How will the 2016 Election results impact coal-fired generation in the US?
- Nov 10, 2016 6:02 pm GMT
- 1141 views
The power industry has gone through tremendous changes in the past few years, and the generation mix has been impacted significantly. Low demand growth, a supply of inexpensive natural gas, incentives for renewables and an aggressive regulatory policy have led to the shuttering of many coal fired generating stations and others operating at reduced capacity factors. What impact could the results of the 2016 election have on this scenario?
There is a question of Energy Policy priority. Despite all the press coverage of the prolonged election cycle, there wasn’t a lot of discussion about Energy Policy. Other topics (immigration, security, trade, job growth, health care) got more airplay. Where will Energy Policy sit in the new year in terms of importance compared to other topics on the agenda?
The Republicans will enter 2017 in complete control of the Executive and Legislative branches of the Federal Government. That gives them carte blanche theoretically when it comes to making changes to laws and regulations. They have less influence over market and technological factors, if any at all.
Coal has gone out of favor for several reasons: climate concerns, the cost of regulatory compliance, comparative fuel costs, demand profiles, and response to mandates on renewables, among others. Will the new Administration and Congress adhere to the Paris accords? Will the US EPA adopt a less aggressive regulatory policy? Will the pace of regulations diminish or even be rolled back? Any of these would help coal fired generation.
But, as long as there is a plentiful and inexpensive supply of natural gas, coal will be more expensive by comparison as a fuel. Will LNG exports raise the price of gas? The tax credits for renewables are already written into the law; will they be revisited? Besides, states have their own authority to set Renewable Portfolio Standards and targets, as well as their own emission limit requirements that may exceed Federal requirements.
A revitalization of the US manufacturing sector will increase the demand for power to some degree but we cannot rule out the technological advances that make many power consumers smarter and more efficient. Technology will probably continue to temper demand growth.
And then there is the way that power is purchased these days. The Regional Transmission system operators buy power in a competitive fashion. They buy low cost power first. Can coal compete? Are changes to these approaches necessary or desirable to provide stability in the long term?
A modern coal-fired generating station is much more efficient and produces less emissions than those built thirty years ago. Can clean coal compete?
It will be interesting to see how this all shakes out as we enter 2017 and a new era.