Is converting coal to gas the right move?
What’s the issue?
The cost of operating a coal-fired plant is rising.
A multitude of EPA regulations requiring utilities to meet new emission standards under the Clean Air Act is a contributing cost factor, but it is not the sole source of rising costs. The all-in cost of mining and transporting coal is also rising.
At the same time, natural gas prices have been falling. New drilling techniques have opened up previously untouchable shale gas, thereby increasing the domestic supply of natural gas and making the fuel economics of running a gas plant highly attractive versus running a coal plant.
Utilities are thinking hard about accelerating a replacement of some of their coal fleet with gas-fired generation.
For some utilities, building a brand-new gas plant is the right path forward. For others, the opportunity to leverage water rights, transmission access, existing staff and other resources makes the conversion of existing coal units to burn natural gas a highly compelling investment.
Deciding on which path to take is the issue many utilities face today.