SNL Energy Reports That Coal Transportation Costs Could Hinder Resurgence of Coal Generation

Share Article

Over the past year, relatively higher natural gas prices have somewhat reinvigorated coal-fired generation in the U.S. However, the combination of looming environmental regulations and gas prices remaining relatively low compared to historical rates have kept the pressure on coal generators.

Coal transportation costs could hinder coal generation, SNL Energy report shows

From January 2008 to March 2013, the Southwest Power Pool region experienced the largest increase in average coal transportation costs, rising from 73 cents/MMBtu to $1.13/MMBtu, according to an SNL Energy analysis.

Competition between coal and natural gas as the go-to fuel for electricity generation is expected to continue in the short term. According to the U.S. Energy Information Administration's "Annual Energy Outlook 2013," natural gas prices are projected to increase more rapidly than coal prices and this may potentially allow existing coal plants to recapture some market share lost in recent years.

Over the past year, relatively higher natural gas prices have somewhat reinvigorated coal-fired generation in the U.S. However, the combination of looming environmental regulations and gas prices remaining relatively low compared to historical rates have kept the pressure on coal generators.

The cost of transporting coal from mine to power plant constitutes a significant part of the price of coal. According to the EIA, more than 70% of the coal delivered to the electric power sector is transported by rail, and the average cost of shipping coal by rail in the U.S. has increased nearly 50% over the past decade.

Full report and analysis here:
http://www.snl.com/InteractiveX/Article.aspx?cdid=A-18746661-11053

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Christina Twomey
SNL Financial
434-951-6914
Email >
Follow us on
Visit website