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Coal’s Share of Generation to Dwindle, WEFA Says
Tougher environmental regulations could result in the shutdownof about 30% of the existing U.S. coal-fired generation capacityover the next decade, opening the potential for the gas industry tocapture an additional 10 Bcf/d of natural gas demand , says a keyexecutive with WEFA Inc.
Coal currently has a 51% share of the generation mix, whilenatural gas has less than a third of that – 14%. “And yet it’sexpected to.be the dominant source of growth over the next decade,”said Ronald Denhardt, vice president of energy services, atGasMart/Power ’99 in Dallas, TX, Monday. He expects natural gasdemand in the generation market to grow an average of 5% a yearbetween 2000-2010.
How coal “plays out” will be “critical” to gas obtaining agreater share of generating capacity in the future – much moreimportant than nuclear, which has 17-18% of existing generationcapacity, he noted. “I think nuclear generation has really beengiven a disproportionate amount of attention in terms of its rolefor gas demand.”
If all current coal-fired generating capacity were to beconverted to gas units, gas consumption in the generation marketwould 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 itjust says something about the importance of coal in terms of therole of gas” in the next decade.
Coal is expected to face “some real hurdles” on theenvironmental front in the near term, substantially increasing thefinancial attractiveness of natural gas, he noted. The hurdlesinclude Phase II nitrogen oxide and sulfur dioxide complianceregulations by 2000; an 85% reduction in NOx emissions by May 2003in 22 eastern states; and tougher particulate standards. Denhardtpredicts it will cost an additional $12/MWh for coal generators tomeet those regulations
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