Coal’s Cruel Fortune: Its Biggest Market Is Also the Windiest

Source: By Mario Parker and Brian Eckhouse, Bloomberg News • Posted: Friday, November 13, 2015

Here’s how bad U.S. coal has it these days: The region that has for years burned the most coal also happens to be the windiest.

The Great Plains states that run south from Canada to Texas, tucked between the Rocky Mountains and the Mississippi River, are increasingly turning to cheap wind power to generate electricity. It’s a shift that’s eating into coal’s dwindling share of America’s power plant pie.

In Texas, which burns more coal than any other state, wind generation has grown almost 10-fold since 2005. That’s come as coal use there slid in April to the lowest in 14 years. Nebraska, Iowa, Kansas, Minnesota, Missouri and the Dakotas have all seen a similar or starker re-balancing in a region known for its broad, flat terrain. The changes are part of a larger-scale war being waged worldwide between coal, natural gas and renewables including wind.

“It’s a three-way cage fight,” said Michael Webber, deputy director of the Energy Institute at the University of Texas at Austin.

Wind power’s gaining on coal power in Texas.

In 2005, the U.S. had about 9,000 megawatts of wind capacity. That’s grown to 69,471 megawatts, and more than 13,250 are under construction, according to data from the American Wind Energy Association.

The rapid emergence of wind is hurting coal in two ways. On breezy days, the fossil fuel must compete head-to-head against turbines powered by free wind. When the wind fluctuates, natural gas-fired plants that can start up quicker than coal-burning units are often called in to make up for the lost power.

Intermittent Resource

Of course, wind is intermittent. Sometimes it blows and sometimes it doesn’t. If all the country’s turbines were to turn at normal rates, wind power could displace 96.5 million tons of coal, or one-eighth of this year’s projected consumption, according to an analysis by Grand Junction, Colorado-based Doyle Trading Consultants.

Turbines are ideal for the Great Plains because wind whips over the Rocky Mountains and along the elevated, flat terrain. It’s akin to the wind caught between skyscrapers in metropolitan areas, said Wade Schauer, principal analyst for North America power research at Wood Mackenzie, an Edinburgh, U.K.-based energy consultancy.

Source: NREL

Coal producers, meanwhile, are struggling in the sector’s worst downturn in decades, undermined by emissions standards toughened by global warming concerns, cheap natural gas that recently traded below $2 per million British thermal units for the first time since 2012, and the emergence of renewables, including solar and wind power. Walter Energy Inc. and Alpha Natural Resources Inc., both producers of thermal coal, slid into bankruptcy protection this year.

In a windy region that includes Iowa, Kansas, Minnesota, Missouri, Nebraska and the Dakotas, coal fell 13 percent in the four years through 2014, Energy Information Administration data shows. And no state illustrates wind’s impact on fossil fuels more than Texas, which sits at the southernmost tip of the plains.

Coal Demand

In the third quarter, Texas installed the most wind power in America with 771 megawatts, according to the American Wind Energy Association, a Washington-based industry group. Its use on the statewide grid run by the Electric Reliability Council of Texas, or Ercot, has jumped to more than 16 gigawatts this year.

The Ercot market dispatches power based on which plants offer the lowest prices. On windy days, power falls to a level that discourages less efficient units from running, according to Warren Lasher, Ercot’s director of system planning. Gas plants are better able to ramp up production, making them easier to operate in tandem with wind farms, he said.

There was a time when coal-fired power generators just hoped for hot or cold weather that would stoke electricity demand, said Emily Medine, a principal at Energy Ventures Analysis, a consultancy in Arlington, Virginia. Now, they “hope the wind doesn’t blow.”