Nine new natural gas power plants are planned in Pennsylvania, more than making up for the loss of power generation caused by the retirement of 12 old coal-burning power plants, according to state regulators.
But industry analysts say lower power demand and uncertainty over natural gas prices will likely keep more than half of the new gas-burning power plants on the drawing board and out of operation, at least for the foreseeable future.
State Department of Environmental Protection data show the proposed gas-burning facilities undergoing permit review will have a total electricity generating capacity of a little less than 8,000 megawatts, while the 12 coal-fired power plants scheduled for shutdown by April 2015 have a capacity of just under 4,000 megawatts.
DEP Secretary Michael Krancer said last week in Pittsburgh at the Developing Unconventional Gas conference that he expects natural gas-fired electric generation "will be huge" in Pennsylvania. And Kevin Sunday, a DEP spokesman, said he anticipates more proposals for gas-fired electricity generation.
According to power industry data, electricity from burning natural gas increased from 12.8 percent of the total generated in June 2011 to 19.1 percent in June 2012, in the PJM Interconnection, the regional transmission organization that coordinates wholesale electricity distribution for 60 million people in the District of Columbia and 13 mid-Atlantic states, including Pennsylvania.
Electricity from coal burning decreased from 47.4 percent to 40 percent during the same one-year period.
But Doug Biden, executive director of the Electric Power Generation Association, an industry lobbying organization in Harrisburg, cautioned against counting on all of the planned gas-fired projects now in the development pipeline.
"Just because they've applied for a permit doesn't mean those plants will be built," Mr. Biden said. "The companies get into the permitting line because it's a time-consuming process, but, historically, only about 30 percent of what's in those construction queues gets built. And unless there is a serious uptick in [coal-fired] retirements, I doubt we'll see all of those on the current permit list."
Other factors in the growth of natural gas-fired power plants are demand and gas prices, which are up slightly in recent months but remain low.
The recent recession has flattened demand for electric power, reducing its growth rate to less than 1 percent annually, Mr. Biden said, but a bigger reason is "demand response," a power use and conservation policy that allows big and small commercial and industrial electric power users to voluntarily reduce power usage, especially during peak power demand periods, and get paid for the power they don't use.
"It's a wild card in the market and a new risk for would-be developers of new natural gas-fired power plants," he said. "I don't see a need for a megawatt-for-megawatt replacement when coal plants are retired because of demand response. Companies are getting paid for not using electricity and that has become a real force."
Mike Roth, director of development for Tenaska, an Omaha-based, independent electric power production company that has proposed building gas-fired facilities in Westmoreland and Lebanon counties, said both remain active in the permitting process but the company hasn't found a buyer for the 900 megawatts each would produce. The facilities would sell electricity into the PJM Interconnection market.
"We've looked at the power generation landscape and will continue to evaluate it as the projects move forward," Mr. Roth said. "But it's been said that the two biggest new sources of power are natural gas and demand response.
"There's no doubt that demand response is a factor in the overall energy picture and we need to be aware of it in putting all the pieces of any new power project together."state - environment
Don Hopey: firstname.lastname@example.org or 412-263-1983.