The UK relies heavily on imported coal. So the price of coal on the international market significantly affects the cost of generating electricity from coal-fired power stations.
The cost of coal itself makes up a large part of the operating costs of a coal-fired power station. The demand for coal is expected to grow in developing economies, which could lead to coal becoming more expensive.
Burning coal releases greenhouse gases. Both the UK Government and the European Union charge power station operators for greenhouse gas emissions, and these charges are expected to increase.
As part of its commitment to reduce UK greenhouse gas emissions by 2050, the Government has ruled that any new coal-fired power stations must incorporate Carbon Capture and Storage (CCS) technology. CCS traps carbon dioxide (CO2) from fossil fuel power stations before it can be released into the atmosphere, and stores it underground.
CCS has not yet been proven to work on an industrial scale. And incorporating CCS into coal-fired power stations is expected to incur an extra upfront cost (to install the equipment) and to decrease the station’s efficiency, making it more expensive to operate.
By 2025, it is estimated that generating electricity from a coal-fired power station fitted with CCS technology could cost about 13.0 pence per kilowatt-hour (p/kWh). But the cost of generating electricity from coal using CCS may decrease as the UK gains more experience of operating such power stations.
Both the UK Government and the European Union charge power station operators for greenhouse gas emissions, so reducing emissions with CCS could significantly reduce the cost of operating a coal-fired power station. And as more CCS power stations are built, continuing technological innovation and growing industry experience and expertise should further reduce the cost of this technology.