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Steven WinbergProgram ManagerBattelle :: Infrastructure & EnvironmentPittsburgh, PA

The Future of Coal33rd USAEE/IAEE North American Conference October 25-28, 2015Pittsburgh, PA.

The Future of Coal

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Our Founding Mission

• Established by steel industrialist, Gordon Battelle

• Nonprofit, charitable trust formed in 1925 in Columbus, Ohio

• Profits reinvested in science & technology, and in charitable causes

“Bring business and scientific interests together as forces for positive change”

Gordon Battelle’s last will and testament

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• Consumer & Industrial

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Serving a Broad Range of Clients

US Coal Production Through 2014

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2015 estimate Production down 9% from 2014 Production down 22% from 2008 peak Exports down 17% from 2014 Exports down 36% from 2012 peak

US Coal Production Through 2014

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Coal Use 93% Electricity Generation 5% Industrial (excluding coke ovens) 2% Coke Ovens – Metallurgical coal

My FocusCoal’s Future for Power Generation

You can’t talk about the future of coal without talking about natural gas

Paradigm Shift The majority of natural gas E&P was in the Gulf

deep water until the 2007 shale boom. Shale shifted the paradigm

• 3-5 years to build a deepwater well

• vs. 6-9 months for a shale well

• Lower amplitude on price variability

• Shorter time between boom and bust cycles

U.S. Natural Gas Wellhead Price

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Summer 1987$1/Mcf – Ohio

Snow & Cold

Hurricane Katrina

High Energy Prices

Paradigm Shift The majority of E&P was in the Gulf deepwater until the 2007 shale boom. Shale shifted the paradigm

• 3-5 years to build a deepwater well

• 6-9 months for a shale well

• Lower amplitude on price variability

• Shorter time between boom and bust cycles

2014 Winter was the 1st time the spot price of natural gas did not climb when the thermometer dropped in the Northeast

2014-2015 negative basis between Henry Hub and Pennsylvania production Henry Hub = $2.66 Western PA production into pipeline = $1.05

Maybe this current bust cycle is the new norm??

You can’t talk about the future of coal without talking about the Clean Power Plan

Electricity Generation CO2 Emissions

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140

500

1000

1500

2000

2500

3000Total Fuel Oil

Natural Gas

Coal

Mill

ion

Tonn

es

Year

CPP 2030 Goal – 32% below 2005 baseline1643 Million Tonnes CO2

32%

Coal-Fueled Electricity Generation under CPP

CPP 2030 CO2 Emissions1,643,000 M Tonnes

2030 Coal if lost gen. is from zero-emitting sources 634,000 M Tons

2030 Coal if lost gen if from natural gas 527,000 M Tons (17% additional loss)

Year

M Tons of coal

M Tonnesof CO2

You can’t talk about the future of coal without talking about the aging coal fleet

FirstEnergy's Lake Shore power plant, built in 1911, is closing.

EIA Coal Retirement Forecast

Does not consider the impacts of the Clean Power Plan

2014 Coal Consumption & Capacity Factor

> 50 40-50 30-40 20-30 10-20 <100

50

100

150

200

250

300

350

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

43%

29%

78%

86%84%

71%

GW

Million Tons Coal

Capacity Factor

Age of Coal Fleet(years)

12%

28%

41%

10%7%

2%

GW

/MM

Tons

of

Coa

l

% Capacity Factor

You can’t talk about the future of coal without talking about what replaces the aging coal fleet.

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So What Gets Built?

Wind, of course, but there are limits

Solar, of course, but even more limited than wind

Biomass, maybe but also limited

Nuclear, unlikely

Fossil Energy - Natural Gas Generation wins over coal Lower capital cost

Shorter construction times

Less potential for cost overrun

Less environmental regulatory uncertainty

Less public opposition

Coal Generation - Unlikely, in the next 10 years

New Generation Cost

Conve

ntion

al Coa

l

Advan

ced

Coal

Advan

ced

Coal w

/CCS

NGCC

Advan

ced

NGCC

Advan

ced

NGCC w

/CCS CT

Advan

ced

CT

Advan

ced

Nuclea

r

Geo

rther

mal

Biomas

sW

ind

Wind

- O

ffsho

re

Solar P

V

Solar T

herm

al

Hydro

elcec

tric

0

50

100

150

200

250

LCOE (2013$/MWh)

LCOE ($/MWh)

Current Grid Price

New Generation Cost

Conve

ntion

al Coa

l

Advan

ced

Coal

Advan

ced

Coal w

/CCS

NGCC

Advan

ced

NGCC

Advan

ced

NGCC w

/CCS CT

Advan

ced

CT

Advan

ced

Nuclea

r

Geo

rther

mal

Biomas

sW

ind

Wind

- O

ffsho

re

Solar P

V

Solar T

herm

al

Hydro

elcec

tric

0

50

100

150

200

250

LCOE (2013$/MWh)

