An informal report of discussions at a leading US electric industry conference confirms the general view that new development in the US will be predominantly gas-fired. Mark Gabriel, Senior Vice President of Black & Veatch’s management consulting division, writing in the Black and Veatch Energy Strategies report for December 2011, had the following observations:
“The ‘dash to gas’ has turned from a moderately paced jog into a full-out sprint with booster rockets attached as EPA regulations appear on the path to forcing the closure of 65 to 100 gigawatts of coal; utilities meanwhile, despite relatively soft demand, are preparing for their mid- and long-term futures. The assumption is that natural gas, fed by shale, will have easy access to the interstate pipeline system. Coal prices are slipping, which ironically makes it more attractive and offers the opportunity for coal exports. As Gale Klappa, CEO of Wisconsin Electric pointed out, ‘We could actually end up exporting more CO2 and other pollution by exporting coal to China. We have to be careful to not politicize coal out of the future.’
“Phil Moeller, FERC Commissioner, commented that, ‘natural gas has to be the default option for new generation.’ Mike Morris, of AEP, quipped, ‘One way to make $4 natural gas into $8 natural gas is for everyone to build combined cycle plants.’
“While there is the growing affinity for natural gas solutions and general happiness in the low prices thanks to shale, there is a recognition that this can change rather quickly. LNG exports are being discussed, with Dominion considering expanding its export capabilities in the face of $14 world LNG prices.
“One quiet specter is the aging nuclear fleet. As the industry eliminates 65 to 100 GW of older coal, and some of the nukes go off line, and as demand returns, there may be a 70 GW shortfall by 2018. So much for flat and falling electric prices.”