Steep environmental costs mean coal-fired power's competitive edge will drop by half.
A mid increasing pressures to reduce costs, the competitive positions and profitability of U.S. coal-fired power plants will change dramatically in the near-term. Resource Data International Inc. examined this change within its recently released study, "Coal-Fired Generation in Competitive Power Markets."
The study identifies plants whose competitive position and profitability will change from 1998 to 2003 as a result of moving coal and transportation contracts to market levels and complying with environmental standards. The study also identifies how such changes will position each plant against combined-cycle additions.
RDI projects additional environmental costs will increase overall coal-fired power production costs by nearly $3 per megawatt-hour by 2003, thereby reducing coal's advantage over gas combined-cycle units by half. Despite this, RDI forecasts total coal-fired generation will increase 7.8 percent from 1998 to 2003, while total utility generation will grow 7.2 percent. Moreover, generation from coal-fired plants in all North American Electric Reliability Council regions will increase, with some regions experiencing 13 percent to 14 percent increases from 1998 to 2003.