LCOE ($/MWh)

New Generation Cost

Conve

ntion

al Coa

l

Advan

ced

Coal

Advan

ced

Coal w

/CCS

NGCC

Advan

ced

NGCC

Advan

ced

NGCC w

/CCS CT

Advan

ced

CT

Advan

ced

Nuclea

r

Geo

rther

mal

Biomas

sW

ind

Wind

- O

ffsho

re

Solar P

V

Solar T

herm

al

Hydro

elcec

tric

0

50

100

150

200

250

LCOE (2013$/MWh)

LCOE ($/MWh)

New Generation Cost

Conve

ntion

al Coa

l

Advan

ced

Coal

Advan

ced

Coal w

/CCS

NGCC

Advan

ced

NGCC

Advan

ced

NGCC w

/CCS CT

Advan

ced

CT

Advan

ced

Nuclea

r

Geo

rther

mal

Biomas

sW

ind

Wind

- O

ffsho

re

Solar P

V

Solar T

herm

al

Hydro

elcec

tric

0

50

100

150

200

250

LCOE (2013$/MWh)

LCOE ($/MWh)

New Generation Cost

Conve

ntion

al Coa

l

Advan

ced

Coal

Advan

ced

Coal w

/CCS

NGCC

Advan

ced

NGCC

Advan

ced

NGCC w

/CCS CT

Advan

ced

CT

Advan

ced

Nuclea

r

Geo

rther

mal

Biomas

sW

ind

Wind

- O

ffsho

re

Solar P

V

Solar T

herm

al

Hydro

elcec

tric

0

50

100

150

200

250

LCOE (2013$/MWh)

LCOE ($/MWh)

New Generation Cost

Conve

ntion

al Coa

l

Advan

ced

Coal

Advan

ced

Coal w

/CCS

NGCC

Advan

ced

NGCC

Advan

ced

NGCC w

/CCS CT

Advan

ced

CT

Advan

ced

Nuclea

r

Geo

rther

mal

Biomas

sW

ind

Wind

- O

ffsho

re

Solar P

V

Solar T

herm

al

Hydro

elcec

tric

0

50

100

150

200

250 LCOE (2013$/MWh)

LCOE ($/MWh)

New Generation Cost

Conve

ntion

al Coa

l

Advan

ced

Coal

Advan

ced

Coal w

/CCS

NGCC

Advan

ced

NGCC

Advan

ced

NGCC w

/CCS CT

Advan

ced

CT

Advan

ced

Nuclea

r

Geo

rther

mal

Biomas

sW

ind

Wind

- O

ffsho

re

Solar P

V

Solar T

herm

al

Hydro

elcec

tric

0

50

100

150

200

250

LCOE (2013$/MWh)

LCOE ($/MWh)

New Generation Cost

Conve

ntion

al Coa

l

Advan

ced

Coal

Advan

ced

Coal w

/CCS

NGCC

Advan

ced

NGCC

Advan

ced

NGCC w

/CCS CT

Advan

ced

CT

Advan

ced

Nuclea

r

Geo

rther

mal

Biomas

sW

ind

Wind

- O

ffsho

re

Solar P

V

Solar T

herm

al

Hydro

elcec

tric

0

50

100

150

200

250

LCOE (2013$/MWh)

LCOE ($/MWh)

Current Grid Price

New Generation Cost

Conve

ntion

al Coa

l

Advan

ced

Coal

Advan

ced

Coal w

/CCS

NGCC

Advan

ced

NGCC

Advan

ced

NGCC w

/CCS CT

Advan

ced

CT

Advan

ced

Nuclea

r

Geo

rther

mal

Biomas

sW

ind

Wind

- O

ffsho

re

Solar P

V

Solar T

herm

al

Hydro

elcec

tric

0

50

100

150

200

250

LCOE (2013$/MWh)

LCOE ($/MWh)

Current Grid Price

What are these Next Gen Coal Technologies?

Chemical Looping

Advanced SupercriticalOxyfuel Combustion

Pressurized Fluid

Bed Comb.

Supercritical CO2 Brayton Cycle

So What’s the Future For Coal?

One Future Slow decline of coal to 500 million tons (50% reduction) in

next 15 years… perhaps quicker & greater decline

More mines shuttered With this shuttering comes lost reserves

More bankruptcies

Fewer coal companies competing for a decreasing market.

OR

A Better Future

Coal has to take ownership of the next generation of coal technologies- Coal can no longer rely on utilities/IPPs to advance coal technology

They have other, less expensive options

They have higher priority uses of their capital

Many have mandates to reduce coal consumption

- Coal must partner with technology providers

- Coal must build the pilot plants on mining property

Coal must build, own and operate the equipment that uses its product!

albeit a challenging future…

800.201.2011 | solutions@battelle.org | www.battelle.org

The best way to predict the future is to create it.

Peter Drucker