{"id":14160,"date":"2016-11-04T18:05:28","date_gmt":"2016-11-04T22:05:28","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/american-electric-power-the-coal-problem\/"},"modified":"2016-11-04T18:18:08","modified_gmt":"2016-11-04T22:18:08","slug":"american-electric-power-the-coal-problem","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/american-electric-power-the-coal-problem\/","title":{"rendered":"American Electric Power \u2014 The Coal Problem"},"content":{"rendered":"<p>AEP Generation Resources operates 60 electricity generation stations across 11 states with total capacity of 31,000 MW<a href=\"#_ftn1\" name=\"_ftnref1\">[1]<\/a>. Based on capacity, AEP is the second largest US electricity generator but leads its competitors in CO<sub>2 <\/sub>emissions<a href=\"#_ftn2\" name=\"_ftnref2\">[2]<\/a>.<\/p>\n<p>Generating electricity requires superheated steam which is converted into mechanical energy via a turbine. AEP needs a lot of superheated steam and gets it by burning coal and natural gas, representing the fuel for 50% and 28% respectively of the firm\u2019s total power production<a href=\"#_ftn3\" name=\"_ftnref3\">[3]<\/a>. The average coal plant boasts an extremely low efficiency of 33%, this means that 67% of the energy in coal is lost to inefficiencies like incomplete combustion<a href=\"#_ftn4\" name=\"_ftnref4\">[4]<\/a>. Compounding increased emissions from low efficiency is coal\u2019s combustion characteristics; it releases about two times the CO<sub>2<\/sub> of natural gas per thermal unit of energy generated<a href=\"#_ftn5\" name=\"_ftnref5\">[5]<\/a>.<\/p>\n<p>With the highest greenhouse gas emissions of any electricity producer in the US, AEP is in a precarious position. The firm simply releases significantly more CO<sub>2<\/sub> per unit of electricity then any other producer. No matter what form regulation of CO<sub>2\u00a0<\/sub>emissions takes, AEP will have to make changes in how it produces electricity to comply. Fortunately for AEP, there are three ways to reduce its emissions per electricity unit:<\/p>\n<ol>\n<li>Replacing coal with natural gas<\/li>\n<li>Improving plant efficiency<\/li>\n<li>Increasing alternative sources including renewables and nuclear<\/li>\n<\/ol>\n<p>Compared to coal, natural gas releases about half the CO<sub>2<\/sub> and almost no secondary pollutants like NOx and FEV when combusted. Over the past five years the price of natural gas per unit of energy has decreased due to increased gas production in North America leading to convergence with the price of coal<a href=\"#_ftn6\" name=\"_ftnref6\">[6]<\/a>. This phenomenon aligns economic incentives with reducing greenhouse gas emissions by making it feasible to retool coal power plants to burn natural gas. By switching plants from coal to natural gas AEP could reduce its greenhouse gas emissions by almost 25%.<\/p>\n<p>In addition to fuel switching, AEP can modernize its plants to increase efficiency by minimizing heat loss. It is possible to achieve efficiency of 40%<a href=\"#_ftn7\" name=\"_ftnref7\">[7]<\/a> in coal plants and 45%<a href=\"#_ftn8\" name=\"_ftnref8\">[8]<\/a> in natural gas plants. These increases would result in an additional 7 to 9% reduction in greenhouse gas emissions.<\/p>\n<p>Even though there is plenty of natural gas in North America, generating electricity from gas is still relatively inefficient. Depending on regulation pressure in the future AEP may need to add alternative energy sources to its portfolio including wave, solar, wind, geothermal, hydroelectric, and nuclear. These energy sources come with their own challenges including availability, cost and safety. Due to current price conditions it would be difficult for AEP to replace a significant portion of its capacity with alternative sources even though they may make sense over the long term.