Tracking New Coal-Fired Power Plants

February 18, 2008a

National Energy Technology Laboratory

Office of Systems Analyses and PlanningErik Shuster

2/18/200822

Tracking New Coal-Fired Power Plants

This report is intended to provide an overview of proposed new coal-fired

power plants that are under development. This report may not represent

all possible plants under consideration but is intended to illustrate the

potential that exists for installation of new coal-fired power plants.

Recent experience has shown that public announcements of new coal-fired

power plant development do not provide an accurate representation of

actual new operating power plants. Actual plant capacity commissioned

has historically been significantly less then new capacity announced.

The report focuses on those power plant projects that have achieved

significant progress toward completion, to provide a more accurate

assessment of the ability of this segment of the power generation industry

to support demand for new electricity capacity in various regions of the

United States.

The Department of Energy does not warrant the accuracy or

suitability of this information.

2/18/200833

Tracking New Coal-Fired Power Plants

This report provides a perspective of coal-fired power plants that are currently under development, with a focus on those having made significant progress toward achieving commercial operation

The status of projects in development varies from project announcements to those under construction

Announced projects that are canceled before or during the permitting phase are not unusual; announced projects are not necessarily strong indicators of capacity additions

Plants that are permitted or under construction reflect a developer’s significant financial commitment to completion and offer a better perspective of the new generation capacity that may be forthcoming

Long-term forecasts reflecting declining natural gas production for North American also highlight the increased importance of coal-fired power generation to the Nation’s energy security and to a growing economy

2/18/200844

0

2

4

6

8

10

12

14

16

18

20

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Actual 2002 Report 2005 Report December 2007

Cap

acit

y G

W

Delays in Implementation

Past Capacity Announcements vs. ActualFigure 1

Historically, actual capacity has been seen to be significantly less than proposed capacity. For example, the 2002 report listed 36,161 MW

of proposed capacity by the year 2007 when actually only 4,478 MW (12%) were constructed.

Source: 2007 data Global Energy Decisions – Velocity Suite (12/31/2007)2002 – 2005 data – Previous NETL Tracking New Coal-Fired Power Plants Reports

Del

aye

d a

nd

Ne

w

Pro

ject

s St

acki

ng

2/18/200855

Historic Capacity Additions by YearsRefer to Figure 1

Actual plant capacity, commissioned since 2000, has been far less

than new capacity announced; the year 2002 report of

announcements reflected a schedule of over 36,000 MW to be

installed by 2007, whereas ≈ 4,500 MW (12%) were achieved

The trend over several years has reflected the bulk of power plant

developments shifting out in time due to project delays

Delays and cancelations have been attributed to regulatory

uncertainty (regarding climate change) or strained project

economics due to escalating costs in the industry

New announcements combined with delayed projects have tended

to increase the backlog of plants in the queue

Cancellations become more prevalent as prospects of fulfilling all

projects in the queue become impractical

2/18/200866

Current Coal-Fired Capacity Projects (quarterly change)

Table 1

Status Listing Description

Under Construction Project is under construction.

Near Construction Project has been approved; majority or all permits are obtained. Sponsor is

contracting vendors and Engineering, Procurement and Construction

(EPC) contractors. Site preparation has begun.

Permitted In the permitting phase. Two or more permits approved or fuel or power

contracts have been negotiated.

Announced Early stages of development to filing for permits. May include a feasibility

study.

Progressing

Projects

Uncertain

Potential and

Timing

Source: Global Energy Decisions – Velocity Suite

October Report data collected (9/20/2007); Current Report data collected (12/31/2007)

Number of Plants Capacity (MW)

General Status October

2007 Report

Current

Report ChangeOctober 2007

Report

Current

Report Change

Under Construction 24 28 +4 12,506 14,885 +2,379

Near Construction 8 6 -2 4,565 1,859 -2,706

Permitted 13 13 0 6,169 6,422 +253

SUB TOTAL 45 47 +2 23,240 23,166-74

(-0.3%)

Announced (early stages of

development)76 67 -9 48,440 42,394

-6,046(-12.5%)

TOTAL 121 114 -7 71,680 65,560-6,120(-8.5%)

