First US coal plant in years to open where no options exist

Washington

ONE way to boost coal in the US: Find a spot near a mine with no access to oil or natural gas pipelines, where it's not particularly windy and it's dark much of the year.

That's how the first coal-fired plant to open in the US since 2015 bucked the trend in an industry that's seen scores of facilities close in recent years. A 17-megawatt generator, built for US$245 million, is set to open in April at the University of Alaska Fairbanks, just 160km from the state's only coal mine.

"Geography really drove what options are available to us," said Kari Burrell, the university's vice-chancellor for administrative services. "We are not saying this is ideal by any means."

The new plant is arriving as coal fuels about 25 per cent of electrical generation in the US, down from 45 per cent a decade earlier. A near-record 18 coal plants closed in 2018, and 14 more are expected to follow this year, according to Bloomberg NEF.

The biggest bright spot for US coal miners recently has been exports to overseas power plants. At home, one of the few growth areas has been in pizza ovens.

There are a handful of other US coal power projects that have been proposed, including plans to build an 850-megawatt facility in Georgia and an 895-megawatt plant in Kansas. But Ashley Burke, a spokeswoman for the National Mining Association, said she is unaware of any US plants actively under development besides the one in Alaska.

"The future of power in the US does not include coal," Tessie Petion, an analyst for HSBC Holdings Plc, said in a research note.

Fairbanks sits on the banks of the Chena River, amid the vast subarctic forests in the heart of Alaska. The oil and gas fields of the state's North slope are 805km north. The nearest major port is in Anchorage, 563km south.

The university's new plant is a combined heat and power generator, which will create steam both to generate electricity and heat campus buildings. Before opting for coal, the school looked into using liquid natural gas, wind and solar, bio-mass and a host of other options. None of them pencilled out, said Mike Ruckhaus, a senior project manager at the university.

The project, financed with university and state-municipal bonds, replaces a coal plant that went into service in 1964. University spokeswoman Marmian Grimes said it's worth noting that the new plant will emit fewer emissions.

While any new plant is good news for coal miners, Clarksons Platou Securities analyst Jeremy Sussman said that this one is "an isolated situation".

"We think the best producers can hope for domestically is a slowdown in plant closures," he said. WP