The Costs of Electricity from Coal Over More Than a Century

Coal began to be really important with the advent of the Industrial Revolution, in the mid-Eighteenth Century. More than a century later, in the late Nineteenth Century, the electricity industry began in the United States. A paper in Energy Policy explores how the cost of coal-fired electricty has changed between that time and the present. Using data from 1882 to 2006, the researchers examined various factors that could account for the changes.

As one of their conclusions, the authors find that the cost coal, as a factor in electricity costs, isn't particularly predictable:

The data suggest a qualitative difference between the behavior of fuel and capital costs, the two most significant contributors to total cost. Coal prices have fluctuated and shown no overall trend up or down; they became the most important determinant of fuel costs when average thermal efficiencies ceased improving in the U.S. during the 1960s. This fluctuation and lack of trend are consistent with the fact that coal is a traded commodity and therefore it should not be possible to make easy arbitrage profits by trading it. According to standard results in the theory of finance, this implies that it should follow a random walk.

Here's a chart of coal prices:

But construction costs for coal plants is also a factor and does exhibit clearer patterns:

In contrast, plant construction costs, the most important determinant of capital costs, followed a decreasing trajectory until 1970, consistent with what one expects from a technology. After 1970, construction costs dramatically reversed direction, at least in part due to pollution controls.

But the details don't even matter that much to me; I'm just a sucker for datasets over long timescales. While this isn't quite the sprawling dataset of other papers, I'm hooked.

Want to play with the data? You can go here.

Top image:Roy Luck/Flickr/CC