Glossary and Conventions
COST OF COAL CONVERSION PROCESSES
The cost of producing electricity or clean gaseous and liquid fuels from coal is highly dependent on the level of capital investment and, therefore, on the return required by investors. This return depends on both the prime rate, which reflects the anticipated effects of inflation and the desire of the Federal Reserve Bank to control inflation, and the investors' assessment of risk.
The electric utility industry, with its relatively predictable selling prices for electricity and stable production costs, can attract capital at a lower prime rate than, for example, the oil industry, where future product and feedstock prices are much less certain. Major investments are frequently split between a component with relatively assured, but lower, return and a higher-return component that will incur a larger risk. In the utility industry, a substantially larger component of low-risk borrowed money is more common than in the petroleum industry, where 100 percent equity financing has been more commonly practiced. Hence, the term ''utility financing" is frequently used to describe highly leveraged investments, whereas "petroleum financing" describes investments with the smaller component of borrowed money generally employed in that industry.
The costs presented by the U.S. Department of Energy (DOE) and used in this report are based on leveraged financing. Key assumptions are summarized below.1 It has also been assumed that sufficient plants have been built to reach a stable cost (nth plant costs; see Chapter 8).
Key assumptions for capital cost estimation:
Bank interest rate (percent)
Percent internal rate of return
Years of construction
Years of operation
Maintenance, percent initial capital
Working capital, percent revenue
Working capital, percent liquid
Owner's cost, percent initial
capital, first-year operation
Federal income tax rate, percent
General inflation, percent
Raw material price escalation,
percent (same as general inflation)
General inflation of 3 percent per year was applied to all costs and selling prices. As mentioned above, an assumed rate of inflation was included in the investment required by investors.
Throughout this report, all costs, prices, and so forth, are given in constant 1992 dollars unless otherwise specified. A Gross Domestic Product Implicit Price Deflator2 has been used to adjust current dollars to 1992 dollar figures. An exception is DOE budget data, which are quoted in current dollars.
Throughout this report all thermal efficiency figures are based on the higher heating value (HHV) of fuel, which is the convention most widely used in the United States for coal-based systems. HHV credits the fuel with the heat of vaporization of water formed in the combustion reaction; that is, water is assumed to exist in the liquid phase after combustion. This is consistent with the standard thermodynamic conditions of 25 °C (77 °F) and 1 atmospheric pressure used to calculate the heat of formation or reaction of any chemical compound (recall that "heating value" is simply the name commonly used for the heat of reaction of a hydrocarbon used as fuel).
In parts of Europe and elsewhere, however, the lower heating value (LHV) is commonly used in reporting thermal efficiencies. In the United States LHV is commonly used to quote efficiencies based on natural gas as a fuel. The LHV assumes that water formed in combustion remains in a vapor state, as in actual combustion systems that discharge flue gases at temperatures of several hundred degrees. Thus, the energy potentially recoverable by condensing water in the flue gas is assumed to be unavailable and not credited to the fuel. Since the LHV assumes that fuel delivers less energy input than the HHV, any thermodynamic efficiency, E, based on LHV will be higher than one based on HHV in simple inverse proportion; that is, ELHV/EHHv = HHV/LHV.
The numerical difference between LHV and HHV depends on the fuel. The difference is smallest for coal (where LHV is roughly 4 percent less than HHV) and greatest for natural gas (where LHV is about 10 percent lower). Accordingly, a power plant efficiency of 40 percent based on HHV would be reported as 42 percent based on LHV using coal and about 44 percent based on LHV using natural gas.
Asea Brown Boveri
Atmospheric fluidized-bed combustion
Highest rank of economically useable coal, with a heating value of 15,000 Btu per pound, carbon content of 86 to 97 percent, and moisture content of less than 15 percent
Advanced pulverized coal
Advanced power system
Advanced research and environmental technology
Advanced research and technology development
Advanced turbine system
Baseload is the minimum amount of power required during a specified period at a steady state.
