Coal Age

APR 2018

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Page 7 of 51

6 April 2018 news continued Continued from p. 5... Continued on p. 7... Earlier this year, FirstEnergy announced plans for more than $10 billion in capital investments in its regulated businesses through 2021. FirstEnergy's 3,779-megawatt (MW ) regulated electric gener- ation fleet includes four plants: 1,098-MW coal-fired Fort Martin Plant in Maidsville, West Virginia; the 1,984-MW coal-fired Harri- son Plant in Haywood, West Virginia.; 487 MW of regulated gener- ation at the Bath County Hydro facility in Warm Springs, Virginia; and 210 MW of hydro-generation at the Yards Creek facility in Blairstown, New Jersey. In late 2016, FirstEnergy announced its goal of exiting the generation business by mid-2018. At this time, the company's AE Supply subsidiary owns two competitive generation assets: the 1,300-MW Pleasants Plant in Willow Island, West Virginia, and 713 MW of compet- itive generation at Bath County Hydro. The company plans to sell or deactivate Pleasants by the end of 2018, and the previ- ously announced sale of Bath is on course to close in the first half of the year. Shortly before filing for bankruptcy, FirstEnergy Solutions sent a letter to the Department of Energy Secretary Rick Perry to invoke Section 202(c) under the Federal Power Act, which allows the secretary to require temporary connections, generation, de- livery, interchange or transmission of electricity during war or when an emergency exists, such as a sudden increase in the de- mand for electric energy or a shortage of electric energy. The order requested that the DOE step in and order certain existing nuclear and coal-fired generators in PJM to enter into contracts with PJM Interconnection to generate, deliver, inter- change, and transmit electric energy, capacity, and ancillary ser- vices as needed to maintain the stability of the electric grid and for PJM to compensate at-risk merchant nuclear and coal-fired power plants for the full benefits they provide. The letter stated that nuclear and coal-fired generators have been closing at a rapid rate which puts the system resiliency at risk. "PJM has done little to prevent this emergency despite the numerous signs for many years that the emergency was coming," the letter said. "The very diversity of supply that baseload nuclear and coal- fired units provide is being lost more and more each day as more and more of these plants retire because their fuel security and resiliency are not properly recognized and valued by the current administrative market rules." The letter cited the recent cold weather in the East and the Polar Vortex as examples of why immediate action is necessary and "the value that nuclear and coal-fired generators bring to the electric grid." In the letter, the company said a "lack of appropriate com- pensation" is one reason nuclear and coal-fired units are closing. "Such quick and decisive intervention is necessary to avoid a crisis point where such baseload generation will cease to exist in RTO markets," the letter said. Back in January, the Federal Energy Regulatory Commission (FERC) rejected a rule proposed by the DOE on grid reliability and resilience pricing. The rule would have ensured that each eligible reliability and resiliency resource could recover its fully allocated costs. Without the agreement, the only other option would have been to liquidate the mines, putting at risk the livelihoods of 400,000 workers, as well as contractors and their employees. Coal India to Possibly Lower Production Target for FY2020 India Infoline reported that the government is considering lowering Coal India's current production target for FY2020. The government had earlier set a production target of 1 billion metric tons (mt) for Coal India in FY2020. KPMG has been asked to assess whether a production of 1 billion mt of coal would be required to meet domestic demand. Coal India had set a production target of 600 mt for FY2018, of which it achieved 95% (567 mt). Coal offtake for CIL also achieved only 97% of its FY2018 target. This miss in offtake and production was largely due to unavailability of coal rakes. With the issue of poor coal rake availability persisting, it is unlikely that the issue would be resolved in the near term. Thus, offtake from CIL is unlikely to reduce the coal shortage in the near term. CIL holds a dominant market share in coal mining and produc- es 84% of the nation's coal output. Coal production for the month of February stood at 54.5 million mt, which takes the total coal production for 11MFY2018 to 495 mil- lion mt. The production target for FY2019 stands at 630 million mt. The Working Group on Coal and Lignite has stated that they plan to expand production of CIL to 908 million mt by FY2020. The govern- ment made a ruling in February to allow private miners to engage in commercial coal mining. This move removes the monopoly enjoyed by CIL and is a long-term negative for the company. African Development Bank Supports Coal Projects The African Development Bank (AfDB) will be supporting coal-pow- ered projects despite International Monetary Fund's (IMF) ban on fossil fuels and specifically banning funding to some coal plants, according to a report from Development Discourse. Using the latest clean-coal technology, Kenya is developing a 1-gigawatt generator near Lamu. World Bank and IMF have distanced themselves from it. The organizations have also banned funding to Eskom for coal plants. AfDB has agreed to fund these projects, including Nigeria's plans to develop coal-fired plants that will produce more than 500 megawatts of power. Akinwumi Adesina, president of AfDB, has defended the move say- ing that Africa must develop its energy sector with what it has. More than 600 million people in Africa live without electricity from the national grid. A research at the University of Witwatersrand has shown that fossil fuel emissions can be reduced, and waste can be reused for other purposes as well. Other African countries like South Africa, Bo- tswana, Zimbabwe also get the majority of their electricity from fossil fuel sources. Russia Remains Ukraine's Primary Coal Supplier The Economic Unian reported Ukraine spent $760.5 million on coal imports in the first quarter of 2018, a 33.3% year-over-year increase, according to the Economic Unian, citing figures from the State Fis- cal Service of Ukraine. Coal imports mostly originated from Russia ($472.4 million), followed by the United States ($219.9 million) and Canada ($48.4 million). The imported tonnage was believed to be 5.7 million metric tons (mt). UNIAN reported earlier, production of thermal and coking coal in Ukraine in 2017 shrank to 34.9 million mt, a 14.6% decrease compared to 2016. Hostilities in the eastern regions of Ukraine, which began in 2014, have caused a significant shortage of coal, primarily that of thermal anthracite produced in militant-controlled areas of Donetsk and Luhansk regions. After this, Ukraine started buying coal abroad.

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