Engineering Inc. - July/August 2014 - (Page 6)
MarketWatch
BY G E R RY D O N O H U E
Steady Transformation Ahead
In Power Generation Market
lations is steadily transforming
the industry. That's not an easy
thing to do.
"Power is really hard to
change," says Jack Hand, president and CEO of POWER
Engineers, Inc. It takes hefty
investments and long lead
times to build new power
facilities. That's why change
will happen slowly. The United
States Energy Information
Administration (USEIA)
projects that natural gas won't
surpass coal as the nation's primary power generating source
until 2035. By 2040, natural
gas will account for 35 percent
of power generation, followed
by coal (32 percent), nuclear
Electricity Generation by Fuel
(Percentage of market)
2012
2040
Coal
37%
32%
Natural Gas
30%
35%
Nuclear
19%
16%
Renewables
12%
16%
Oil and Other Liquids
1%
1%
Source: USEIA
Permitted Plants by Primary Fuel Type
Primary Fuel Type
Capacity (MW)
% of Total
Natural Gas
20,961
48.2
Wind
12,716
29.2
Solar
5,132
11.8
Coal
2,560
5.9
Geothermal
671
1.5
Hydro
494
1.1
Other
317
0.7
Waste
169
0.4
Biomass Gas
50
0.1
Agricultural
Byproduct
49.9
0.1
Biomass Solid
28
0.1
Source: APPA
6
ENGINEERING INC.
JULY / AUGUST 2014
(16 percent) and renewables
(16 percent).
Natural Gas Rising
The development of hydraulic
fracturing and horizontal drilling techniques has opened a
pipeline to the nation's shale
gas reserves. And that work will
only increase. USEIA projects
shale gas production will more
than double by 2040, from
7.8 trillion cubic feet/year to
16.7 trillion cubic feet/year.
Such dramatic supply expansion has many immediate
impacts-natural gas prices
have plummeted and chemical
companies and other manufacturers have repatriated factories.
But its full force is only now
being felt across the industry.
"Up until fracking, natural
gas plants were running at
about 35 percent capacity," says
Hand. "Today we're over 50
percent. The word on the street
is we won't start building new
plants until when we get to 60
percent of capacity."
But give it a few years. Work
on several new natural gas
plants should kick into high
gear in 2016, says Hand, who
adds, "Once it gets going, I
really don't think it's going to
slow down."
According to the American
Public Power Association's
(APPA) latest Report on New
Generating Capacity, power
plants totaling 47,525 megawatts (MWs) are currently
in permitting. Of those, 48
percent are natural gas plants.
Coal plants, which accounted
for 40 percent of plants in permitting in 2009, make up less
than 6 percent.
Two key regulations further
RON AND PATTY THOMAS PHOTOGRAPHY/GETTY IMAGES
D
emand for electrical
power will slowly and
steadily grow over the
next 20 years, increasing by just
less than 1 percent annually
through 2040.
Coal has long dominated
power generation. It currently
accounts for 37 percent of supply, followed by natural gas (31
percent), nuclear (16 percent),
renewables (12 percent) and
hydropower (7 percent).
But coal's supremacy in the
power generation market is
about to wane. The combination of cheap and plentiful
natural gas, programs encouraging renewable fuel use and
tighter emissions control regu-
threaten coal's future. The Mercury and Air Toxics Standard,
which takes effect in 2016, and
the Obama administration's
recent decision to cut carbon
emissions from power plants by
30 percent by 2030 will significantly increase operating costs
for many coal plants. Utilities
must weigh whether to retool
those facilities or shutter them.
Dean Oskvig, president
and CEO of Black & Veatch's
energy business, anticipates a
surge in requests to retrofit coal
plants, even if on a limitedtime basis. "Each plant is its
own story and will have to be
addressed on a case-by-case
basis," he says. "That work
won't continue forever, though,
and before too long all the big
plants will be done."
Even with those upgrades,
USEIA estimates that 50,000
MWs of coal-fired capacity will
be retired by 2021.
Rather than retiring or
retooling a plant, Hand says
Table of Contents for the Digital Edition of Engineering Inc. - July/August 2014
Engineering Inc. - July/August 2014
Contents
From ACEC to You
Legislative Action
Market Watch
Staying on Mission
Public vs. Private
Meeting the Need
2014 Professional Liability Insurance Survey of Member Firms
Sustaining Industry Momentum
2014 Fall Conference
Risk Management
Business Insights
Members in the News
Mergers and Acquisitions
Engineering Inc. - July/August 2014
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