Type of coal most commonly used for electric power generation, with a heating value of 10,500 to 15,000 Btu per pound, carbon content of 45 to 86 percent, and moisture content of less than 20 percent
British thermal unit
Clean Air Act amendments
Clean coal technology
Clean Coal Technology Coalition
U.S. Department of Energy
Demonstrated reserve base
Demand-side management; DSM programs are instituted by utilities, such as rebates to customers for installation of energy-efficient appliances or reduced rates for nonpeak-load use of electricity, to encourage customers to reduce electricity consumption overall or at certain periods.
European currency unit
Externally fired combined-cycle
Energy Information Administration
U.S. Environmental Protection Agency
Energy Policy Act of 1992
Electric Power Research Institute
Flue gas desulfurization
Fischer-Tropsch process; catalytic conversion of synthesis gas into a range of hydrocarbons.
Gross domestic product
Gases, such as water vapor, carbon dioxide, tropospheric ozone, nitrous oxide, and methane, that are transparent to solar radiation but opaque to long-wavelength radiation; their action is similar to that of glass in a greenhouse.
Gas Research Institute
Gigawatt (109 Watts)
Higher heating value
High-performance power system
Indirectly fired cycle
Integrated gasification combined-cycle; IGCC power generation systems replace the traditional coal combustor with a gasifier and gas turbine.
Integrated gasification fuel cell
Low-emission boiler system
Lower heating value
Life extension is achieved by maintaining or improving the operating status of an electric power plant within acceptable levels of availability and efficiency, beyond the originally anticipated retirement date.
Type of coal with a heating value of 4,000 to 8,300 Btu per pound, a carbon content of 25 to 35 percent, and moisture content up to 45 percent.
Liquefied natural gas
Thousand cubic feet
Molten carbonate fuel cell
Morgantown Energy Technology Center
Million (106) Btu
Megawatt (106 Watts)
National Coal Association
National Coal Council
Oxides of nitrogen; a mix of nitrous oxide (NO) and nitrogen dioxide (NO2)
New Source Performance Standards
Organization for Economic Cooperation and Development
Organization of Petroleum Exporting Countries
Phosphoric acid fuel cell
Peak load Peak load (usually in reference to electrical load) is the maximum load during a specified period of time.
Pittsburgh Energy Technology Center
Pressurized fluidized-bed combustion
Parts per million
psi (or psig)
Pounds per square inch (psig indicates gauge pressure, that is, pressure above atmospheric pressure)
Public Utility Regulatory Policy Act of 1979
Thermal decomposition of a chemical compound or mixture of chemical compounds.
Quadrillion (1015) Btu
Variety of coal; the higher the rank of coal, the greater its carbon content and heating value.
Research, development and demonstration
Research, development, demonstration and commercialization
Repowering is achieved by investments made in a plant to substantially increase its generating capability, to change generating fuels, or to install a more efficient generating technology at the plant site.
South African Coal, Oil, and Gas Corporation; coal conversion plant in operation at Sasolburg; coal is gasified by the Lurgi process and then converted to liquid hydrocarbons through the Fisher-Tropsch process.
Superclean cold water slurry
Selective catalytic reduction; postcombustion NOx control with the use of catalysts.
Synthetic natural gas
Combined SO2 and NOx catalytic advanced flue gas cleanup
Solid oxide fuel cell
Mixture of carbon monoxide and hydrogen and other liquid and gaseous products
Coal with a heating value of 8,300 to 11,500 Btu per pound, a carbon content of 35 to 45 percent, and a moisture content of 20 to 30 percent.
Synthetic Fuels Corporation
Organization established by the Energy Security Act of 1980 to facilitate the development of domestic nonconventional energy resources.
Thermal barrier coatings
Trillion (1012) cubic feet
University of North Dakota Energy and Environmental Research Center
Volatile organic compounds