2/18/200877

Current Capacity Additions by YearsRefer to Table 1

Table 1 reflects the current status of coal-fired plant development

activity with quarterly changes

“Progressing” plants are projects with status indicating permitted,

near construction, or under construction

Progressing plants have attained a higher likelihood of advancing

toward commercial operation; however, regulatory uncertainty and

industry cost increases are impacting development decisions for

all projects

Two net plants have been added to Progressing projects in the last

quarter; there has been a modest net loss of 74 MW (0.3%) of

Progressing projects during the quarter

2/18/200888

Current Capacity Additions by YearsFigure 2

Source: Global Energy Decisions – Velocity Suite (12/31/2007)

Actual Operational Dates Proposed

0

2

4

6

8

10

12

14

16

18

20

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Cap

acit

y (G

W)

Actual

Announced

Permitted

Near Construction

Under Construction

2/18/200899

Current Capacity Additions by YearsRefer to Figures 2 & 3

Current coal-fired projects in development reflect the potential for a

surge in growth but questions exists as whether this is achievable

The ≈ 2,400 MW of new added capacity installed in the last three

years (800 MW per year) is only 18% of the 13,400 MW of

progressing plants that are proposed to be operational in the next

three years

Coal-fired plants commissioned, from 1990 through 2007, have

averaged 976 MW per year in the U.S.; this lack of domestic demand

has significantly reduced the level of skilled human resources

available to perform current projects (Figure 3)

Scarcity of skilled labor for power plant engineering, procurement,

project management and construction activities, increases major

equipment and EPC costs and calls into question the viability of the

annual commissioning levels reflected in current schedules

2/18/200810

Our Workforce and Skills ChallengeFigure 3

A Two Decade Gap for Coal; Three Decades for Nuclear

Source: EIA AEO’07 reference case and Annual Energy Review 2006

Lost opportunity

to transfer a

generation of

valuable

experience

2/18/20081111 Source: 2007 data Global Energy Decisions – Velocity SuiteOctober Report data collected (9/20/2007); Current Report data collected (12/31/2007)

Past Quarter Comparison (all Projects)

Figure 4

Continued Delays with a Quarterly Decline in Mostly “Announced” Projects

Commissioning dates determined for these projects during the quarter

2/18/20081212 Source: Global Energy Decisions – Velocity Suite (12/31/2007)

Removed Capacity

Stanton Energy Center

315 MW

IGCC

Lima Energy

600 MW

IGCC

91% of MWs removed represent

“Announced” projects

Net Capacity Changes (Removed or Added Opportunities)

Figure 5

Total Net Reductions 6,120 MW (-8.5%) for 4th Quarter 2007

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Geographical Map by NERC Regions: Coal-Fired Plants(Permitted, Near Construction, and Under Construction)Figure 6

Source: Global Energy Decisions – Velocity Suite (12/31/2007)

2/18/20081414

Proposed Capacity Relative to NERC RegionsTable 2

Progressing Projects

NERC

Region

Under

Construction

Near

Construction

Permitted Sub

Total

Announced Grand Total

ASCC Capacity (MW) - - - 0 300 300

Plants - - - 0 2 2

ERCOT Capacity (MW) 3,265 0 900 4,165 5,330 9,495

Plants 4 0 1 5 5 10

FRCC Capacity (MW) 0 0 0 0 750 750

Plants 0 0 0 0 1 1

MRO US Capacity (MW) 1,649 55 0 1,704 2,880 4,584

Plants 5 1 0 6 6 12

NPCC Capacity (MW) 0 0 0 0 1,420 1,420

Plants 0 0 0 0 3 3

RFC Capacity (MW) 2,505 562 985 4,052 9,558 13,610

Plants 3 2 4 9 13 22

SERC Capacity (MW) 4,150 500 2,557 7,207 7,391 14,598

Plants 7 1 3 11 15 26

SPP Capacity (MW) 1,832 0 1,350 3,182 800 3,982

Plants 4 0 2 6 1 7

WECC Capacity (MW) 1,484 742 630 2,856 13,365 16,221

Plants 5 2 3 10 20 30

N/A Capacity (MW) 0 0 0 0 600 600

Plants 0 0 0 0 1 1

Total Sum Capacity (MW) 14,885 1,859 6,422 23,167 42,394 65,560

Total Count of Plants 28 6 13 47 67 114

Source: Global Energy Decisions – Velocity SuiteSource: Global Energy Decisions – Velocity Suite (12/31/2007)

