MORGANTOWN — A recent headline in the online journal NS Energy said “Longview Power’s bankruptcy indicates ‘dire strait’ of the US coal industry.”
The Dominion Post regularly publishes articles of the use of fossil fuels and renewable, and decided to use the headline above as a springboard to talk to Longview and two coal industry leaders about the state of the industry as both Longview and Murray Energy deal with bankruptcy.
Longview Power
Jeff Keffer is CEO of Longview Power. He is ushering the plant through its bankruptcy process while also overseeing development of gas-fired and solar plants adjacent to the coal-fired plant.
He talked about the bankruptcy first. It stemmed from too much debt on the balance sheet under current market conditions.
The debt was maturing as the market was down following the exceptionally warm winter – with prices less than half of what we normally see. “It created quite an overhang in the market and resulted in much lower prices.” The COVID-19 pandemic further reduced demand for power, as a good bit is used by industry and commercial entities.
“You end with prices that were just not going to be able to allow us to pay off the portion of the debt that was coming due, and looking forward pay off the rest of the debt that we had on our balance sheet next year.”
That debt issue, he said, was very specific to Longview versus other coal generating facilities, particularly in the PJM regional grid.
Looking at the industry in general, Keffer said there’s a mix. There are older coal plants that probably should be retired and some not as old that are regulated and protected with government-approved rates.
But coal power in PJM is available essentially all the time; when gas gets disrupted the coal is there. That happened during the 2017-18 polar vortex. Renewables aren’t not available around the clock under all conditions.
“You’ve got a bunch of different sources of power and each brings to the table and to the grid attributes that are important, and for coal the attribute is that it’s always there and can always be there and really supports that base load that we need.
As the pandemic eases off, he said, “The demand will come back and the Longview coal plant will be available to meet that demand, which it does very reliably.”
While Longview is among the cleanest, perhaps the cleanest, coal-fired plant in the country, the now-defunct Clean Power Plan effectively stopped construction of new coal plants far cleaner than the old ones, he said. That’s unfortunate.
Longview is very reliable, very clean. It produces a fraction of pollutants of older plants,” he said. But the ability use coal as a generation fuel is now limited and will be limited going forward, he said.
“I don’t see additional coal plants being built,” he said. They tend to be more expensive than gas plants and there’s so much gas available it’s become the fuel of choice for power generation, except in West Virginia, which is still coal-heavy.
Gas power is essentially stalled in West Virginia, Keffer said. Proposed plants in Harrison and Brooke counties have their siting certificates and permits, but are on hold because of the weak market. The low prices are not supporting the financing they need to start construction.
Keffer said he expects Longview’s gas plant to get all approvals and permits by the first or second quarter of 2021. “Then we’re hopeful things will start to change.”
Gas production has dwindled and the market should respond with higher prices. And that would put Longview in a position to be able to proceed under its new owners, who want to see the gas plant built. He hopes construction could get underway in late 2021 into 2022
“I would just caution people not to count out any way in which we can reliably and inexpensively and in an environmentally clean fashion produce the electricity we need,” he said. For West Virginia to build its industrial and commercial base it needs low-cost power, among other things.
If we’re tied to just older coal plants , “we’re going to lose that advantage or that opportunity. Renewables have a place but they’re not the answer. It’s only by having all of the above that we’re able to ensure that we continue to have reliable electricity that’s produced at a very competitive basis to be able to support the kind of state that we’d like to be.”
Bill Raney
Bill Raney is president of the West Virginia Coal Association. Asked about future coal plants, he said, “Personally I’m hoping we’re going to build some more.”
He agreed with Keffer that this is a challenging time with low prices.
Longview is an example of an efficient, modern coal fired plant, he said, but with people looking at alternatives, “We’re all of a sudden going to find ourselves at some point in the next three or four years going, ‘Hoo boy, we need electricity 24 hours a day and we’ve got to depend on it.”
Renewables need a backup supply, he said. “We know if I’ve got a pile of coal in the back yard, that I’m going to be able to make electricity for whatever amount of time that stockpile is.”
The U.S. Department of Energy is looking at different ways to burn it, moving toward a no-emissions power plant, he said, and continued research is essential.
And West Virginia needs a program that offers existing plants an incentive to change out their boilers on a routine basis, on a frequency that allows them to have the most modern technology, Raney said. He doesn’t know if it would be a tax incentive or some other, or whether it might be federal or state.
Research is even looking at coal byproducts such as fly ash to recover rare earth elements or make gypsum. “It’s all those kind of things coming together. And I just don’t think there’s any more dependable fuel to make electricity with than coal.”
America has more coal than any nation and we would think that we’d be looking for the best ways to use our resource, he said. “We’re hopeful. You maintain your optimism.”
The most immediate need is to get the economy rolling again to increase electricity demand. Beyond that, he hopes that the virus crisis prompts America to resume producing goods here that have been offshored. Along with increasing jobs, it increases electricity demand around the clock.
Chris Hamilton
Chris Hamilton is Coal Association vice president and offered some additional perspectives.
“I think this national crisis and the way the economy has been slowed and all industrial manufacturing, I think it has served to accelerate a near-crisis situation that the energy industries are going to reach this summer, particularly here in West Virginia.
Gas and coal are both going to see a difficult time tied to the oversupply of oil and gas depressed prices. “Its building up to substantial reductions in output and potential layoffs,” he said.
But he thinks it will be survivable. The coal industry still maintains its output of metallurgical coal. A six-to-seven county region of West Virginia has the best metallurgical reserves in the world, the best quality and solid shipping infrastructure across the country and to 30-some foreign destinations.
Met coal, he said, will serve to maintain coal mining in West Virginia no matter what happens on the generation side.
Coal-fired demand is down, Hamilton said, while renewables have grown exponentially, gas has filled much of the coal void and nuclear remains about the same. “We would offer that it’s critical that we maintain a 25% share of that market for base load generation.” Other forms can supplement as needed, especially in non-peak times.
Coal could also be thought of as a transition fuel, he said. “We’re going to eventually exhaust our coal reserves – thermal and generation.”
Renewables aren’t yet ready to fill the void without base load generation. “As those technologies advance and as coal reserves begin to exhaust or become depleted, then there will be a natural transition out ahead of us a ways for renewables to be able to be relied on more to provide uninterrupted power supplies.”
If we allow science and technology and economics to drive the fuel issue, he said, “We feel very confident that there will be a place for coal and coal-fired generation in the future.” But from the political perspective, it becomes a little less secure. “I don’t there’s any other business or industry that is affected as much as coal is on the mere formulation of public policy.”
Asked about Longview, he said, “It’s a model that ought to serve to all utilities as they upgrade their plants and do whatever they can to keep coal-fired generation maintaining its place in the energy mix going forward.”
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