Natural Gas-Fired Plants on the Rise as Coal Fades

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Researched by Industrial Info Resources (Sugar Land, Texas)--A natural gas-fired power plant buildout is in progress in the Midwest, Great Lakes and Southeast regions of the U.S due to retirements of coal-fired power plants and low natural gas prices. The power generation projects are being constructed between 2016 and 2019 and are meant to replace the power from the coal-fired plants announced to retire during that time frame. Driven by the switch, these regions are developing power generation and pipeline projects near natural gas shale plays such as the Excello/Mulky, Bakken and New Albany shale regions.

Industrial Info is tracking 14 natural gas-fired power projects in the Midwest region valued at over $2.5 billion, 20 projects in the Great Lakes region valued at over $14.6 billion and 26 projects in the Southeast valued at over $9 billion. Top states include Florida, with 22 projects valued at $7.4 billion; Ohio, with 14 projects valued at $8.09 billion; and Indiana, with four projects valued at $2.45 billion.

Weather was warmer during the 2015-16 winter months due to El Nino, which contributed to a natural gas inventory glut of 2.5 trillion cubic feet (Tcf) in storage, which was 57% above 2015 levels and 53% over the five-year average. The average Henry Hub spot price fell from $2.85 per million British thermal units (MMBtu) to 2.73 per MMBtu this month.

The federal Clean Power Plan also favors more efficient natural gas power generation increasing the average utilization rate over coal with the associated reduction in CO2 and promotes the greater use of renewable energy such as wind and solar generation.

For more information regarding coal-fired power plants closing, see May 17, 2016, article--Dynegy Shutters Illinois Coal-Fired Power Plants

Natural gas-fired generation reached a new high in July of 4,950 gigawatt hours according to the Energy Information Administration (EIA) which was up 9% from the previous record set in July 2015.

While natural gas generation has increased, carbon dioxide emissions have decreased about 12% from 2005 through 2015, according to the EIA, in part due to the drop in coal-fired power generation and the increase in natural gas and renewable generation in the U.S.

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