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S.C. coal plant, efficient but doomed, offers lessons for states grappling with EPA rule

This story was updated at 5:55 p.m. EDT.

Despite its age and technology, the 60-year-old McMeekin Power Station near Columbia, S.C., consistently ranks as one of the most efficient coal-fired power plants in the United States.

It's especially surprising because McMeekin starts at a comparative disadvantage -- most other top-rated coal plants have larger boilers that operate at much higher temperatures and pressure, automatically providing about a 3 percent efficiency boost.

"It's like having a race between hybrids and muscle cars and then one hybrid moves to the front," Thomas Hewson, principal at Arlington, Va.-based Energy Ventures Analysis Inc., told Electric Light & Power magazine when McMeekin made its list of the top 20 most efficient plants in 2007.

Understanding what makes McMeekin’s coal units so efficient -- and also why they will be shuttered in four years despite their performance -- is important for states and utilities considering how to meet U.S. EPA's proposed carbon emission regulations for existing power plants released in June.

Despite generating 250 megawatts of electricity used intermittently for the peak demand of summer and winter, McMeekin boasts an excellent "heat rate" -- the amount of electricity actually produced from the coal that goes into the plant.

A rigorous program of maintenance and dedicated staff help make up some of the energy lost in technology, intermittent use and size, according to Jim Landreth, vice president of fossil and hydro plant operations at South Carolina Electric & Gas Co. (SCE&G), a subsidiary of SCANA Corp.

But, he said, "the real contributor to that wonderful heat rate is the fact that McMeekin is right below the dam of Lake Murray. What we say technically speaking is that that cold water going through the condenser creates low-condenser back pressure, very low."

The water at the bottom of the lake stays 45 degrees Fahrenheit year-round, boosting the performance of the heat to steam process, where a great deal of a plant's energy can be lost, Landreth said.

Consistently cold lake water is not easy to replicate, nor is it present at all other U.S. coal plants. But McMeekin's ability to reach that heat rate despite its age and technology went into EPA's analysis for its proposal, which concluded that each state's coal-fired power plant fleet could achieve a 6 percent gain in efficiency, cutting a similar percentage in CO2 emissions from power plants.

In fact, EPA identified achievable improvements in coal plant efficiency as one of the justifications to target reductions of CO2 emissions 30 percent by 2030 relative to 2005 levels. But it is also one of the trickier elements of the EPA plan, because improving heat rate is so plant-specific, analysts say.

EPA is mainly counting on some improvements that all plants can make, like McMeekin's strong culture of good operation and maintenance, or "best practices." EPA says implementing best practices at coal plants could account for two-thirds of its 6 percent efficiency goal. More expensive equipment upgrades would make up the additional 2 percent, according to EPA's technical support document for its proposal.

Sam Korellis, principal technical leader at the Electric Power Research Institute, the industry's research arm, said the industry has worked hard and "in the last six years, we have made huge progress in identifying what kind of actions power plant owners can take -- hardware or operational."

"We have learned a lot on how to comply with emission requirements and not lose ground on the heat rate efficiency. It has been a tough battle," he said.

Much of the efficiency ground has been gained thanks to advances in sensor technology, Korellis said, which can tell operators how to optimize the equipment and let them monitor fleetwide performance from a central location. After high demand from its members, EPRI released an efficiency primer in April 2014 that tries to spell out improvements plants could make and roughly how much they would enhance a system.

The technical battle, however, is only part of the efficiency equation. Even though McMeekin is one of the most efficient coal plants, SCANA Corp. will take its units offline by 2019 and switch to natural gas because adding equipment to meet emissions rules for traditional pollutants -- like the Mercury and Air Toxics Standards -- does not make economic sense for the peaker plant, Landreth said.

"The decision was a heartbreaker," he said. Many of the 70-member staff have been at McMeekin for dozens of years and are proud of their work and the plant. The company will do its best to retrain and re-employ staff in other parts of SCE&G, Landreth said, as it did with its nearby Canadys plant, which the company recently shut down ahead of schedule.

Kathleen Spees, a senior associate with the Brattle Group, said the EPA proposal will lead to a substantial increase in the number of coal plant retirements -- but that makes sense for a rule aiming to control CO2 emissions, as coal plants are the highest source of CO2 in the nation's electric generation supply.

How often the remaining coal plants will be used is important to future emission levels, Spees said. If they're used less, it may not make sense to invest in efficiency improvements.

"They are getting redispatched, and for the carbon problem, that's what matters," she said. "Instead of operating 70 percent of the time, even if they are still installed by the year 2020 or 2030, they will be only operating at 30 percent. We will be saving on a lot of carbon emissions because they are operating less."

EPA adjusted its emissions calculations in the proposal based on a preliminary list of coal plants that will retire by 2016.

States and utilities have begun grappling with a long list of considerations as they plan how to meet the new rules.

'Out of whack' comparisons

One of the difficulties in trying to calculate how to improve a plant's heat rate is that efficiencies can be found in every aspect of running a plant. While that could be an advantage because it gives companies a lot of options, it also makes any one plant's success hard to replicate or to compare between plants.

Based on a much-cited 2009 study from energy analysis firm Sargent & Lundy LLC, EPA identified "no-cost" and "low-cost" efficiency improvement methods -- including condenser cleaning, controlling heater and duct leakage, and adding intelligent soot blowers -- that together with best practices could provide a 4 percent heat rate improvement, the agency said. The additional 2 percent would be found in more expensive equipment upgrades such as a turbine overhaul, according to EPA.

