This generation roundup provides snapshots of activity—current, planned, and proposed—in the four distinct U.S. electric power generation market niches. Use the capacity and investment levels provided to gauge the relative maturity of projects within a niche, or to get a feel for one market segment's promise in the context of the others.
Coal: Still the king
In the intermediate term, capital spending in the coal-fired sector of the North American electric power industry will be driven by two key factors. One is the perceived urgency for building new generating units—primarily in the U.S., but in Canada and Mexico as well. The other factor consists of the collective federal, state, and provincial mandates to reduce existing and new units' air pollution emissions by equipping them with SO2 scrubbers, selective catalytic reduction units, electrostatic precipitators, and low-NOx burners.
Coal remains the fuel of choice for the new units for two reasons: Baseload capacity is what's most needed, and coal is far cheaper on a $/Btu basis than natural gas. Still hung over from the last decade's binge of gas-fired combined-cycle plant construction, developers—both utility-affiliated and independent—now are seeking to make their fleet fuel mixes a bit more diverse. Coal still fuels more than half of U.S. electricity generation, and its share rose 1.9% between May 2005 and May 2006.
The new coal-fired capacity is needed not just to meet future demand growth but also to replace production previously provided by mothballed and permanently shuttered plants. Since 1999, some 1,486 units representing almost 50,000 MW have gone off-line in the U.S. alone. Expect similar numbers in both categories in the near term: By 2010, another 209 units totaling more than 20,000 MW are likely to be decommissioned.
Advanced age is the reason why those units will be retired. In North America today, there are 781 operational coal-fired units representing 86,000 MW that started commercial operation prior to 1967. Many of them soon will be replaced by new coal-fired units that are far more efficient and clean—in some cases, even cleaner than gas-fired units of comparable capacity.
Between now and 2010, some 25 coal-fired units totaling 10,923 MW currently under construction are scheduled to come on-line in the U.S. These projects represent over $15 billion in capital spending. Fourteen of the units (representing 7,758 MW) are being built by utilities or utility affiliates; the other 11 (with a total capacity of 2,615 MW) are owned by independent power producers (IPPs). To slice and dice the numbers in another way: Nine units representing 3,379 MW are greenfield developments, while the other 16, totaling 6,994 MW, are being built as expansions of existing power stations.
In addition to these projects, which already have broken ground, another 246 units totaling over 85,000 MW of new coal-fired capacity are in various earlier stages of development. Combined, these projects represent an investment of more than $127 billion. Some 233 of the new units are proposed for the U.S., 11 for Canada, and two for Mexico. Of the 246 total units, 92 (representing over 37,000 MW) are utility-sponsored; the remaining 154 (totaling roughly 47,000 MW) have been proposed by IPPs.
Unlike the units already under construction, a fair share of the proposed units envision burning coal cleanly via integrated gasification combined cycle (IGCC) or circulating fluidized bed (CFB) technology. At this point, of the new projects proposed, 65 units (over 12,000 MW of capacity) expect to use IGCC, whereas 28 units (representing over 8,000 MW) anticipate going with CFB. The remaining 173 proposed units will use conventional techniques for firing pulverized coal at subcritical or supercritical pressures and temperatures.
Of the 246 coal-fired units that have been proposed, 72 (representing 27,000 MW) could break ground this year, and another 95 units totaling 31,000 MW may get under way in 2008. As a reality check, it helps to remember that developers are always sanguine about project initiation and completion dates. Many of these projects may be stillborn due to difficulties securing financing and siting or environmental permits.
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