Extended Future for Coal-Fired Power to Meet Soaring Base Load Demand

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--While Black & Veatch (B&V) (Overland Park Kansas) has marginally raised its estimate of projected U.S. coal-fired power plant retirements in its recent Energy Market Perspective, this does not indicate that the death knell for coal is inexorably approaching, either in the medium or longer term. There are plenty of current power source statistics that indicate that the end of coal-fired power is not nigh, and that the amount of coal-fired capacity is, in fact, rising globally.

B&V has raised its estimate to 61.7 gigawatts (GW) of coal-fired plants being retired by 2020, up from the 61.5 GW estimated in the company's mid-2012 report. Natural gas-fired plants are expected to grow to provide more than 50% of total energy capacity over the coming 25 years, and this will replace the lost capacity from the retirement of coal-fired plants. Currently, gas-fired generation capacity accounts for about 35% of the U.S. power total.

Elliot Gue, in the Energy & Income Advisor, says the death of King Coal by regulation may well be premature. He reports that, at a time when the U.S. Environmental Protection Agency (EPA) is pursuing new regulations aimed at reducing the country's domestic coal usage, many utilities are burning natural gas as a base-load fuel instead of coal, simply because is now "dirt cheap" in the U.S.

The Energy Information Administration (EIA) lowers the margins of closure even further, expecting about 40 GW of older, inefficient coal-fired plants to be shut down in the next five years. But the EIA forecast that coal-fired plants will remain the largest source of power in the U.S. generation mix for at least the next two decades. The upward curve of power demand will require the still operative coal-fired plants to affect a higher utilization rate, which will offset the capacity lost through retirements.

In Europe, natural gas futures in London are more than triple those prevailing in the U.S. Taken with the phasing out of nuclear power in Germany, this has led to a surge in coal demand. Industrial Info observes that while Germany is a leading renewable energy proponent, as a major industrial power the country needs secure and steady base load power, which coal or gas can supply.

Despite the recession, coal-fired power generation in the eurozone has increased 14% over 12 months. In India, coal imports spiked 15% in 2012 as the coal-fired plant build program continued to gather steam. The China Electricity Council forecast that the country's coal demand should reach 4.3 billion tons annually by 2015, and in that year Chinese coal-fired capacity will be triple that of the U.S. Europe and China will present good markets for U.S. coal for some time into the future.

Base load power will continue to rumble along 24/7, with coal as a major fuel feed into the foreseeable future. As "clean" coal remains something of a relative concept to date, it sounds like a good time for a radical breakthrough in coal power generation technology.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.