Analysis of Heat Rate Improvement Potential at Coal-Fired Power Plants

Release date: May 19, 2015

Introduction

The thermal efficiency of electricity production is represented by the heat rate, which measures the amount of energy used to generate one kilowatthour of electricity.¹ A generating unit with a lower, or more efficient, heat rate can generate the same quantity of electricity while consuming less fuel, compared with a unit with a higher heat rate. Lower fuel use per unit of electricity generated also reduces the corresponding emissions of pollutants such as sulfur dioxide (SO2), nitrogen oxide (NOX), mercury (Hg), and carbon dioxide (CO2). Consequently, improving heat rates at power plants can lower fuel costs and help achieve compliance with environmental regulations.

During the development of the Annual Energy Outlook 2015 (AEO2015), the U.S. Energy Information Administration (EIA) updated its modeling capability to include the ability to evaluate the potential for making heat rate improvements at existing coal-fired generators. The projections in the AEO2015 are produced by the National Energy Modeling System (NEMS), which is a modular system consisting of components to represent fuel supply, end-use consumption and conversion sectors, as well as modules for international and macroeconomic activities.

The Electricity Market Module (EMM) is the electricity supply component of the NEMS. The EMM performs three primary functions — capacity planning, fuel dispatching, and finance and pricing. Capacity planning decisions include building new plants to satisfy increases in demand and to replace retiring plants. Planning decisions also consider retrofits of existing capacity to install pollution control devices. The fuel dispatching function involves operating the available capacity to meet the demand for electricity. The finance and pricing function considers the investment costs associated with planning decisions and the operating costs from dispatching activities to develop delivered prices for electricity.

Heat rate improvement is another planning activity, as it considers the tradeoff between the investment expenditures and the savings in fuel and/or environmental compliance costs. Potential increases in efficiency can vary depending in part on the type of equipment installed at a generating plant. The EMM represents 32 configurations of existing coal-fired plants based on different combinations of particulate, sulfur dioxide (SO2), nitrogen oxide (NOX), mercury, and carbon emission controls (Table 1). These categories form the basis for evaluating the potential for heat rate improvements.

EIA entered into a contract with Leidos Corporation (Leidos) to develop a methodology to evaluate the potential for heat rate improvement at existing coal-fired generating plants. Leidos performed a statistical analysis of the heat rate characteristics of coal-fired generating units modeled by EIA in the EMM. Specifically, Leidos developed a predictive model for coal-fired electric generating unit heat rates as a function of various unit characteristics.² Leidos employed statistical modeling techniques to create the predictive models.³

For the EMM plant types, the coal-fired generating units were categorized according to quartiles, based on observed⁴ versus predicted heat rates. Units in the first quartile (Q1), which perform better than predicted, were generally associated with the least potential for heat rate improvement. Units in the fourth quartile (Q4), representing the least efficient units relative to predicted values, were generally associated with the highest potential for heat rate improvement. Leidos developed a matrix of heat rate improvement options and associated costs, based on a literature review and the application of engineering judgment.

Little or no coal-fired capacity exists for the EMM plant types with mercury and carbon control configurations, therefore estimates were not developed for those plant types. These plant types were ultimately assigned the characteristics of the plants with the same combinations of particulate, SO2, and NOX controls. Plant types with relatively few observations were combined with other plant types having similar improvement profiles. As a result, 9 unique plant type combinations were developed for the purposes of the quartile analysis, and for each of these combinations Leidos created a minimum and a maximum potential for heat rate improvement along with the associated costs to achieve those improved efficiencies.⁵

Leidos used the minimum and maximum characteristics as a basis for developing estimates of mid-range cost and heat rate improvement potential. The mid-range estimates were used as the default values for the Annual Energy Outlook 2015 (AEO2015) (Table 2). Table 3 contains the minimum and maximum heat rate improvements and costs.

Additional details regarding the background and the analytical methodology are included in the consultant report prepared by Leidos Corporation (Appendix).

Table 1. Existing pulverized coal plant types in the NEMS Electricity Market Module

Plant Type	Particulate Controls	SO2	NOX	Mercury Controls	Carbon Controls
B1	BH	None	Any	None	None
B2	BH	None	Any	None	CCS
B3	BH	Wet	None	None	None
B4	BH	Wet	None	None	CCS
B5	BH	Wet	SCR	None	None
B6	BH	Wet	SCR	None	CCS
B7	BH	Dry	Any	None	None
B8	BH	Dry	Any	None	CCS
C1	CSE	None	Any	None	None
C2	CSE	None	Any	FF	None
C3	CSE	None	Any	FF	CCS
C4	CSE	Wet	None	None	None
C5	CSE	Wet	None	FF	None
C6	CSE	Wet	None	FF	CCS
C7	CSE	Wet	SCR	None	None
C8	CSE	Wet	SCR	FF	None
C9	CSE	Wet	SCR	FF	CCS
CX	CSE	Dry	Any	None	None
CY	CSE	Dry	Any	FF	None
CZ	CSE	Dry	SCR	FF	CCS
H1	HSE/Oth	None	Any	None	None
H2	HSE/Oth	None	Any	FF	None
H3	HSE/Oth	None	Any	FF	CCS
H4	HSE/Oth	Wet	None	None	None
H5	HSE/Oth	Wet	None	FF	None
H6	HSE/Oth	Wet	None	FF	CCS
H7	HSE/Oth	Wet	SCR	None	None
H8	HSE/Oth	Wet	SCR	FF	None
H9	HSE/Oth	Wet	SCR	FF	CCS
HA	HSE/Oth	Dry	Any	None	None
HB	HSE/Oth	Dry	Any	FF	None
HC	HSE/Oth	Dry	Any	FF	CCS
Notes: Particulate Controls -- BH = baghouse, CSE = cold side electrostatic precipitator, HSE/Oth = hot side electrostatic precipitator/other/none. SO2 Controls -- wet = wet scrubber, dry = dry scrubber. NOX Controls -- SCR = selective catalytic reduction. Mercury Controls -- FF = fabric filter. Carbon Controls -- CCS = carbon capture and storage. Source: U.S. Energy Information Administration/Leidos Corporation

