US Coal Prices are Way Up – Fuel Flexibility Can Help

Coal prices have increased in the USA dramatically over the last year.  Mine prices have increased 2x, 3x, or even 5x times more over one year as shown in Table I.  It is time to consider lower cost alternative coals to try to buffer this increase.  DO YOU have well established procedures for plant management to consider, evaluate impacts, and approve or deny alternate coals/fuels on a short time basis?  Some coal purchase opportunities expire fast.  Let us look at average weekly U.S. Energy Information Administration Data on today’s coal price verse one year ago.

        Table I. US Coal Mine Price 9/12/2022 verse 9/13/2021

       Basin               Btu/lb                   $/ton 21               $/ton 22               $/MBtu 21           $/MBtu 22           % Increase 22/21       

       PRB                  8800                       13.35                     16.15                     0.76                        0.92                        121 % 

       ILB                    11800                    36.25                     196.73                   1.54                        8.34                        543 %

       CAPP               12500                    60.65                     198.85                   2.43                        7.95                        328 %

       NAPP              13000                    71.05                     181.95                   2.73                        7.00                        256 %

PRB = Powder River Basin, ILB = Illinois Basin, CAPP = Central Appalachian, NAPP = Northern Appalachian

From Table I you can see that these are mine prices rather than delivered prices.  High Btu/lb coal tend to travel farther due to transportation providers charging $/ton.  PRB coal users have seen an increase of about 20% over the past year.  ILB coal users have seen the biggest increase of all the coal fields listed with over a 5X increase in mine price.  Generation costs are about 80% fuel costs.  This could significantly increase electric bills and profitability of plants.   Are you considering lower cost coals for your plants?  Here are some of our (CCI’s) philosophies on alternate coal evaluation:

1. Do not use bid specs.  Ask for guaranteed specs and price from supplier rather than them trying to fit their coal into your spec.
2. Have in place a coal quality impact model like our COAL XL spreadsheet that looks at basic quantities of coal, ash, sulfur, and efficiency to look at major cost impacts.  Slagging, fouling, mill performance, and pollution impacts can be estimated using various calculations.
3. Trained and knowledgeable engineering and operations staff to accommodate alternative coals though blending and/or changes in operation.
4. Test burn procedures that incorporate these three phases of learning.
   1. Paper test burn – COAL XL or similar model that compares potential coals to coals plant has experience using.
   2. Trial test burn where a small shipment is evaluated by plant operation to look for areas of concern – handling, dust, combustion, emissions…
   3. Organized test burn where units is tested over several days/weeks to look for opportunities to improve operation with new fuel.
5. After step 4c longer term contracts may be considered. Completing step 4b may allow for spot shipments to the plant for further evaluation/blending purposes.

Good communications between fuel purchasing and plant operations is important to successful introduction and continued use of non-design or nontraditional coals or other solid fuels. (Pet coke, bio fuel…).  Understanding coal quality and combustion truly helps this process, which is what we offer to the industry though our training and consulting services.