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Coal Mines Are Reimagined as a New Power Source

Gerard Reid quoted in The Wall Street Journal:

“The advantage of pumped hydro is that it’s high capex, but it’s there for 100 years,” said Gerard Reid, a founding partner at Alexa Capital, a London-based corporate finance firm specializing in energy technology and infrastructure.

The engineer’s report described the pump as “long-lasting and virtually maintenance free.”

But there is another problem affecting all types of power-storage systems. Even if an investor fronted the money to build the pump, the low price of electricity on both sides of the Atlantic would make it difficult to turn a profit. For the pump to make money, it needs wide spreads in the wholesale power market, so it can buy power when prices are low and sell when prices are high.

Right now, wholesale electricity is cheap pretty much all the time.

In the U.S., it is an abundance of natural gas from the shale boom that has driven down electricity prices. In Germany, an oversupply of electricity—from government-subsidized renewable power sources and a fleet of coal plants that backs up the grid—has diluted prices.

Mr. Reid said the coal-mine pump concept would be hard to run profitably in such a market. “It’s absolute madness,” he said. “It’s a big white elephant that would never make money.”

Read the full article here: https://www.wsj.com/articles/coal-mines-are-reimagined-as-a-new-power-source-1495713601