Implications
It is reported in the 7th of January issue of Christian Science monitor that Houston-based energy giant Dynegy has announced that it is abandoning plans to construct six coal-fired power plants, dissolving the 50-50 joint venture with LS Power, a New York-based energy company. That venture, launched in 2007, sought to build coal-fired plants in Arkansas, Georgia, Iowa, Michigan, Nevada, and Texas.The main reasons cited are that the development of new generation is getting increasingly marked by barriers to entry including external credit and regulatory factors that make coal plants in a carbon constrained economy uncertain. In light of these market circumstances, Dynegy has elected to focus development activities on generation portfolios which they can themselves control. Needless to reiterate, the six plants would have spewed 30 million tons of greenhouse gasses into the atmosphere each year (by comparison, the average American is responsible for about 20 tons annually).
Analysis
Coal supplies approximately 49% of the electricity generated in the U.S. The U.S. Department of Energy estimates that by 2030 this will increase to 54%. Also, regardless of how much new coal-fired generation moves forward, capital and maintenance spending in existing plants remains strong.
Currently, there is more than 353,000 MW of operational coal-fired capacity from 1,529 generating units in North America. Traditional utilities and private energy producers own 520 of these, producing more than 349,000 MW. An additional 4,300 MW is generated from 119 sites owned by industrial energy producers. These are industrial sites, such as steel mills, petrochemical plants, refineries, pulp and paper mills and others that produce power for in-house use and sell the surplus to the grid.
Recent data shows that there are over 484 projects and $49 billion of investment in these plants scheduled for construction kickoff during 2009. This includes both capital and maintenance projects. Capital projects identified include grass root construction, as well as in-plant expenditures, such as unit additions, modernizations, environmental retrofits, refurbishments, upgrades and other modifications to existing plants. Maintenance projects are planned maintenance outages inside the plants.In addition to in-plant projects, several others that add generation
are moving forward. Currently, in North America, 40 new coal-fired
generating units are under construction at 31 plants representing more
than 19,000 MW. Nine additional units and 1,295 MW of coal-fired
capacity are scheduled to kick off construction before the end of 2008.
Thus in light of these developments Dynergy's decision appears to be against the tide, and will be a boon to the environmentalist.
