In 2009, unconventional shale gas emerged as the dominant driver in North American natural gas markets. Rapid increases in shale gas production and shale-driven upward revisions to the U.S....
2025: A Murky Mix
Which power technologies will dominate?
U.S. power-plant construction tends to follow fads. In the 1960s and early 1970s, the fad was large, sub-critical coal plants. In the late 1970s and early 1980s, it was nuclear plants, although no one could agree on a standard design. In the 1980s, the trend was to not build any plants but instead enter into long-term PURPA-based contracts. In the 1990s, the industry turned to gas turbine combined-cycle (GTCC) plants, and the “dash to gas” began (see Figure 1) .
Identifying these trends is easier than determining the primary drivers and issues that contributed to them. Was market growth the primary driver? Fuel price and availability? Policy and regulatory issues ( e.g., the Clean Air Act, investment tax incentives)? Lowest installed cost? Lowest levelized cost of electricity? Or, was the utility industry guilty of a group-think mentality driven by common planning processes, selection criteria and assumptions?
Understanding how these drivers affect power-planning decisions can help utilities predict generation-construction trends in the future and avoid getting caught in a group-think trap.
In recent years, natural-gas additions have declined from their peak in 2002, when regions experienced excess power-generation capacity and natural-gas prices began to rise. The price of natural gas for electric-power generation increased from $2.38 per MMBtu in 1998 to $4.44/MMBtu in 2001 (the point at which orders for GTCC plants began to decline) and peaked at $8.21 per MMBtu in 2005. 1
As natural-gas prices increased, utilities and investors began searching for alternative generating technologies. Low-cost coal appeared promising and orders for coal-fired power plants started to rise. Orders for steam turbines for new coal power plants increased from below 1,000 MW/year from 1994 through 2002 to nearly 6,000 MW in 2006 (see Figure 2) . Once again, coal appeared destined to be king.
As of May 2007, utilities and other power producers had announced plans to build more than 150 new coal plants. 2 However, as plans for growth in coal progress, the industry is seeing an increasing number of cancellations, and development of new projects has slowed to a crawl. Coal-fired power plants are facing increased opposition on a number of fronts. Environmental advocates concerned with criteria pollutants, looming greenhouse-gas (GHG) regulation, and increasing material and construction costs have significantly limited the number of actual coal projects moving toward construction.
This trend is evinced by the recent cancellation of several key coal-fired power projects, including Florida Power and Light’s 1,960-MW Glades plant, one of the 800-MW twin units for Duke Energy’s Cliffside plant, eight of TXU’s 11 planned units, and similar announcements by power producers in Kansas and Oklahoma. 3
While the future of conventional coal power plants does not look as promising as it did just a short time ago—due primarily to environmental concerns, higher than expected coal prices, public opposition and rising construction