Coal drying at the mine rather than the power plant

With India now importing large amounts of high moisture low rank coal, there is growing interest in the potential benefits of drying the fuel prior to combustion. But what is the best way of doing this? In particular, are there advantages in drying the coal at the mine before transportation to the power plant site? The analysis presented here looks at the add-on benefits of coal drying at the mine end relative to drying at plant sites, but is agnostic as to the particular coal drying technology employed. The issue is examined in the Indian context, but the findings are applicable elsewhere.

It is well known that moisture is a major cause of thermal losses in coal fired boilers. Therefore reduction of the moisture content in coal improves boiler efficiency. Reduction of coal moisture also facilitates coal handling and coal preparation.

Drying of high moisture coal to reduce its moisture content and thereby improve boiler performance is a well established concept in principle but when it comes to the practicalities there are uncertainties about the most suitable drying processes and the economics, currently topics receiving attention. There are a few power plants around the world using one or other of the available drying methods to reduce the coal moisture, there are also trials underway at power plant sites and at laboratories to find the most appropriate technologies for coal drying.

The issue has taken on particular importance in India, which is importing a large quantity of low rank high moisture coal, mainly from Indonesia, to bridge the gap between domestic demand and supply. At present this high moisture coal is fired mostly in 'as received' condition without drying. As the gap between domestic coal production and demand continues, coal drying is receiving increasing attention.

Nearly all studies of coal drying conducted to date assume that the coal will be dried at the plant site. It means high moisture imported coal would be transported all the way to the plant site and then dried using fuel or waste heat, if available. In other words, enormous quantities of water are transported to the plant (in the coal) and then energy is consumed to evaporate the water.

Considering the quantity of water that is transported as coal moisture, and taking into account shipping distances, transportation costs and fuel consumption, it may be worth looking at another scenario: what if the coal is dried at the mine mouth and then transported? Would this make sense in the Indian context?

Total power generation capacity in India (as of March 2015) is around 271 GW. Of this, 164 GW is coal/lignite based. The annual coal demand to fuel the existing coal fired fleet is expected to be of the order of 500 million tonnes during the present fiscal year. A significant proportion of this coal demand will be met by imported coal. Thermal coal imports have increased steadily in recent years, rising from 50 million tonnes in 2009 to 100 million tonnes in 2012 and 150 million tonnes in 2014. In 2015, an estimated 115 million tonnes of thermal coal was imported (with around 73 million tonnes being blended with indigenous coal for use in power plants and about 42 million tonnes used by units running on 100% imported coal). Around 80% of this imported coal is high moisture fuel from Indonesia. Although every effort is being made to boost India's domestic coal production to meet 100% of thermal coal demand as soon as possible, given the realities on the ground, import of high moisture coals could continue for years to come.

Using such high moisture coal in power plants adversely affects boiler performance as the moisture loss reduces the overall boiler efficiency and at the same time increases capital and operating expenditures for all systems associated with coal firing and ash disposal. Any reduction in moisture at the pre combustion stage helps in improving boiler efficiency. Hence, the effort is underway worldwide to evolve technically acceptable solutions that are economically viable.

The average moisture content of the imported Indonesian high moisture coal is about 25-40%. This means, coal importers are transporting around 25-35 million tonnes of water every year from Indonesia to Indian ports and then to various power stations across the country. This is a huge waste not only in economic terms but also from the perspective of preserving natural resources and the environment. Any reduction in moisture content prior to transportation would mean lower transport costs, less fuel consumed during transport and reduced environmental pollution, in addition to all the advantages of coal drying at site. In other words, coal drying at the mine is an option that deserves serious consideration.

Economic benefits

For the purpose of better understanding, the costs and benefits of dried coal supply to a boiler can be divided into three segments: benefits of moisture reduction; transportation & handling; and costs of drying.

Less moisture, higher efficiency

The advantages of firing low moisture coal in a boiler are well established. The key benefit is derived from reduced losses from moisture in fuel. For a typical sub bituminous coal fired boiler, 10% moisture reduction in coal improves boiler efficiency by about 1.5 percentage points and plant efficiency by about 0.6 percentage points. Figure 1 shows the effect of moisture in coal on boiler performance.For a coal drying process implemented at plant site, this improvement in plant efficiency and consequential
benefits in capital and operating cost of auxiliaries and balance of plant systems like coal mills, electrostatic precipitators, coal handling plant, and ash handling plant has to generate sufficient returns over and above the life cycle cost of the coal drying plant, including costs associated with the drying medium (steam, flue gas, etc) such that the overall economics become attractive. The problem for most plants is that the energy costs involved in generating the coal drying medium (steam/hot gas) outweigh the benefits coming from improved boiler efficiency. Even in a case where waste heat is available, low returns and the prospect of managing a coal drying plant, with high capital & operating costs, prevent most plant operators from seriously considering coal drying as a viable prospect for circumventing the problems associated with firing high moisture coal.

