How the Coal Industry Could Benefit from Large-Scale Energy Storage

Rebecca Wolkoff
May 18, 2015

Submitted as coursework for PH240, Stanford University, Fall 2014


Fig. 1: Heat rate increase with generation drop in a Colorado coal plant. [3]

As the amount of the alternative energy on the grid has increased, so too has the attention to energy storage. The chief disadvantage to major alternative energy sources - wind and solar - is their huge, unpredictable variation in power output. Because the U.S. electrical grid relies heavily on energy resources that provide inflexible but steady power - coal and nuclear - variation in power caused by alternative energy is stressful to the grid. Basically, coal and nuclear plants are unable to react fast enough (or fast enough efficiently) to the rapid drops in energy caused by alternative sources when the wind stops blowing or a cloud covers the sun. The solution, many alternative energy proponents argue, will be energy storage. Energy storage facilities - including pumped hydro, compressed air, flywheels, thermal, and batteries - paired with alternative energy sources would enable alternative energy to provide constant power output, providing clean energy when demand necessitates and storing excess energy when the energy is not immediately needed.

Energy storage, however, is not currently available everywhere at a justifiable cost. Pumped hydro technology is cost effective but limited by location, while other energy storage technologies are not developed enough to be economic. Thus, several states have begun adding alternative energy sources to the grid without the supplement of energy storage . Kansas, for example, has mandated that 20% of its electricity to come from alternative sources by 2020, Michigan 15% by 2015, and Ohio 12.5% by 2024. [1] California, in fact, is the only state thus far to mandate energy storage. [2]

Without energy storage, added alternative energy sources further strain the steady coal plants supplying the majority of U.S. power. Ironically, this strain could be alleviated by pairing energy storage with coal plants. Thus, it is distinctly odd that while there has been growing interest in energy storage paired with alternative energy resources, there has been little discussion of how energy storage could benefit the coal industry. Coal plants would benefit as much or more than alternative energy generators if paired with energy storage, and the more alternative energy integrated into the grid, the more valuable energy storage become to the coal industry.

Economical Benefits of Pairing Energy Storage with Coal

Coal plants are most efficient when they run steadily at the peak power they were designed for. However, due to regulations and economics, most coal plants are unable to always run at peak power. Particularly in competitive markets, the plant may make more money by limiting the fuel and power used when energy is cheap and in low demand. In addition, some state regulations require that utilities accept alternative energy first, forcing other energy sources like coal to shut down, generate less energy, or produce electricity for no gross revenue during times of high alternative energy output. [3]

Fig. 2: Efficiency vs. heat rate. [4]

Thus, coal plants are forced to cycle, meaning they produce less energy at a non-optimal efficiency. While cycling a coal plant, the heat rate, or energy from coal measured in btu used to create one kWh of electricity, increases. At the beginning of a cycle, the same amount of coal is being burned for a curbed amount of electricity generated, and towards the end of a cycle, the heat rate further increases as more coal is burned to bring the plant back up to optimal efficiency temperature. [3]

Fig. 1 illustrates this phenomenon using sample data taken from a coal plant in Colorado. [3]

Fig. 2 illustrates how even though generation drops 30%, the heat rate rises a disproportionate 38%. This unbalance is caused by overhead energy costs; a specific amount of energy must be used to run the combustion engines and other necessary machinery regardless of how much electricity is being produced. While each coal plant will have a unique heat rate to efficiency relationship due to differing technology and maintenance, the overall trend can be estimated with the figure to the left. While this figure illustrates a less dramatic increase in heat rate with a decrease in efficiency than the Colorado example, the heat rate still increases exponentially with dropped efficiency levels.

On an annual basis, a plant may be cycled from 2 and to over 125 times depending on energy output, integrated alternative energy on the grid, and efficiency of the plant. [3] Supposing plants cycle only about 7% of the year down to a 35% partial load, the coal industry then loses over $2 billion annually. The calculation is shown below:

Money Lost = [(HR) × (HR % Increase)] × [Power Generated in the US by Coal Annually]
× [% of the Time Coal Plants Cycle] × [Revenue from Coal]

HR represents the average heat rate of coal plants in the US. The heat rate increase due to cycling was assumed to be 20% in accordance with a 35% partial load as illustrated in Fig. 2 (thus, HR % Increase is .2). All other data was taken from the EIA's 2012 Electric Power Annual Report. [5]

Unfortunately, this report does not report revenue from coal in $/btu. It does, however, report revenue in $/kWh. Thus, using the heat rate, we can first calculate the revenue from coal in $/btu.

Revenue in $/btu = [Revenue in $/kWh] ÷ [HR]
= .0984$/kWh ÷10,498 (btu/kWh) = 0.00000937 $/btu

Now we can accurately calculate money lost from producing less energy due to coal plant cycling:

Money Lost = [10,498 (btu/kWh) × .2] × [1,514,043,000,000 kWh] × [.07] × [0.00000937 $/btu]
= $2.085 billion

Even further losses are incurred due to cycling from wear on plant. The majority of coal plants were not designed to sustain changes in operating load. Generators, boilers, turbines, and pipes can all be damaged in some capacity by plant cycling. A plant can accumulate between 4.8 and 67.4 thousand dollars a year from maintenance costs due cycling; this is equivalent to the coal industry as a whole losing between $2.9 and $40 million a year. [6]

Therefore, if coal plant cycling could be prevented, billions of dollars could be saved. Energy storage is the perfect tool to prevent cycling. Instead of cycling the plant to produce less electricity, the plant could produce a steady supply of electricity and store excess energy in an energy storage unit during times when coal power is not in high demand. Not only would a coal plant paired with energy storage save money, its overall efficiency would increase, and it would potentially make even more money by selling stored energy for a higher price during peak hours.


Most methods of energy storage need to be further developed in order to become economically viable. While the alternative energy industry would benefit from energy storage, solar and wind energy constitute less than 7% of the energy generated in the U.S. and frankly the industry is in no position to invest in energy storage. The coal industry, currently generating more electricity in America than any other industry, will begin to struggle further as more alternative energy is added the grid. An increase in coal plant cycling is inevitable without energy storage.

Unlike the alternative energy industry, however, the coal industry has the money and resources to develop energy storage. Successful energy storage would have huge monetary benefits for individual coal plants. Coal, it's time to start investing.

© Rebecca Wolkoff. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.


[1] "Renewable Energy in the United States: Midwest Region, 2013 Ed.," American Council on Renewable Energy, October 2013, pp. 13, 15, 24.

[2] H. Fountain, "Batteries and Renewable Energy Set to Grow Together," New York Times, 20 Apr 15.

[3] P. Bennet, J. Lieskovsky, and B. McBee, "Impacts of Intermittent Generation," in Large Energy Storage Handbook, ed. by F. S. Barnes and G. Levine (CRC Press, 2011), p. 17.

[4] "Power Generation from Coal," International Energy Agency, 2010.

[5] "Electric Power Annual 2012," U.S. Energy Information Administration, December 2013, pp. 10, 28, 166.

[6] S. A. Lefton and P. Besuner, "The Cost of Cycling Coal Fired Power Plants," Power Magazine, Winter 2006, p. 16.