By Bethany Snoby & Stephen Smith
Executive Summary
The quality of feed coal is known to influence the combustion efficiency as well as financial performance of coal-fueled power plants. Pre-combustion coal cleaning produces a fuel with lower ash, thereby reducing emissions of sulfur dioxide, mercury, nitrogen oxides, and carbon dioxide. Utility executives may overlook coal cleaning due to higher priority responsibilities or a lack of understanding of the financial value derived by cleaning coal. Using a recently developed model, this paper examines the benefits and costs associated with obtaining and operating coal preparation plants and considers the financial valuations for a utility on a project-specific basis.
A 650 ton per hour wet preparation plant yields a $3,720,000 net present value and a 20 percent internal rate of return. This financial valuation of pre-combustion cleaning is not dependent on the type of coal preparation plant or the coal cleaning circuitry, except to the extent that the prep plant and circuitry affect the consistent quality of the cleaned coal. The quality of the coal has a direct effect on the valuation.1
Upgraded Coal as Fuel
Coal is processed to provide a cleaner, more consistent fuel for power plants. Pre-combustion coal cleaning removes mineral matter; therefore, coal cleaning results in a higher energy per pound of fuel and a reduction of spikes in mineral content entering the power plant. Burning coal of consistent quality reduces operating and maintenance costs, improves efficiency, increases capacity, reduces emission levels from the power plant, and hence can lead to a more cost efficient power station operation.
Cleaning coal is often perceived as being costly, because the expenses are apparent and the savings are difficult to quantify. Utilizing recently developed, simplified modeling, this paper presents valuations that demonstrate how significantly pre-combustion cleaning can enhance the financial bottom line of both older and newer power plants.
Pre-combustion cleaning reduces the amount of pollutants to capture. For older power plants, installing a coal cleaning facility could save a significant amount of capital as compared to new pollution-control equipment, such as scrubbers or carbon capture systems. Because the expense of a preparation plant is usually far less than the cost of post-combustion capture, a combination of the two can be a cost effective solution. Power plants in the initial stage of development may reduce costs by designing the post-combustion capture in conjunction with a pre-combustion cleaning plant.
Modeling the Benefits of Pre-Combustion Coal Cleaning
Allmineral LLC has created a model, the Allmineral Coal Preparation Valuation Model (the ACPV Model), to forecast a power plant’s financial advantage when utilizing a coal cleaning plant. The Allmineral Coal Preparation Valuation Model provides an inexpensive, preliminary evaluation of the financial gain from coal cleaning. Based on the results, more extensive analyses may be sought if the preparation plant seems justifiable.
The ACPV Model appraises several financial areas of the coal-based electric generating process, including sulfur credits/penalties, sulfur in the stack gas, mercury credits/penalties, BTU improvement, ash improvement, high quality coal purchases, equipment expenditures, life of mine reserve (additional years of mining beyond the expected date of the mine closure due to increased coal recovery), and efficiency of the power plant. The model results are based on customized inputs related to the individual power plant. The summation of these benefits is the yearly value of the cleaning facility to the power plant.
The costs of obtaining and operating the preparation plant are included in the ACPV Model.
These costs are compared by the model to the financial benefits, using a standard financial analysis to obtain net present values and internal rates of return.
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