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Proposed Technologies of New Plants (quarterly change)

Figure 7

Technology ListingsOperational(Since 2000)

Progressing(Permitted, Near-, and Under

Construction)

Announced Total

Proposed

October Current(Change)

October Current(Change)

October Current(Change)

PC Subcritical 10 25 22 (-3)* 26 18 (-8) 51 40 (-11)

CFB 8 12 14 (+2) 12 11 (-1) 24 25 (+1)

PC Supercritical 1 4 8 (+4) 9 9 (0) 13 17 (+4)

IGCC 1 4 3 (-1)** 29 29 (0) 33 32 (-1)

*Progressing PC subcritical:

- 3 plants due to revised status

reported reverting from

Progressing to Announced

**Progressing IGCC: 2 removed

+ 1 added = -1 plant net

Source: Global Energy Decisions – Velocity Suite

October Report data collected (9/20/2007); Current Report data collected (12/31/2007)

Table 3

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Proposed Technologies of New PlantsRefer to Figure 7 and Table 3

Opportunities involving conventional technologies, such as

subcritical PC and CFB, are more plentiful and tend to be more

advanced due to earlier start in development (Figure 7 & Table 3)

Advanced technologies proposed, such as supercritical PC and

IGCC, reflect more recent trends in development activity, so fewer

have achieved permitted status

Regulatory uncertainty for GHG legislation is a key issue impacting

technology selection and project economics

Returns on investment for conventional plants, including super-

critical, can be severely compromised by the need to subsequently

address CO2 mitigation

Higher capital costs incurred for IGCC may make such new plants

less competitive unless their advantage in CO2 mitigation is secured

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NERC Generation Capacity Margins PerspectiveFigure 8

Source: 2007 Long-Term Reliability Assessment – NERC, October 2007

135 GW Increase in Summer Peak Capacity Required by 2016

2/18/20081818

Consideration of EIA and NERC Capacity ForecastsRefer to Figures 8 and 9

NERC foresees inadequate peak summer capacity margins in several regions of the U.S., as early as next year, requiring 135 GW of added capacity by 2016 (Figure 8)

In contrast, AEO’08er (2008 early release) forecasts a net increase of only 4 GW in total capacity by 2016, substantially lower than NERC’s estimate (Figure 9)

Differences are partly attributable to declining assumptions for annual electricity generation growth rates, with NERC’s report reflecting prior year data compared to EIA

The forecasts represent a wide variation in the perceived need and value for near-term added generation of all types

Note: EIA, AEO 2008 Early Release, December 2007 data is referenced in this report; EIA is expected to reissue this report in March 2008

incorporating the Energy Independence and Security Act of 2007 ("EISA")

2/18/20081919

U.S. Peak Summer Generation Capacity NERC and AEO’08er Capacity Outlook Figure 9

Capacity Growth Forecasts Vary Substantially, Partly Due to Assumptions for Annual Electricity Generation Growth Rates

Source: EIA, AEO 2008 Early Release, December 2007; NERC 2007 Long Term Reliability Assessment, October 2007

-

200

400

600

800

1,000

1,200

1,400

GW

s

NERC New Summer Capacity Other Renewable Sources

Nuclear Power Combustion Turbine/Diesel Combined Cycle

Oil and Natural Gas Steam Coal

+4 GW by 2016 (AEO ’08er)

(41 GW of retirements)

979 GW

+131 GW additional required to maintain capacity margins (NERC)

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Declining Total Electricity Generation Growth Rate Assumptions Figure 10

Declining Growth in Long-term Electricity Demand;NERC Estimates Tied to Higher Growth Rate

Source: EIA, AEO 2008 Early Release, December 2007; NERC 2007 Long Term Reliability Assessment, October 2007

4,000

4,200

4,400

4,600

4,800

5,000

5,200

5,400

5,600

5,800

6,000

2005 2010 2015 2020 2025 2030

Bil

lio

n k

Wh

/ye

ar

AEO’05

AEO’08er

AEO’07

AEO’06

1.9%/yr

growth

1.2%/yr

growth

Reduction of 27 BkWh/year growth equates to reduced need for 3,700 MW of new generation each year (@85% c.f.)

