Monday, March 29, 2010

New coal-fired plants on hold amid impending emissions regulations, competition from gas

Last week's announcement of the cancellation of a Nevada coal-fired power plant in favor of one that will burn natural gas may be the latest example of shrinking demand for coal-fired energy. Nearly two dozen coal plants are scheduled to go online in the next three years, but plans for virtually all new projects have disappeared as electricity demand decreases and Congress considers carbon-dioxide emissions regulation, Mark Peters of Dow Jones Newswires reports. "The Sierra Club says developers haven't broken ground on a new unit in more than a year, and the list of canceled plants continues to grow," Peters writes, with the Blackstone Group L.P.'s Sithe Global Power in Nevada being the latest casualty.

"Last year brought the largest annual addition of coal-fired generation in nearly two decades as projects planned several years ago were finished," Peters writes, but development of additional units faces serious threats from cheap, plentiful gas. In the future, "You're only building one kind of [central station] power plant, and that's natural gas," Kevin Book, managing director of the Washington, D.C., consulting firm Clearview Energy Partners, told Peters.

Many of the coal projects being built were approved before the recession and subsequent drop in electricity demand, which fell 5 percent in the last two years but has begun to recover. Some new plants will replace old ones scheduled for retirement, Peters writes, and other plant closures are expected as the Environmental Protection Agency adopts and enforces stricter rules for mercury, sulfur dioxide and other pollutants. Many are looking to Congress for leadership on the future of coal, Peters writes. Theresa Pugh, director of environmental services for the American Public Power Association, explains, "This is the biggest challenge I have ever seen in any industry." (Read more)

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