Coal Industry Trends - Impact on Rural Electric Cooperatives
Since rural electric cooperatives rely on diverse fuels, like coal, to supply their electric demand the decrease in the coal industry will lead them to adopt more renewable resources. Other trends that will influence their use of coal are the increasing exports of coal, use in electric domestic generation, and the efforts to revive the coal industry.
1. GRADUAL DECLINE
2. COAL EXPORT
- To compensate for the domestic fall, coal producers are focusing on increasing coal export.
- Thanks to global demands, particularly from China, coal exports rose in the last years.
- The EIA forecasts a decline in coal exports in the short term, but also that it will increase annually by the year 2050.
- The creation of export terminals are a key factor in the increase of coal exports.
- In 2017, coal exports increased by 61%.
- This increase was caused by the growing demand for electricity sources from India.
- Additionally, South Korea and Japan demanded coal as a replacement for nuclear energy.
- The disruption in the coal supply from Australia and Indonesia is another factor why US coal exports have increased.
- Analysts have warned that the increase in exports might not last due to the economic growth that has been globally slowing, especially in key markets like India and Turkey.
- Arch Coal and Alliance Resource Partners LP have reported success in exports and an increased focus on the exports market.
3. COAL USE FOR DOMESTIC ELECTRICITY GENERATION
- The primary use/market of coal is electric power generation.
- Electric cooperatives rely on continued supplies for fuels such as coal, nuclear, natural gas, hydropower, wind, solar, biomass, and other renewables to supply their electricity demands.
- Even though the use of coal for operating power plants has declined, it is still the largest fuel resource in the industry.
- The permanent closure of coal-based power plants would result in stranded assets, hurt local economies, and increase electricity rates.
- Electric cooperatives are committed to reducing their emissions and researching more methods to succeed.
- Individual electric cooperatives are making the switch to greener energy sources.
- Farmers Electric is still in a contract, where it is required to buy half of its electricity from a coal plant in Illinois.
- 2018 had the lowest coal consumption rates in the US in the last 39 years.
- Xcel Energy is also presenting financial struggles to try to switch from using coal plants to renewable sources.
4. ATTEMPTS TO REVIVE THE US COAL INDUSTRY
- Trump is making efforts to revive the US coal industry by moving aggressively to roll back regulations that have harmed America's coal miners during the first year of this term.
- His administration attempted to roll back the Obama administration’s Clean Power Plan.
- In the next five years the coal mining industry is expected to recover slightly.
- During President Trump's first two years in the office, coal miners managed to keep a steady employment.
- Coal-fired generation is still significant for electric cooperatives.
- There were numerous unsuccessful attempts to revive the coal industry in previous years.
- It was announced that the Environmental Protection Agency would eliminate a 2015 rule requiring new coal plants to include carbon capture technology.
- Peabody Energy and Arch Coal are some companies struggling with financial issues due to the coal industry's status.
- Hydroelectric power is the largest share of electricity generation in South Dakota.
- Three of the ten largest power plants in South Dakota are hydroelectric facilities.
- Renewable resources make seven-tenths of the electricity produced by South Dakota.
- South Dakota doesn't have crude oil reserves, oil refineries, coal production, or has significant reserves of gas or coal.
While we were able to identify the recent trends in the coal industry, there was no direct answer to how each of them impacts rural electric cooperatives.
Based on the trends identified and the information available on rural electric cooperatives, we were able to triangulate how each of them could impact those electric cooperatives.
The gradual decline in the coal industry, coal being one of the primary fuels used for electric generation, affects rural electric cooperatives as they rely heavily on it to deliver constant electrical energy to their customers. The decrease in coal production would lead to rural electric cooperatives having to switch to other energy sources, like gas or renewable sources (solar, wind, or hydrothermal) which will represent an additional cost to adapt.
The export of coal impacts them because, as we already established, rural electric cooperatives use coal as their primary fuel for electrical energy, and are trying to switch to more renewable energy sources, the increased export would make that transition faster, but it would also lead to financial issues.
Coal use for domestic generation impacts the rural electric companies because it is the primary resource for power generation. Rural electric cooperatives rely on coal to ensure electricity demands. Nowadays, a lot of individual rural electric cooperatives are switching from coal to greener energy resources, but most of them are still in contract with coal plants and breaking up those contracts would lead to loss of funds.
The attempts to revive the US coal industry impacts them because, even though most of the efforts of reviving the coal industry failed, rural electric cooperatives are still receiving enough coal for their plants. With the falling of the coal industry and fewer contracts with coal plants, the transition to renewable sources of rural electric cooperatives would be much easier and with a lower financial loss.