According to a recent Black & Veatch survey of electric utilities, coal will remain part of the overall electric energy for some time to come, even though a number of older coal burning plants can expect to be retired. As coal-burning plants are made more efficient or converted to natural gas, significant increases in utility pricing should be expected over the coming years.
A large number of older coal plants will quite burning coal in favor of using natural gas. “We judge that 60 megawatts of smaller, older less efficient coal plants will be shut down over the next 10 years,” Dean Oskvig, Black & Veatch’s CEO, said in a recent interview. “It isn’t cost-effective to retrofit these plants.”
Expect the near-term alternative for these shuttered plants to be structured around using natural gas, a fuel that claims higher marks for burning cleanly, even though a significant number of health and safety concerns have been raised about the horizontal drilling technologies and hydraulic fracturing that are being used to create natural gas wells.
Oskvig believes concerns such as these will be addressed through deploying a combination of the right expertise and technology.
Over 77 percent of those surveyed indicated that when fiscal realities are considered, coal would continue to hold its lead in the U.S. energy mix for economic reasons. Even so, more than 70 percent of respondents believed energy prices would rise significantly in the next five years – and that’s taking into account coal remaining part of the energy equation.
Notably, for the first time, aging infrastructure was the top operational concern among all survey respondents, surpassing regulation and reliability.
According to the study report, “This concern correlates with findings from the American Society of Civil Engineers’ (ASCE) 2009 Report Card on America’s Infrastructure. Using a traditional grading system of A, B, C, D and F, the ASCE gave America’s energy infrastructure a collective rating of D+, and estimated a total investment need of $75 billion dollars for new or upgraded generation and transmission and distribution assets.
The investment needs outlined by the ASCE provide insights and suggest another source of upward pressure on utility rates in addition to the escalation in energy and commodity prices over the five years.
Energy Central’s Sierra Energy Group conducted the Black & Veatch annual survey. Over 700 people responded to the survey – the vast majority of respondents with executive or management job functions.
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