The cost of coalfired electricity generation

A decision to build a coal-fired power station will depend on many factors such as fuel availability, the environmental hazards attached to the project, and the cost of alternative methods of electricity generation. A coal-fired plant will generally be built for base-load duty, though more modern plants and technologies do allow some load following without grave economic penalties. In general, however, economic viability must be established in comparison with other base-load generating technologies such as hydropower, nuclear power and gas-fired combined cycle power stations.

As with all fossil-fuel-fired technologies, the cost of electricity depends on both the cost to build the generating plant and the cost of the fuel. Coal-fired power stations tend to cost more than gas turbine power plants, but coal is usually cheaper than gas. Table 3.3 collects estimates from three sources for the capital costs of different coal-fired power station technologies. The cost of a new conventional plant with emission-control systems will vary depending on the efficiency of the capture. The estimates in Table 3.3 assume nitrogen oxides, sulphur dioxide and particulates are all being controlled to meet US regulation levels. With less stringent restrictions, capital costs could be reduced.

The table shows that a conventional coal-fired power plant costs less than an atmospheric fluidised-bed power plant. The cost comparison with the pressurised fluidised-bed plant is more difficult, but when the efficiency of the pressurised plant is taken into account, it could win. IGCC, too, is more expensive than a conventional plant, but again the additional efficiency will have a significant effect on long-term levelised costs for electricity.

The Energy Information Administration (EIA) has published estimates for annual operating and maintenance (O&M) costs for coal-fired power plants. Its most recent estimates put the fixed O&M costs for a pulverised-coal plant at US$22.5/kW and the variable O&M costs at USmills3.25/kWh. For an IGCC plant the fixed O&M costs are US$24.2/kW and variable costs are USmills1.87/kWh.

Table 3.3 Capital costs ($/kW) of coal-fired power plants


World Bank EIA

Conventional plant with emission control Atmospheric fluidised bed Pressurised fluidised bed IGCC


1500-1800 1300-1600 1250-1500 1200-1500 1500-1800 1500-1800



Source: Center for Energy and Economic Development (CEED), World Bank Technical Paper No. 286, US EIA.

Most countries in both the developed and the developing world have the capacity to manufacture pulverised-coal-fired boilers for power generation applications. Steam turbine manufacture, too, is widespread although the most efficient machines still come from established manufacturers in the USA, Europe and Japan. With indigenous capability, the need for foreign exchange to fund construction is reduced, making conventional coal-fired capacity attractive. The advanced coal-fired systems generally require a higher level of technological expertise to manufacture. As a result, core components of these power plants will often have to be imported. This will make such plants less attractive, particularly in the developing countries where funds are scarce.

The bottom line for any coal-fired project, however, is the cost of the fuel. Where the fuel is available locally, as it is in many parts of the world, it will always prove attractive and will frequently provide the cheapest source of electricity.

In countries such as the USA and China, where coal is plentiful, coal-fired power generation will generally be competitive,4 even when the cost of pollution-control technologies are taken into account. But factors affecting the cost of coal are critical. In particular, transportation can seriously affect the economics of generation. Coal is expensive to haul and the shorter the distance the better. Where it must be transported, cheap bulk transport it is important. In the USA, the cheapest form of coal transportation is by barge, followed by truck and then rail.

Countries without their own resources have to rely on imported coal. World coal prices began to climb in 1994 and peaked in the third quarter of 1995 at around $45/tonne (spot price for coal in north European ports). By the middle of 1997, they had fallen back somewhat, to around $40/tonne and in 2000 they were close to $33/tonne. Estimates suggest that a price of around $45-50/tonne is necessary to fund the development of new mines. But with relatively few buyers and a large number of suppliers, it seems unlikely that there will be a major change in the cost of coal.

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