The factors making coal drying at individual plant sites an unattractive proposition can be summarised as follows:

• Benefit due to improvement in boiler efficiency, when compared with capital and operating costs associated with coal drying, does not create enough incentive to make it economically viable.
• Being a single plant, scale of coal drying is reduced, resulting in higher installation and operating costs.
• Hassle of operating another process plant.
• Space constraints.
• Not many commercially proven coal drying plants are in operation worldwide at coal plants.
  

Most of these problems can be addressed if the focus is shifted from coal drying at the plant site to coal drying at the mine, particularly in the context of imported Indonesian coal for Indian power plants, and other similar applications.

Transportation and handling cost

The benefit of firing low moisture coal will be available so long as the coal is dried, either at site or at the mine. However, the major part of the additional benefits from drying at the mine comes primarily from reduced transportation and handling/ processing costs.

For example, as already noted, India is expected to import about 115 million tonnes of high moisture coal from Indonesia in fiscal 2015-16, at an average moisture content of around 30%, that means 34.5 million tonnes of water is actually transported from Indonesia to India and then using heat energy this water is evaporated and released to atmosphere as part of the power plant flue gas. Even a 10 percentage point moisture reduction by coal drying at the mine would reduce coal transport by about 16 million tonnes thereby resulting in substantial savings in transportation cost. Table 1 indicates the savings potential in transportation & handling costs, benchmarked to a standard 2 x 660 MW power plant operating with 100% imported coal.

The cost of coal transportation varies depending on transport distance, type of sea vessel and oil cost. Accordingly the savings in coal transportation also vary. Figure 2 plots coal transport cost savings against unit cost of transportation, for coal drying at power plant (orange area) and coal drying at mine (orange area plus blue area). This assumes 10% point moisture reduction, but the same trend would be followed if moisture reduction was higher or lower.

Figure 2 clearly demonstrates the additional savings that can be realised by shifting the coal drying from plant site to mine.

Cost of drying

Unlike at the plant site, at the mine a large quantity of coal fines gets generated and pose a disposal problem. When coal drying is done at the mine the coal fines can be gainfully employed to generate steam, which in turn can be used to dry the high moisture coal. This means the fuel cost for coal drying at the mine becomes practically zero or negligible and eliminates the biggest economic hurdle for coal drying.

Table 2 summarises the overall economics of coal drying, providing a ball park figure for the cost of installation of coal drying plant, expected savings and consequent payback period.

Making the economics more attractive

It is clearly evident from the above analysis that the main contributors to making the economics of coal drying attractive are reductions in coal transportation cost and in the fuel cost for coal drying. Both these could be achieved by shifting the coal drying from plant site to mine. Even if waste heat is used at the plant site for drying, the economics does not appear favourable. Furthermore, the most likely source of such waste heat is exhaust flue gas and diverting such a large quantity of flue gas to a coal drying plant would pose a huge challenge for the plant site.

The analysis has been done for specific case assuming ROM (run of mine) coal cost of 40 USD/t, coal transportation cost of 4 USD/t and 10% point moisture reduction. Figures 3 and 4 demonstrate the sensitivity of the overall economics to ROM coal cost and coal transportation cost for 10% point moisture reduction.

From Figures 3 and 4, it is obvious that within a reasonable range of coal cost and coal transportation cost, coal drying becomes attractive when reduction in coal transportation cost is taken into consideration and that it is economically feasible only if the coal is dried at the mine. The additional benefit in terms of reduced or negligible cost of fuel for drying (which is possible only if coal is dried at the mine) makes the coal drying at the mine a truly attractive proposition, as shown in Figure 3a. The numbers shown are for 10 percentage point moisture reduction but a similar trend will be observed even when a different level of moisture reduction is assumed.

Where mine owners establish a coal drying facility at their mine and consequently produce better quality coal, the coal price could be suitably adjusted to make the investment attractive, while still keeping the price low enough to entice coal buyers to buy the dried coal. Other benefits of coal drying at the mine could include the following considerations:

• As the coal drying will be done at one place and not a scattered activity at various sites, economies of scale would make it even more attractive from the view point of both capital and operating expenditure.
• There are unlikely to be space constraints as mines generally have enough space to accommodate such plants.
• The utilisation rate of the coal drying plant is likely to be higher than an individual plant installation as it no longer depends on single power plant's operating cycle.

One negative aspect that needs to be addressed is that dried coal tends to be more prone to catch fire when exposed to air with high humidity than high moisture coal. Dried coal will therefore require special care during shipment.

Unlocking benefits of coal drying

Coal drying at the mine makes the process of coal drying technically and economically attractive. A coal pricing mechanism for dried coal could be evolved keeping in mind the interests of both mine owners and coal buyers, so that both parties benefit. With the wide adoption of coal drying, significant quantities of oil could be saved thanks to reduced requirements for coal transport, while at the same time the power plants themselves would operate at higher efficiencies with reduced environmental impacts.