Demands for Coal-fired Power Will Reach New High

By Lily Wang

According to the new report released by the International Energy Agency， as the pandemic starts to mitigate and the global economy gradually recovers， demand for power has been rising. In 2021， the world’s coal-fired power generation increased by 9% over the previous year， while in 2020 power generation fell by 4%. The report shows that the rising demands for power， coupled with inadequate low-carbon power generation have made many developed economies more dependent on fossil fuel power. The rise of natural gas prices to a historical high has also stimulated demand for coal.

U.S. coal-fired power saw first rebound since 2014

A report from the International Energy Agency pointed out that in 2021， global coal demand， including the cement and steel manufacturing industry， increased by 6% from the previous year. Although the total amount was still lower than the levels in 2013 and 2014， the agency said that without policy intervention， demand is likely to be even higher next year. “Coal is the world’s largest single source of carbon emissions. This year， global coalfired power generation has hit a record high， indicating that world countries are moving away from the target of net zero carbon emission，” said Fatih Birol， Chief Executive of the International Energy Agency.

According to the recent Shortterm Energy Outlook issued by the U.S. Energy Information Administration， it is estimated that U.S. coal-fired power generation in 2021 will increase by 22% compared to 2020. The price of natural gas has been rising sharply， while the coal price is stable. Therefore， U.S. power plants have used more coal to generate power. The year 2021 will be the first year seeing the rise of coal-fired power since 2014.

It is understood that so far， the average natural gas delivery cost of power plants in the United States is USD 4.93 per million British thermal units （Btu）， more than twice the price in 2020.

In 2020， the average utilization rate（capacity factor） of coal-fired generators in the United States reached 40%， while the average capacity factor of coal-fired power was normally 70% or higher before 2010. The high natural gas price has pushed up the average coal capacity factor to about 51% in 2021， returning to the average level in 2018.

U.K.’s energy crisis pushes up demands for coal-fired power

In June 2021， the U.K. government decided that it would shut down all its coal power facilities by October 1， 2024. However， the following energy crisis stimulated the demands for coal-fired power.

As early as 2019， the national grid of the U.K. announced that the U.K. had been using zero coal for power generation for seven consecutive days， and all its power came from low-carbon energy such as photovoltaic， nuclear power and wind power. This set the longest time record that no fossil fuels were used for power generation since the Industrial Revolution.

However， in the past two months， the price of natural gas in the U.K. has continued to surge， and high temperatures lingered in the summer. These conditions forced the British power plants to restart the old coal-fired power facilities that had been out of service.

According to youjia.com， there was also a surge in coal power generation in Britain in early September 2021， which was also due to the reduction of wind speed and wind power generation.

British power company Drax previously said that the company owns several coal power plants， and it plans to completely shut down its last two coal power facilities before the end of 2022. However， as the energy supply tightens in the U.K.， Drax’s CEO Will Gardiner said that following the requirements from the British government， the company might have to adjust its coal power phasing-out plan within a few months.

According to data released by British national grid institution ESO in October 2021， among the power supply in the U.K.， natural gas， wind and nuclear power accounts for 44.8%， 19.2% and 12.6% respectively.

Australia refuses to phase out fossil fuels

“We have made it very clear that Australia will not close coal mines or coal-fired power stations，” Keith Pitt， Australian Minister of Mining and Resources， said recently. He emphasized that Australia has the best coal in the world and will continue to maintain its competitiveness in the coal market.

Pitt said that by 2030， global coal demand is expected to rise. “If we don’t win that market， others will. Rather than using coal from Indonesia， Russia or elsewhere， I hope that Australia’s high-quality coal will be used to create job opportunities and boost Australia’s economy， ” Pitt said.

Australia is one of the largest producers of coal and natural gas in the world， but the country has also suffered drought， floods and mountain fires caused by extreme climate in recent years. The Australian government announced the net zero target by 2050 in October 2021， but the plan was criticized for lack of details and heavy dependence on unknown technological breakthroughs. The Minerals Council of Australia said it could achieve its 2050 emission reduction target by investing more in technology.

Reinhold Schmidt， CEO of Australia’s major coal exporter New Hope Corp.， said， “In the next 20 years and beyond， many communities， especially large cities in Asia， will need coal supplied by our customers as an affordable and accessible energy to empower the local homes and industries.” It is said that the company’s major export market includes India， Vietnam and Japan.

Schmidt said that the economic recovery of major markets and the inadequate supply of substituted energy have pushed up the price of coal recently. From the beginning of the next ten years， the demand for shipped coal will surpass production.

The company also mentioned that China， the largest net importer of coal， will continue to exert a significant impact on the global maritime trade market. Although Japan continues to explore cleaner energy sources， the limited availability of these alternative energy sources will push up the demand for thermal power generation.

China uses coal as a major energy resource

China is the world’s largest coal producing and consuming country. Among its energy reserves， coal accounts for about 89%， oil accounts for about 4% and natural gas accounts for about 7%.

Since early 2021， the supply and demand of coal and electrical power has been tight in China， and power rationing could be seen in some provinces and cities. Especially since late October of last year， with the release of high-quality coal production capacity， there has been no shutdown of thermal power units due to coal shortages in the country. The central economic work conference held recently proposed that we should focus on the basic national conditions of coal as the major source of energy and promote the clean and efficient utilization of coal， increase the consumption capacity of new energy， and realize the optimal combination of coal and new energy.

China is rich in coal， but lacking in oil and natural gas， which determines its coal-dominated energy structure. That coal is the major source of energy will not change in the next period of time.

The traditional development and utilization of coal heavily pollutes the environment. The Central Economic Work Conference stressed the need to make the use of coal clean and efficient.

“Mining work shall use intelligent mining technology and build a green and intelligent mine，” Feng Xingzhen， Chairman of Xuzhou Coal Mining Group， mentioning that we should avoid using coal for mining and promote clean mining.

In terms of installed capacity， data of the National Bureau of statistics shows the installed capacity of power generation in China reached 2.2 billion kw by the end of 2020. Among them， the installed capacity of thermal power was 1.2 billion kw； the installed capacity of hydropower was 370 million KW； the installed capacity of nuclear power was 49.89 million KW； the installed capacity of grid-connected wind power was 280 million KW； the installed capacity of grid-connected solar power generation was 250 million KW.

In terms of power generation， China’s thermal power generation in the first half of 2021 reached about 2.8262 trillion kwh， accounting for about 73%， meaning it remains the main type of power generation. Hydropower ranks second， accounting for about 12.5% of the total power generation in China.

Sun Yaowei， Chairman of the energy investment commission of the Investment Association of China， said，“coal-fired power is still used as baseload energy supply. In the future it will be used for both base load supply and peak shaving， and finally used mainly for peak shaving.” Xiao Xinjian said that the future energy structure will use the wind power， solar power， hydropower and nuclear power as conventional energy sources， and the coal-fired power will be used as supplement to jointly ensure power supply. Also， the development of electrochemical energy storage technologies will gradually become an important support for a flexible power supply.