While these improvements are important, many other factors in and around the plant that are harder to change also play a key role in heat rate.

Efficiency improvements depend in part on the kind of coal that is burned, the air pollution controls, geographic location and outside air temperatures.

The size of the plant also can make a difference. Bigger plants lose less steam energy, have better economy of scale in cost improvements and tend to be younger.

And, as with McMeekin, the temperature of the cooling water, whether the plant is baseload or follows demand, and operation and maintenance practices also make a difference in heat rates.

EPA did not sufficiently account for foundational differences, such as whether a plant is supercritical or subcritical, or some of these other external factors in their calculations of the 6 percent goal, Energy Ventures Analysis' Hewson said in an interview, although the agency did try to account for outside air temperature and how often plants run.

"There has always been incentives for the utilities to generate power as efficiently as possible, so I don't believe there is much left on the ground for a bottom-line 4 percent improvement at no cost if they just operate the same as other plants," Hewson said.

Dallas Burtraw, a senior fellow at Resources for the Future, agreed that the statistics "get out of whack" beyond 1 to 2 percent improvements at "very low costs" because of all different types of plants in the nation's coal fleet.

"To say it is available is one thing, but to say how much it costs is something else," said Burtraw, co-author of a 2013 study that analyzed the marginal costs and emission impacts of improving coal plant efficiency that EPA cited in its technical document. "The evidence is it gets more costly rapidly."

But Burtraw said that to EPA's credit, the agency tried to anticipate these differences, which is why compliance with the proposal is flexible and not all states or even plants need to find the same efficiencies.

If it is too expensive to make changes to a coal-fired power plant because its base technology is too old, utilities and states have the option to switch to natural gas -- the most likely option, analysts say -- or to beef up efficiency on the demand end, or to find that same capacity in renewable energy, nuclear plants or even more efficient coal plants.

Squeezing out 6%

If utilities retire the older, less efficient coal plants that have the most room to improve, however, that places even more of a burden on the most efficient coal plants to squeeze a better heat rate out of their operations if coal's share of the emissions reductions under EPA's proposal are to be realized.

Belews Creek Steam Station, situated about 200 miles north of McMeekin, near the border of North Carolina and Virginia, is one such highly efficient plant. One of Duke Energy Corp.'s largest coal power plants in the Mid-Atlantic, it placed second in Electric Light & Power's most recent top 20 most efficient coal plants list, which came out in December.

The Belews Creek plant was built in the mid-1970s as a supercritical plant and has been upgraded and maintained with efficiency as a top priority, said Keith Queen, technical manager at the plant.

"Anytime we have to do maintenance, we always try to find solutions as cost-effective in terms of thermal performance," Queen said.

But the company does not spend money just for the sake of improving the efficiency of the plant, he explained.

"Usually, the things that go along with those justifications are something that will make the plant more reliable or more responsive," Queen said, although often what makes it more reliable, for instance, usually improves efficiency and vice versa.

Belews Creek and other nearby coal plants are now usually the third source the system calls upon to supply electricity, with baseload nuclear power and lower-cost natural gas plants being queued up first and second in the dispatch. The plant runs about 80 percent of the time, Queen said.

There are no plans to retire Belews Creek at the moment, according to Erin Culbert, a Duke spokeswoman, and it is too soon to say how the EPA proposal may affect the plant's future.

Under the EPA proposal, states and utilities will grapple with how Belews Creek and other plants that already have the best technology, operation and maintenance will be able to eke out additional efficiency measures.

"Is it really that there is ability for the top ones on the list for doing better than they are already doing?" Hewson said. "They are already at their best -- how are they going to get another 6 percent?"

Flexibility

But not all the nation's hundreds of coal plants have the same company and culture committed to the best maintenance and operation practices that the operators of McMeekin and Belews say underlie their success.

EPA's analysis found that more than 40 percent of the coal units did not even maintain a steady heat rate performance between 2002 to 2012. "This would imply that equipment maintenance and upgrades at a significant fraction of the study population have not been sufficient even to maintain the status quo," EPA said.

There are several additional elements that play a role in a company's decision to improve a plant's heat rate.

Many states and utilities have agreed on "fuel cost pass-through" to customers, which allows utilities to pass the basic costs of fuel straight to customers' bills. So the economic incentive to make sure every bit of coal is turned into electricity as efficiently as possible may not be there for a company.

There are also concerns that any sort of significant equipment upgrade or change to a plant could trigger New Source Review, which would make EPA regulations on traditional pollutants from the plant even tighter, treating it like a new coal power plant. And if a plant is more efficient, it may be used more often and therefore burn more coal, and can actually produce more pollutants, requiring additional environmental controls.

Hewson and other analysts say that it isn't clear how much the fuel cost pass-through and New Source Review have prevented power plants from making efficiency improvements, but that they add yet another uncertainty in meeting the 6 percent goal.

In the end, though, Brattle's Spees said, the flexibility of EPA's plan means that if the coal heat rate improvements are not there or are not economical, utilities can reach their emission cuts in other ways.

"If the heat rate of 6 percent is not achievable and the 4 percent is, I don't think that it would be all that difficult to get the extra 2 percent out of the coal-to-gas dispatch," where natural gas plants are run more often than coal, she said.

"This is just a calculation to determine the standard, and then in reality what folks actually do to meet the standards can be completely different," she added. "To me, the cost-effectiveness will come once it comes to implementation and compliance."

System efficiencies to lower overall emissions could be recovered elsewhere, Spees said, especially if states decide to use a wider trading approach to tackle the emissions issue, rather than focusing just on one state.

Twitter: @lingkate6

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