The recent boom in baseload, intermediate and peaking power generation additions in the United States is now over and capacity additions will be made at a much slower rate over the next decade, according to the latest Fuelcast Long-Term Outlook by Arlington, VA-based Energy Ventures Analysis. A renewed interest in coal-fired generation because of recent gas price increases also is expected to put coal back in a dominant position when it comes to new generation capacity additions.
Between 1998 and 2005, the industry added 145 GW of gas-fired combined-cycle power generation, representing the majority of the capacity that was added, but over the next 10 years (2005-2015) a total of only 39 GW of capacity is expected to be built and combined cycle generation is expected to represent only 48% of that amount, EVA said.
Gas-fired power generation is expected to retain a dominant share of new capacity additions through 2015, but coal-fired generation is expected to make a comeback and will be added in increasing amounts starting in 2008. Over the 2015-2025 period, EVA is forecasting that coal-fired generation additions once again will represent the majority of capacity added. New nuclear generation will start to be added beginning in 2014.
“Coal is expected to retain its dominant share of capacity and generation through 2025 as changes to the longer-term fuels price outlook has tipped the balance of capacity additions toward coal to a larger degree than previous forecasts,” EVA said. “Indeed the continued pricing and volatility of natural gas is also a factor in the increase in the quantity of nuclear generation additions.”
EVA noted that technological advances have made gas-fired combined-cycle generation the best choice for intermediate to baseload applications and that’s unlikely to change in the forecast period. Gas-fired combined-cycle power plants enjoy a 1.9:1 advantage in initial cost over the benchmark subcritical coal-fired option and a 26% edge over coal in heat rate (the efficiency of converting fuel to electricity). Gas-fired combined cycle plants also are favored over coal plants for environmental reasons.
“In fact, it is likely that no new coal plants could be built in several areas of the U.S. under current environmental rules and public sentiment, regardless of cost,” EVA noted. EVA admitted that its long-term forecast could be impacted if tighter environmental regulations are passed nationwide or on a state-by-state basis.
Gas-fired combined cycle generation is expected to capture a 28% share of total generation by 2015 compared to a 24% share currently. However, from 2015 to 2025, gas combined-cycle’s share of new capacity is expected to fall to only 32% of new additions, or about 3.7 GW/year.
In contrast, coal-fired generation, which accounts for 39% of baseload capacity today, is expected to increase its share to 44% by 2025. “Gas prices are expected to remain at a level which would provide economic merit to building new coal-fired power plants in many regions of the U.S.,” EVA said.
Over the forecast period, EVA projects that about 97,040 MW of new coal-fired generation will be added to the U.S. grid while about 89,723 MW of gas-fired combined-cycle power generation will be added.
The projected growth rate of power generation capacity is about 0.5%/year over the 10-year period from 2005 through 2015. About 98 GW of generation will be needed in the 10 years following that, which would be an annual growth rate of 1.1% from 2015 through 2025.
“These forecasted capacity expansion growth rates are in stark contrast to the recent capacity expansion boom, which saw new capacity expand by 14% during 1999 to 2003 (i.e., an average annual growth rate of 3.1%),” EVA said.
U.S. reserve margins went from 17% in 1999 to a peak of 30% in 2003. “It is expected that continued load growth and the retirement of older coal-fired and the older technology gas-fired steam units will gradually erode U.S. reserve margins to a 19% level by 2020,” EVA predicted.
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