Amidst regulatory uncertainty, ICF predicts retirement of 60 GW of coal
April 2, 2015 | By
Barbara Vergetis Lundin
Regulatory uncertainty hangs in the air for many power generation owners, as the U.S. Environmental Protection Agency (EPA) pours over nearly four million comments on its Clean Power Plan proposal, which will be finalized this summer. ICF International is predicting the unannounced retirements of 30 GW of coal units by 2020 driven by just such regulations.
While the specific standards and timing may change as a result of the feedback, the primary questions still persist around the approaches that states will take to achieve compliance and how the rule will fare against legal challenges. "Decisions still have to be made as the energy sector awaits final rules, adapts to international fuel markets, and looks forward to changing demand dynamics," said Chris MacCracken, principal for ICF International. "Decisions on EPA's Mercury and Air Toxics Standards (MATS) and the Clean Power Plan this summer should firm retirement decisions in the near term." With EPA's MATS rule due before the U.S. Supreme Court soon, many coal-fired generation units have both near- and long-term regulatory uncertainty to struggle with in deciding to control and operate or retire. ICF projects coal-fired generation as a whole to remain fairly steady through 2025, despite the projected retirements because of MATS and a future with CO2 regulation. Coal deliveries have kept pace with demand despite cold temperatures on the East Coast. Over the next 10 years, ICF expects coal consumption to remain relatively flat, but still down 15 percent from the last five years. Coal consumption might increase somewhat through 2020 if natural gas prices trend into the $5.50 per MMBtu range, ICF says; however, coal consumption would then fall back to current levels as the CO2 policy comes into play. Low gas prices coupled with impending regulatory requirements continue to drive coal retirements, paving the way for gas-fired generation while putting wind in the sails of renewables. ICF projects nearly 60 GW of coal retirements from now through the end of 2020, split between announced retirements and model projections as a result of existing regulations and assumed requirements on CO2. ICF expects gas-fired units to build their share of total generation at the expense of coal -- reaching 38 percent share by 2030 as compared to coal's 29 percent -- driven by additions of nearly 150 GW of new gas-fired capacity by 2030. New renewable capacity makes up the bulk of the remaining additions, with approximately 70 GW added by 2030, ICF notes. For more: © 2015 FierceMarkets, a division of Questex Media Group LLC. All rights reserved. |