Table 2. Heat rate improvement (HRI) potential and cost (capital, fixed O&M) by plant type and quartile as used for input to NEMS

Plant type and quartile combination	Count of total Units	Percentage HRI potential	Capital cost (million 2014 $/MW)	Average fixed O&M cost (2014 $/MW–yr)
B1-Q1	32	(s)	0.01	200
B1-Q2	15	0.8%	0.10	2,000
B1-Q3	18	4%	0.20	4,000
B1-Q4	20	6%	0.90	20,000
B3-Q1	13	(s)	0.01	300
B3-Q2	24	0.7%	0.05	1,000
B3-Q3	16	6%	0.20	3,000
B3-Q4	15	9%	0.60	10,000
B5C7-Q1	16	(s)	(s)	80
B5C7-Q2	42	0.8%	0.03	700
B5C7H7-Q3	84	7%	0.10	2,000
B5C7H7-Q4	59	10%	0.20	4,000
B7-Q1	27	(s)	(s)	70
B7-Q2	25	0.8%	0.04	800
B7-Q3Q4	30	7%	0.30	5,000
C1H1-Q1	148	(s)	0.01	200
C1H1-Q2	117	0.8%	0.10	2,000
C1H1-Q3	72	4%	0.40	8,000
C1H1-Q4	110	7%	1.00	30,000
C4-Q1	15	(s)	(s)	80
C4-Q2	27	0.8%	0.04	900
C4-Q3	32	6%	0.20	2,000
C4-Q4	39	10%	0.30	5,000
CX-Q1Q2Q3Q4	15	7%	0.20	4,000
H4-Q1Q2Q3	13	3%	0.20	3,000
IG-Q1	3	(s)	(s)	60
Total set	1,027	4%	0.30	6,000
(s) = less than 0.05% for HRI potential or less than 0.005 million $/MW for capital cost. Source: U.S. Energy Information Administration/Leidos Corporation

Table 3. Minimum and maximum heat rate improvement (HRI) parameters

Plant type and quartile combination	Count of total units	Percentage HRI potential	Capital cost (million 2014 $/MW)
B1-Q1	32	(s)	0.007
B1-Q2	15	0.3% – 1.2%	0.096 – 0.11
B1-Q3	18	2.1% – 6.4%	0.20 – 0.26
B1-Q4	20	3.5% – 9.4%	0.76 – 0.99
B3-Q1	13	(s)	0.010
B3-Q2	24	0.3% – 1.2%	0.047 – 0.056
B3-Q3	16	3.1% – 8.2%	0.19 – 0.30
B3-Q4	15	5.1% – 13%	0.50 – 0.72
B5C7-Q1	16	(s)	0.003
B5C7-Q2	42	0.3% – 1.2%	0.031 – 0.036
B5C7H7-Q3	84	3.6% – 9.5%	0.11 – 0.16
B5C7H7-Q4	59	6.0% – 15%	0.18 – 0.25
B7-Q1	27	(s)	0.002
B7-Q2	25	0.3% – 1.2%	0.035 – 0.042
B7-Q3Q4	30	3.8% – 9.8%	0.27 – 0.40
C1H1-Q1	148	(s)	0.006
C1H1-Q2	117	0.3% – 1.2%	0.12 – 0.13
C1H1-Q3	72	2.0% – 6.0%	0.36 – 0.49
C1H1-Q4	110	3.6% – 9.6%	1.1 – 1.5
C4-Q1	15	(s)	0.002
C4-Q2	27	0.3% – 1.2%	0.041 – 0.048
C4-Q3	32	3.5% – 9.1%	0.13 – 0.20
C4-Q4	39	5.7% – 14%	0.21 – 0.30
CX-Q1Q2Q3Q4	15	3.7% – 9.7%	0.19 – 0.28
H4-Q1Q2Q3	13	1.9% – 5.1%	0.14 – 0.21
IG-Q1	3	(s)	0.002
TOTAL SET	1,027	2.0% — 5.3%	0.24 — 0.32
(s) = less than 0.05% for HRI potential. Source: U.S. Energy Information Administration/Leidos Corporation

See complete report

Footnotes
¹U.S. Energy Information Administration, Frequently Asked Questions, What is the efficiency of different types of power plants?, accessed January 31, 2015.
²The characteristics used to predict heat rate included attributes such as nameplate capacity, rank of coal used, NEMS plant type, flue-gas desulfurization status, and flue-gas particulate collector type.
³This included algorithmic evaluation of potential descriptive variables, and piecewise linear regression analysis. A decision tree created 7 sub-models describing inputs for the heat rate model for different unit categorizations.
⁴In this report, observed heat rates refer to the heat rates contained in EIA's EMM plant file.
⁵Leidos selected the plant type and quartile groupings such that each grouping contained at least 10 generating units, with the exception of the integrated gasification combined-cycle (IG) type, which has essentially no heat rate improvement potential. Some plant types and quartiles also had associated variable operation and maintenance (O&M) costs. The variable O&M costs were not incorporated into the NEMS EMM model at the time of this analysis. However, the impact of omitting variable O&M cost is expected to be small due to the relative magnitude of the capital and fixed O&M cost components.