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Industry Trends: A Case for coal

The power industry is starting to take another look at how coal can be run more efficiently and flexibly in future, as the Middle East gets increasingly drawn to the fuel as a viable energy source for its power hungry economies. But just how sustainable is clean coal power generation in the long run?

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Industry experts think that new coal plants may need changes, starting early in the design phase, to enable them to operate in a more flexible mode.
Industry experts think that new coal plants may need changes, starting early in the design phase, to enable them to operate in a more flexible mode.

Recent policy progress concerning emissions and pollution has forced countries in the Middle East to reassess the role of coal in their energy development strategies. While this is paving the way for more renewable-energy power generation, the pressure to add energy capacity quickly has been driving regional governments to look at coal as part of their efforts to diversify the energy mix and enhance energy security.

A closer look at the developments in the region reveals that coal is far from being phased out, despite the ongoing war against it under the weight of a broad range of regulations, and under competitive pressure from natural gas and renewables.

The GCC, endowed with vast oil and gas resources is charging ahead with plans to introduce coal into its future energy mix along high renewable energy targets.

Dubai Electricity and Water Authority (DEWA) has said that it is planning to launch two additional projects that will bring the total capacity of clean coal to 3600 MW by 2030. By that time clean coal will account for 7% of the energy mix, with another 7% coming from nuclear power imported from Abu Dhabi’s 5600-MW Barakah Nuclear Power Plant complex. A further 15% is due to be supplied by solar energy, with the contribution of gas falling from 100% in 2013 to 71% in 2030.

In October 2015 Dubai Electricity and Water Authority (DEWA) announced the preferred bidders for the Hassyan clean coal generation facility, the first phase of which will have a generation capacity of 2400 MW. The plant will be the first coal-fired power station of its kind in the Middle East.

Some countries in the Arabian Peninsula already import coal for industrial production, motivated by the limited gas supply and the need to provide reliable supply of fuel for electricity generation. In the UAE, Fujairah Cement operates a 40-MW coal-fired power plant to support its production, and other cement plants currently use imported coal to produce clinker, as reported in McCloskey Newswire (2015). Yemen and Kuwait also use small quantities of imported coal for cement production.

Coal has so far been mainly imported from South Africa and Indonesia, with small quantities of the fuel also sourced from Australia.

Some industry analysts have argued that it is not economically viable for local utilities to invest in coal-fired steam capacity and to import coal when the domestic prices of other fuels remain fixed at today’s levels.

They also argue that global environmental concerns have diminished coal’s appeal as a source of energy, citing its gradual decline in the global energy mix.

But this argument doesn’t seem to sit well with proponents of coal, most of them renowned solutions providers, who believe that coal still holds an indispensable position in the power generation industry.

“In the wake of COP21, all signatory governments are making efforts to lower the environmental footprint of their power generation,” says Sacha Parneix, regional sale managing director for Middle East North African and Turkey (MENAT), GE Power.

“The call for energy source diversification is also growing louder every other day. There is need for GCC countries to lessen their dependence on oil and natural gas to guarantee sustainable development. I think adding coal to their energy mix is a very important step.

“The move may not deliver immediate results given the competitiveness of other fossil fuels that are cheaply and readily available in the region, and also due to the heavy investments in renewable energy. But I am certain that in the long run, this will deliver the desired results,” Parneix points out.

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Hassyan will be operated and maintained by ACWA and Harbin in partnership with Alstom Power, recently acquired by GE and NRG Energy of the US. The coal-handling and trans-shipment facilities will be managed by Louis Dreyfus, a major European specialist company.

France’s EDF Trading, one of the world’s largest coal traders, will manage the coal supply to the plant. By 2030, clean coal is expected to account for 7% of the energy mix.

Detractors of coal are sceptical about its future, more so in a region that is increasingly inclined towards renewable energy, and question the logic behind investing in an energy source that is gradually falling out of favour with many countries.

But Parneix believes that all technologies within the energy mix are not meant to compete against each other, but rather complement one another. “I do not believe that tomorrow there will be one technology winning. Renewable energy is becoming competitive and affordable. But it has some weak points and intermittency is one of them,” says Parneix.

