This Chart Shows the Collapse of “King Coal” by State, and Why Miners Are Going Bankrupt

Friday, April 29, 2016
By Paul Martin

by Wolf Richter
WolfStreet.com
April 28, 2016

Technological innovation did it.

For decades, coal was the dominant fuel for power generation in the US. But now coal mining companies are being pushed into bankruptcy. Two weeks ago, it was the world’s largest privately held coal miner, Peabody Energy, that made the trip. They’re hounded by a slew of problems. Two of those problems are based on technological innovation.

Coal’s direct competitor in the power sector, natural gas, suffered a total price collapse starting in 2008, from which it has still not recovered. A surge of production from improved fracking technologies created a natural gas glut that has still not abated. Even today, inventories are at record levels.

It comes on top of a technical innovation in the power generation industry: the Combined-Cycle Gas Turbines (CCGT). The gas turbine operates like a jet engine but drives a generator instead of fan blades. The super-hot exhaust gases are then used to generate high-pressure steam to drive a steam turbine connected to another generator. Efficiencies of these sets reach 62% and beyond.

Coal-fired power plants only use steam turbines with efficiencies that average globally 33%. In other words, 67% of the energy in coal is wasted.

That combination — a highly efficient power generator and a price of natural gas that is so low that it is driving natural gas drillers into bankruptcy — has completely changed the dynamics of the power generation sector.

The decline of coal as a fuel in the power mix started in the early 1990s when the CCGT technology took off and started replacing coal-fired generators – the oldest, least efficient plants first – even when the price of gas was higher than today.

The Rest…HERE

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