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Study finds $700B in costs for switching from coal to gas generation
July 7, 2010 - 4:22 PM
The American Public Power Association released a study July 7 that examines the infrastructure and investment impediments to switching from coal-fired power plants to natural gas-fired plants. The study, "Implications of Greater Reliance on Natural Gas for Electricity Generation," assumes that natural gas demand will be much higher than many previous studies have estimated.
That assumption was by design, lead author and Aspen Environmental Group senior associate Catherine Elder said at a July 7 news conference in Washington, D.C. "We're going into uncharted territory with natural gas demand," she said. Most studies on the future of gas generation have had a "wide range" of scenarios for demand, but "by and large, the assumptions don't knock your socks off," Elder said.
The study found that current demand for natural gas is about 23 Tcf, compared to 22 Tcf in 1972. But if existing coal-fired generation capacity were to be replaced with natural gas-fired capacity, the demand would increase
"We're not suggesting that all coal will be replaced, but a significant number of coal plants will be affected by regulations that have nothing to do with CO2," APPA President and CEO Mark Crisson said at the conference. The study notes that regulations of a number of conventional pollutants, such as SO2, NOx, particulate matter, coal ash and mercury, are all pending from now until 2017.
Elder explained some of the barriers to meeting the increase in demand identified by the study. The overall cost of transitioning from coal to natural gas would be more than $700 billion today, the study found. Of that cost, $335 billion comes from the replacement of existing coal-fired units with combined-cycle gas units. "You have to be careful when you hear somebody talking about converting or retrofitting because usually they are really talking about replacing," Elder said.
An additional $348 billion would come from new pipeline capacity. In the study's scenario of complete transition from coal generation to gas generation, pipeline capacity would need to be increased to the point that it can handle 70 Bcf/d. Since 1990, the country has added 45 Bcf/d to pipeline capacity, Elder noted.
She also expressed concerns about the ability of production levels to meet the increase in demand that would come with a transition to natural gas. The study found that over the past 10 years there has been a "pronounced" decrease in gas production per new well, and Elder said there is little sign of that trend stopping. "We've got these new shale wells, but they're not big enough producers to change that trend per well," she said.
At the conference, Crisson disagreed with questions that suggested the study is politically anti-gas. "The study is not intended as an advocacy piece," he said. But, "all of these challenges should give policymakers pause" on the question of transitioning to natural gas, he added. "We need to look a little more closely before we leap down
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