Coal, New Projects

Four percent of new electric generating capacity by 2015 will use coal as fuel, report shows

Overwhelming 94% of new plants to burn natural gas

NEW YORK, Nov. 26, 2001 — Only 11,400 MW, or roughly 4%, of the 296,000 MW of new power generation capacity needed by 2015 will be fired by coal, according to a new study. The 296,000-MW total for all new generation is the equivalent of 592 utility-scale, 500-MW plants.

Natural gas will be the fuel of choice for 279,000 MW of the new capacity and the remaining 5,600 MW will be made up by renewable energy, including hydro, solar and wind technologies, Platts said in a new report, “New Coal-Fired Generation: The Race Is On.”

The current installed base of power plants in the U.S. is roughly 780,000 MW, with coal units generating about 52% of current electric output.

While coal-fired plants have lower operating costs, this advantage is offset by higher capital costs. In addition, the glut of gas-fired capacity coming on-line in the next few years will dim prospects for coal, with 51% of the 279,000 MW proposed by 2015 coming on-line by the end of 2003.

The result of overbuilding will be lower electricity and capacity prices that will be a disincentive to coal plant developers until later in the decade, the report said.

By late summer 2001, more than 50,000 MW of new coal-fired capacity had been announced in 34 states across the country. Despite a more favorable political environment favoring diversity of supplies, the economic and siting risks of coal-fired generation will reduce the number of proposals becoming reality to just 11,400 MW by 2015, according to the report.

New coal plant development appears competitive when natural gas prices average within a range of $3.50-$4.00/MMBtu. However, specific situations, for example plants located adjacent to the coal mine, can still make a coal plant competitive at gas prices below $3.50/MMBtu. Average U.S. monthly natural gas spot prices for November were $3.01/MMBtu, a 79% rise from October but still well under year-ago levels.

“New Coal-Fired Generation: The Race Is On” provides detailed information and analysis of the factors that will contribute to the success of new coal plant development, including specific modeling of proposed and conceptual plants. The report was written by RDI, a research unit of Platts.

Additional information is available at www.platts.com and www.plattsmetals.com.