1.5%/yr

1.6%/yr

NERC

growth

2/18/20082121

Declining Electricity Generation Growth Rate Refer to Figures 10 and 11

Electricity generation growth rate assumptions have declined substantially over the last 4 Annual Energy Outlook reports,dropping from 1.9% in AEO’05 to 1.2% in AEO’08 (Figure 10)

The resulting decline in forecasted average annual increase in kWh demand for the U.S. amounts to ≈ 27 BkWh per year; this equates to the generation of approximately 3,700 MW of new capacity (each year) operating at an 85% capacity factor

There has been a long term trend in declining generation growth rates in the U.S. (Figure 11)

The current AEO’08er forecast of 1.2% electricity generation growth has moved below the last six year average growth of 1.7%

If the forecasted growth rate is too low this will underestimate the new capacity needed to maintain adequate capacity margins with implications for periods of insufficient electricity supply

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Total Electricity Generation GrowthFigure 11

AEO’08er

1.7%/yr

6 yr 1.2%/yr

EIA

Sources: Electricity generation: Energy Information Administration. 1949-1994: Annual Energy Review 2006; 1995-2006:

Electric Power Annual 2006; 2007-2030: Annual Energy Outlook 2008 early release; NERC - 2007 Long Term Reliability Assessment

2.2%/yr

20 yr

1.5%/yr

NERC

Forecast for Electricity Generation Growth Well Below Recent Averages

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Development Activity vs. EIA AEO’08erFigure 12

Actual Installation Trend and EIA AEO’08er Reference Forecast Correspond;A Significant Surplus of Developments Exists Above EIA’s Forecast Demand

Source: EIA, AEO 2008 Early Release, December 2007; Global Energy Decisions – Velocity Suite (12/31/2007)

Trendline 5-Year Actual

AEO’08er reference case

and trendline

≈ 20GW through 2016

Low forecasts for new capacity may not reflect sufficient market

promise to attract new skilled human resources to the industry

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Coal and Natural Gas-fired Development Issues Refer to Figures 12 and 13

Coal-fired power plant development activity significantly exceeds the current estimate of need by EIA (Figure 12)

Evidence provided by recent installations and the low forecast for new capacity in 2008 suggest that the capability to install and commission plants is constrained by limited skilled resources

Low forecasts of demand growth add an element of “demand uncertainty” to the problems of regulatory uncertainty and rapidly escalating costs for coal-fired power plant development

Should electricity demand growth prove higher than anticipated,the alternative of increasing natural-gas fired generation will create fuel resource adequacy issues, due to diminished natural gas supply expectations (Figure 13)

Virtually all incremental demand for consumption of natural gas can be seen to require increases in imports of LNG

2/18/20082525

Gradual Decline to 20 Tcf without LNG

AEO’06

Total Natural Gas Supply to U.S. (Including LNG)Figure 13

Tcf/

Year

AEO’01

AEO’02

AEO’03

AEO’04

AEO’05

AEO’07

Increased Use of Natural Gas in Electricity Will Require LNG;N. American Natural Gas Supply for U.S. Trending Down

AEO’08er

Source: Annual Energy Outlook 2001, 2002, 2003, 2004, 2005, 2006, 2007 and 2008 early release reference cases

AEO’08erno LNG

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Summary

Coal-fired power plant development activity has experienced a significant number of cancellations (8.5% of MW) during the quarter, mostly involving “Announced” projects

“Progressing” projects have increased by two plants with little change in the total MW involved, during the 4th quarter 2007

Recent forecasts of EIA and NERC represent disparate views on the need for near-to-mid-term increase in U.S. capacity

Should NERC’s views for required new electricity capacity prevail, significant added coal-fired plant capacity will be required to maintain reliability in several U.S. regions and to keep electricity prices from rising due to shortages

Forecasts for natural gas supply to the U.S. indicate that turning to additional natural gas-fired generation will create fuel resource adequacy issues and increase LNG imports