Is there enough natural gas that is findable and deliverable to plug most of the gap created by the projected closure of 25.5 gigawatts (GW) of U.S. generating capacity from coal between now and year-end 2015?
That is an increasingly urgent question facing U.S. utilities, power marketers and regulators.
The risks of brownouts and perhaps even blackouts on weekdays challenged by extreme weather loom as a growing risk that could trigger a backlash against emissions regulations, renewable sources of electricity and competitive power markets.
The principal source of concern is the most recent report by the U.S. Energy Information Administration based on its Form EIA-860, “Annual Electric Generator Report.”
The coal-fired electricity projected to be retired over the next five years is more than four times greater than retirements executed during the preceding five-year period, a mere 6.5 GW by comparison. The estimated 9 GW of coal-fired capacity retirements expected in 2012 will likely be the largest one-year amount EVER. And that record likely won’t stand very long because 10 GW are projected to be retired in 2015.
Coal-fired power plants to be retired are 5% less efficient than today’s average coal power plant so even this relatively small differential is defining which coal plants remain in generators’ portfolios.
The bulk of the projected closures are to occur in Ohio, West Virginia and South Carolina, and to a lesser extent in Pennsylvania, southern Indiana and the Chicago area.
How much new natural gas can fill the gap? Is there even enough natural gas pipeline capacity available to deliver the gas if a sufficient number of companies can justify exploring for an producing natural gas as today’s very low prices?
The average size of the coal plants planned for retirement between 2012 and 2015 is 154 megawatts (MW). That’s more than twice the average size of units retired during from 2009 through 2011.
Six factors explain most of the increase in the planned retirements:
1. Modest growth in demand for electricity.
2. Low natural gas prices.
3. Availability of highly-efficient natural gas combined-cycle power plants that are not currently fully utilized.
4. Aging coal-fired generators
5. Environmental compliance costs.
Drill down on the data behind the July 27, 2012 report by EIA here.