 of the 6 possible rates per usage come out to…exactly $150. The other two come out at $160. So basically, Reliant is going to make sure they are making $150 a month on these customers, whether they’re living in a 1 bedroom studio the size of a broom closet or a 5,000 acre compound with a private zoo.

I suppose this should immediately disabuse anyone of the notion that this kind of plan makes sense for a budget conscious retiree or recent college graduate. The .3 rate they quote for someone using 500 kWh is more than three times the cheapest plan available on Power To Choose, and double the most expensive fixed rate plan in the 500 kWh range. In fact, it’s more than twice as expensive as all but one of the five Reliant plans listed on Power To Choose. Personally, I don’t think it’s very budget friendly to charge double or triple rates just so you know exactly what your monthly bill will be, but that’s just me.

And it gets worse. Again, I can only compare this bill to my own historic electricity usage but I pulled my bills to make a comparison. Thanks to Reliant’s easy math, my yearly bill on their plan would be $1800. But looking at my past 12 bills, I can immediately tell this is a bad proposition. Over the past 12 months, I had exactly one bill that was higher than $150. My bill for last July clocked in at $157. So one bill, in the hottest month of the year, topped the $150 Reliant would look to charge me every month. Of course, I also had 7 bills less than $100, including 5 bills under $60. The total cost of my last 12 months of electricity was $1148.45. That’s $651.55, or 36% less expensive than Reliant’s Predictable 12 Plan. That seems like a pretty expensive premium to pay just to know exactly what your electricity bill will be each month. Anyone who can afford that probably isn’t worried about budgeting their monthly bills in the first place because they are affluent, and the irony is they can still get a better deal simply by doing nothing.

 

Other Considerations

The price tag alone isn’t the only thing to consider. As we’ve demonstrated above, despite being tagged as a “budget friendly” plan, this isn’t a plan that makes sense for anyone who is financially concerned about their budget. On the lower end of the spectrum, the plan is extremely expensive.

There are also a couple energy efficiency points. First off, it appears that Reliant is estimating the monthly rate at least in part on past usage. But what happens if someone were to spend money outfitting their home with new energy efficiency appliances? Any possible energy savings or improvements would be lost on their bill simply because the plan doesn’t take into account actual usage. And in this day and age we’re making improvements on the energy efficiency of home appliances and electronics by leaps and bounds. But none of that would matter to any customer on this electricity plan.

Another energy efficiency point to consider is responsible conservation. This plan doesn’t exactly encourage customers to be on their best behavior. It doesn’t really matter if they would leave their electricity on all hours or run their A/C at 65 degrees in the middle of August…because no matter what the bill is going to be the same. So in that regard if someone is looking to raise a dozen penguins in their home year round, well, this is the electricity choice for you! That’s hardly a positive considering the state of Texas is facing an uphill battle to build new electricity generation plants even as our population continues to boom. Of course, Reliant likely doesn’t care about that since their parent company, NRG, currently owns a huge percentage of Texas’s electricity generation and can only make more money from any electricity shortages.

Conclusions

I think it’s safe to say that Reliant Energy’s Predictable 12 Plan probably isn’t the best option for anyone even remotely concerned with their monthly electricity bills. For all but the largest users of electricity, the rates are extremely high. Anyone who can afford $1800 a year on electricity service probably doesn’t have to concern themselves much with their monthly utilities budget. However, for a small niche of customers wealthy enough to want to build snowmen in their living room year round this plan might make good sense. But an average customer like myself can save more than $600 a year just by paying for the electricity I actually use.