“There is no guaranteed continuous supply of wind or water, even the sun. A crunch in any of these sources affects power output. So there is need to stabilise the grid. So, conventional power supply has the ability to guarantee stable supply and prevent intermittency.”

Today, coal supplies nearly 30% of global energy consumption, its highest share since 1970, and provides 40% of the world’s electricity. While this number is expected to drop to 30% by 2040 (34% in America), coal will remain the backbone of the power systems in many countries, despite new capacity coming from natural gas and renewables.

In Southeast Asia, for example, where energy demand is projected to spike by 80%, coal will become the single largest energy source in the region’s energy mix, owing to its abundance and relative affordability.

However, coal as a source of power has over the years come under intense reproach as unclean and harmful to the environment, and this has to a large extent informed the decision behind the ongoing closure of coal plants around the world.

In 2016, JP Morgan joined a growing list of US financial giants including Bank of America, Citigroup Morgan Stanley and Wells Fargo, that have pledged to stop or scale-back support for coal projects citing environmental concerns.

But new technologies developed over recent years are already showing results that render void this kind of criticism. To be precise, the current technologies are able to lower the environmental footprint of a coal power plant to the level of gas power plants, widely considered to be clean enough.

“The flue gas can be captured and cleaned out completely in a coal power plant. For example the Hassyan clean coal plant, where GE is the EPC contractor, is lower in flue gas than gas turbines that have been running for the past twenty years,” says Parneix.

The Hassyan clean coal plant is being designed to use GE’s ultra-supercritical (USC) technology which has already scored a world record 47.5% net thermal efficiency while producing 912MW at the Rheinhafen-Dampfkraftwerk (RDK8) electrical generation facility in Germany.

As far as the global pollution and global warming, the technology being used today produces 34% less CO2 than the world average. So there is a big potential in as far as technology and efficiency is concerned in pushing down CO2 levels, according to GE.

“I am not aware of an operating plant that we have tested or that of our competition that beats the RDK 8,” says Martin Boller, General Manager of Rotating Equipment, GE Power. “This is a benchmark — the highest thermal efficiency we have yet seen for a coal plant. It is really sky-high.”

“The Hassyan clean coal power plant will use the best available technologies and the highest global standards in this field. Flue gas emission targets for the power station will be more stringent that those imposed in both EU and International Finance Corporation guidelines,” says DEWA’s managing director and CEO, Saeed Mohammed Al Tayer.

The USC technology at Hassyan is being fitted by GE, and consists of a boiler and steam turbine generator with a dual fuel capability able to use either sub-bituminous coal or natural gas. It will also use environmental control systems such as electrostatic precipitators and seawater flue gas desulphurisation systems to keep emissions of nitrogen oxides and sulphur oxides at half the level permitted in the EU, making it one of the cleanest coal power stations in the world. In order to meet Dubai’s strict requirements the plant will also be CO2-capture ready.

GE technology also allows the plant to run at higher steam pressure and temperature than regular coal-fired plants, which increases efficiency and reduces stack emissions. At a cost of $3.4bn, the plant will produce enough electricity to power 250,000 homes in Dubai.

The GCC is participating in the development of CCS technologies with the Uthmaniyah project in Saudi Arabia and the Abu Dhabi CCS project in the UAE. In both of these cases, carbon is captured and used for enhanced oil recovery.

Successful development of this technology can help significantly reduce the impact of carbon emissions from coal and could help public acceptance of the construction of coal-fired power plants in the region.

“What the Hassyan coal plant is using is cutting-edge technology. What is new is the use of all new technology in a single plant, and this will make this plant cleaner than what we have seen before,” says Parneix.

Analysts believe that, in principle, coal-fired plants could still have a role in meeting residual demand if they can be made sufficiently flexible and appropriately compensated. But to do this, they will need to achieve increased turndowns, faster and less damaging start-ups, faster load changes and reserve shutdowns at minimal cost, as the coal industry board acknowledges.