<\/p>\n<p>Fuel switching and increasing efficiency are operational changes that AEP could implement today to reduce emissions. These options will come with significant capital costs that AEP may not be willing to invest without the external force of regulation or significant increases in the price of coal. Whatever form regulation takes AEP will need to change how it produces electricity to reduce its greenhouse gas emissions and ensure a healthy planet for future generations.<\/p>\n<p>&nbsp;<\/p>\n<p><a href=\"#_ftnref1\" name=\"_ftn1\">[1]<\/a> AEP, \u201cPower Generation,\u201d https:\/\/www.aep.com\/about\/MajorBusinesses\/PowerGeneration\/, accessed November 2016.<\/p>\n<p><a href=\"#_ftnref2\" name=\"_ftn2\">[2]<\/a> Jeff McMahon, \u201cAnd the Biggest Polluter is: American Electric Power Compay,\u201d Forbes, May 28,<\/p>\n<p>2014, http:\/\/www.forbes.com\/sites\/jeffmcmahon\/2014\/05\/28\/and-the-biggest-power-polluter-is-aep\/#253d2a251236, accessed November 2016.<\/p>\n<p><a href=\"#_ftnref3\" name=\"_ftn3\">[3]<\/a> AEP, \u201cPower Generation,\u201d https:\/\/www.aep.com\/about\/MajorBusinesses\/PowerGeneration\/, accessed November 2016.<\/p>\n<p><a href=\"#_ftnref4\" name=\"_ftn4\">[4]<\/a> World Coal Association, \u201cReducing CO2 Emissions,\u201d http:\/\/www.worldcoal.org\/reducing-co2-emissions\/high-efficiency-low-emission-coal, accessed November 2016.<\/p>\n<p><a href=\"#_ftnref5\" name=\"_ftn5\">[5]<\/a> Energy Information Agency, \u201cHow much CO2 is released when different fuels are burned?,\u201d https:\/\/www.eia.gov\/tools\/faqs\/faq.cfm?id=73&amp;t=11, accessed November 2016.<\/p>\n<p><a href=\"#_ftnref6\" name=\"_ftn6\">[6]<\/a> Energy Information Agency, \u201cNatural Gas Expected to Surpass Coal in Mix of Fuel Used in 2016,\u201d http:\/\/www.eia.gov\/todayinenergy\/detail.php?id=25392, accessed November 2016.<\/p>\n<p><a href=\"#_ftnref7\" name=\"_ftn7\">[7]<\/a> World Coal Association, \u201cReducing CO2 Emissions,\u201d http:\/\/www.worldcoal.org\/reducing-co2-emissions\/high-efficiency-low-emission-coal, accessed November 2016.<\/p>\n<p>&nbsp;<\/p>\n<p><a href=\"#_ftnref8\" name=\"_ftn8\">[8]<\/a> Energy Information Agency, \u201cWhat is the efficiency of different types of power plants?,\u201d https:\/\/www.eia.gov\/tools\/faqs\/faq.cfm?id=107&amp;t=3, accessed November 2016.<\/p>\n<p>&nbsp;<\/p>\n<p>(631 words)<\/p>\n","protected":false},"excerpt":{"rendered":"<p>AEP Generation Resources operates 60 electricity generation stations across 11 states with total capacity of 31,000 MW. Based on capacity, AEP is the second largest US electricity generator but leads its competitors in CO2 emissions. What can AEP do to remain competitive and reduce its CO2 emissions?<\/p>\n","protected":false},"author":1796,"featured_media":14177,"comment_status":"open","ping_status":"closed","template":"","categories":[1342,1627,741,1421],"class_list":["post-14160","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-coal","category-electric","category-natural-gas","category-nuclear-power"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/climate-change-challenge-2016\/","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>American Electric Power \u2014 The Coal Problem - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/american-electric-power-the-coal-problem\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"American Electric Power \u2014 The Coal Problem - Technology and Operations Management\" \/>\n<meta property=\"og:description\" content=\"AEP Generation Resources operates 60 electricity generation stations across 11 states with total capacity of 31,000 MW. 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