Coal's Share of Generation to Dwindle, WEFA Says
Tougher environmental regulations could result in the shutdown
of about 30% of the existing U.S. coal-fired generation capacity
over the next decade, opening the potential for the gas industry to
capture an additional 10 Bcf/d of natural gas demand , says a key
executive with WEFA Inc.
Coal currently has a 51% share of the generation mix, while
natural gas has less than a third of that - 14%. "And yet it's
expected to.be the dominant source of growth over the next decade,"
said Ronald Denhardt, vice president of energy services, at
GasMart/Power '99 in Dallas, TX, Monday. He expects natural gas
demand in the generation market to grow an average of 5% a year
How coal "plays out" will be "critical" to gas obtaining a
greater share of generating capacity in the future - much more
important than nuclear, which has 17-18% of existing generation
capacity, he noted. "I think nuclear generation has really been
given a disproportionate amount of attention in terms of its role
for gas demand."
If all current coal-fired generating capacity were to be
converted to gas units, gas consumption in the generation market
would rise by 50% (33 Bcf/d) over its current level of 60 Bcf/d,
Denhardt said. "Now I'm not saying that's going to happen, but it
just says something about the importance of coal in terms of the
role of gas" in the next decade.
Coal is expected to face "some real hurdles" on the
environmental front in the near term, substantially increasing the
financial attractiveness of natural gas, he noted. The hurdles
include Phase II nitrogen oxide and sulfur dioxide compliance
regulations by 2000; an 85% reduction in NOx emissions by May 2003
in 22 eastern states; and tougher particulate standards. Denhardt
predicts it will cost an additional $12/MWh for coal generators to
meet those regulations
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