U.S. shifts to gas for electricity generation

| Tuesday, Jan. 17, 2012

A shift is under way: More electricity around the nation is being fueled by natural gas, which is far cleaner than coal, the traditional fuel that has long symbolized air pollution with belching smokestacks at electric power plants.

The most optimistic projections describe an abundant domestic energy source that will create enormous numbers of jobs and lead to cleaner skies.

Nationwide, the electricity generated by gas-fired plants has risen by more than 50 percent over the past decade, while coal-fired generation has declined slightly. The gas plants generated about 600 billion kilowatt hours of electricity in 2000 and 981 billion hours in 2010, according to the U.S. Energy Information Agency.

During the same period, coal generation declined from 1,966 billion hours to 1,850 billion hours, while hydroelectric and nuclear generation stayed about the same. The figures include electricity use by consumers and industry.

Nationwide, EIA said natural gas use for power generation rose 7 percent between 2009 and 2010. That's about 515 billion cubic feet. The biggest jumps were in the Southeast, with use rising 24 percent in North Carolina, 18 percent in Virginia and 15 percent in South Carolina.

"Most of the people I know in the electric power industry are building natural gas" plants, said Jay Apt, a professor of technology at Carnegie Mellon University. That's because of low prices over the past few years and the relatively low cost of building such plants, compared to coal-fired or nuclear.

On Monday, futures prices for natural gas fell for a sixth day on speculation that milder-than-average weather in the United States will curb heating demand. Futures dropped as much as 4.9 percent to trade at a 28-month low. Natural gas for February delivery fell 12 cents, or 4.5 percent, to $2.55 per million British thermal units in electronic trading on the New York Mercantile Exchange and traded as low as $2.538, the lowest intraday price since Sept. 4, 2009.

Apt cautioned that the trend could stall because the basics of supply and demand mean that if too many plants embrace cheap gas, it won't stay cheap.

"The surest route to $6 or $8 gas is for everybody to plan on $4 gas," Apt said, and if prices do rise, coal will again be the most cost-effective fuel.

Apt said there was a "huge building boom" in natural gas plants from the late 1990s to 2004, because utilities thought they would get rich from the combination of cheap fuel and plants that were highly efficient and relatively cheap to build. There were predictions that prices would stay low over the long term, too.

But natural gas prices spiked as high as $14 to $15 per Btu, and the new gas-fired plants around the nation stayed idle much of the time. That trend was driven by another irony: The gas-fired plants are easier to start and stop compared to coal or nuclear, so many utilities used them just for peak electric demand periods.

FirstEnergy Corp. spokesman Doug Colafella said low prices are prompting more talk in the power generation industry about building natural gas-fired plants, although power demand has been low because of the lingering recession.

The Akron-based owner of West Penn Power and Penn Power in Western Pennsylvania has 11 plants that run on natural gas or oil. Some are small, and they are used primarily as "peaking" plants to run when demand is high, such as on hot summer days.

FirstEnergy's "baseload" plants that run every day primarily are coal- or nuclear-fueled, Colafella said.

Some companies clearly believe the switch to natural gas plants makes long-term sense.

Sunbury Generation LP in central Pennsylvania plans to close five of its six coal-fired generators and replace them with two natural gas-fired turbines by 2015.

But some companies are deciding not to switch fuels.

The owners of the Homer City Generating Station in Indiana County, the state's second-largest coal plant, plan to add $700 million in pollution-control equipment to keep the 40-year-old plant running and in compliance with clean air laws.

Natural gas-fired power plants are "orders of magnitude cleaner" than coal plants, said Jan Jarrett, president of the PennFuture environmental group. PennFuture wants coal-fired units retired and replaced by gas-fired, at least for the short term.

Apt sees a slow, moderate shift.

"My sense is you'll get small changes here," he said.

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