Much of the current flexibility has come from older, smaller and less-efficient subcritical plants. More modern coal plants are designed to maximise efficiency by making them larger and employing supercritical and ultra-supercritical steam cycle systems. But that has also made them harder to run in a flexible mode.

The proposed new generation of super-efficient and greenhouse-friendly integrated gasification and combined cycle (IGCC) and oxy-combustion coal plants fitted with carbon capture and storage (CCS) are likely to be even less flexible, if they are ever built.

In IGCC and oxy-combustion plants, gasifiers, boilers, turbines, air separation units and the carbon capture system must all be made to work smoothly together. It may not be possible to turn down one sub-system without disrupting the efficient operation of the others.

Industry experts also think that new coal plants may need changes, starting early in the design phase, to enable them to operate in a more flexible mode. Currently, the requirement for flexible operation conflicts with other trends such as the need for increased efficiency and for carbon capture to reduce emissions.

Power plant designers and operators need to focus on flexibility for coal-fired generation to have a future in a power grid with a large share of renewables, say analysts.

That perhaps explains why GE is already treating the existing coal fleet which is big, very old and emitting high levels of CO2.

“The existing fleet is enormous. If we could reduce the impact of the existing fleet by even 3% on global warming, the results are much better than preventing a country to access a viable source of energy to support the economy,” says Parneix.

The Gulf region is participating in the development of CCS technologies with the Uthmaniyah project in Saudi Arabia and the Abu Dhabi CCS project in the UAE. In both of these cases, carbon is captured and used for enhanced oil recovery.

Successful development of this technology can help significantly reduce the impact of carbon emissions from coal and could help public acceptance of the construction of coal-fired power plants in the region.

However, some analysts are of the view that coal might not play a significant role in the Middle East’s energy mix, despite a growing interest in the fuel. “In fact, coal is likely to only play a marginal role in the future of the region’s power sector. Its part in governments’ strategies to tackle demand growth has been marginal, and, with the exception of Morocco, coal is not usually relied on for power generation,” says Ghassan Alakwaa, energy research analyst at APICORP.

Alakwaa, however, points out coal’s cost effectiveness as an inherent advantage in adopting it as a power source. He says that while coal projects, and particularly clean coal, require substantial upfront capital, they exhibit lower operational and fuel costs over their lifetime, which typically is over 40 years.

“In comparison to the upfront capital cost of nuclear projects, coal is more cost competitive, and is on a level playing field with gas-fired plants. Investment decisions are therefore heavily dependent on the availability of finance, government support, and coal supplies. Operationally speaking, it is noteworthy that coal can also be competitive against other sources of baseload power,” says Alakwaa.

It is clear that rapid economic growth and urbanisation in the Middle East will continue to pile more pressure on existing power supply installations, and governments are investing heavily to add new capacity, with coal gradually coming up as a viable option.

The Egyptian government recently announced preliminary plans for four coal-fired power projects totalling 15.6GW of generation capacity to tackle power shortages. These projects aim to use coal for 20% of the electricity generation, which would reduce dependence on oil and gas and lower electricity generation costs.

With its constrained supply of natural gas, Saudi Arabia is looking to adopt alternative fuels and technologies to mitigate the growing use of crude oil and oil products in industrial sectors. Besides its heavy investments on renewable energy, the Kingdom is now considering the addition of coal to its energy mix. Oman has also renewed its interest in coal.

But how will this growing interest in coal be justifiably sustained amidst European antipathy towards the fuel? The answer lies in increased efficiency, says Parneix. And this can only be achieved through further technological research aimed at raising efficiency levels.

He says that the recent development of Advanced Ultra Supercritical (AUSC) technology is already pushing efficiency levels to a new high. The technology is capable of driving a coal plant’s efficiency to nearly 50%.

AUSC boilers have been designed and developed to operate at very high pressures and temperatures to meet both the environmental and energy efficiency challenges. Steam cycle efficiency has been improved, meaning that for a given electrical output there will be less consumption of fuel (coal) and less release of carbon dioxide.

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