Environment Forum

Report: A dramatic drop in coal-fired power by 2035 in the U.S.

By Todd Woody
December 6, 2010

USA-UTILITIES/SOUTHERNCoal’s share of the United States’ electricity market will drop dramatically over the next two decades as supplies of low-cost natural gas expand and new pollution controls come into effect, according to a new study by Black & Veatch, the engineering and consulting giant.

The firm projects that coal-fired power plants will provide 25 percent of the nation’s electricity in 2035, down from 49 percent today. Natural gas-powered facilities’ share of electricity generation will rise to 40 percent, up from 21 percent. Renewable energy production will spike from four percent to 11 percent while nuclear generation increases slightly from 20 percent to 21 percent in 2035 under Black & Veatch’s scenario.

“Natural gas is a factor because it’s cheap at the moment,” Mark Griffith, a Black & Veatch managing director, said in an interview. “Over the past two years it has become a growing factor in the decision-making process.”

Black & Veatch predicts that about 16 percent of the U.S.’ coal-fired fleet will be retired in the coming years to avoid the cost of complying with new pollution control measures.

But Griffith noted that the future is rife with uncertainty over how low natural gas prices will go and for how long. Complicating matters are the prospects for national climate change legislation that would impose caps on carbon emissions. While chances of Congress of passing a cap-and-trade system in the next two years are slim to none, Griffith said Black & Veatch’s analysis assumes there legislation will eventually be enacted.

Electric cars and their potential to stimulate electricity demand pose another unknown.

“When you start looking at the longer-term view, investors are starting to get a sense of these very long-term issues that need to be addressed,” said Griffith. “If we ultimately go to a very low carbon economy, what does that mean for infrastructure investments that are supposed to be a very long-term investment?”

In other words, technological changes potentially could render investments in multibillion-dollar power plants and infrastructure white elephants.

During the recession year of 2009, electricity demand fell 4.1 percent in the United States, the biggest drop in 60 years. Demand increased 4.7 percent in 2010 but Griffith said it would be a mistake to view that uptick as a sign of a resurgence in power generation.

“While power demand was affected by economic growth and the recession rebound,  much was due to the fact that we had an unseasonably hot summer – 24.5 percent warmer than normal,” he said.

Accounting for the unseasonable weather, actual demand growth will be less than two percent in 2010. “Assuming typical weather in 2011 — not extraordinarily cold or hot — we can expect another 1.5 to 2.0% growth,” said Griffith.

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