(SNL – October 18, 2013) EPA carbon rule to remove last impediment to 'building a lot of new gas plants'
Rule seen as confirming gas' future role
The EPA's rule also is noteworthy for the gas industry in that it sets a new source performance standard for natural gas-fired plants that is clearly "more than achievable" through the use of combined-cycle technology, said Rick Smead, managing director of advisory services for the consulting firm RBN Energy LLC in Houston.
The EPA proposed to set CO2 emissions limits for new large gas-fired power plants at 1,000 pounds per MWh, which is equal to the previously proposed limit and would not require add-on control technology for those facilities to meet it. The average U.S. natural gas plant emits 800 to 850 pounds of CO2 per MWh.
"The new source performance standard relieved the risk that something might come out that would be too onerous for even gas to live up to," said Smead, who recently left Navigant Consulting to join RBN Energy. "In a sense, that removed one of the last impediments to building a lot of new gas plants."
Natural gas supply abundance in the U.S. and low wholesale gas prices, combined with the prospect of low prices going forward, have given gas-fired generation a tremendous advantage in the marketplace. Since 1990, natural gas has represented 71% of generation capacity additions in the U.S., according to Smead. Wind is next, at 14%, followed by coal, at 7%. Still, natural gas producers have had to work hard to market their product to electric utilities, many of which have been reluctant to embrace gas as a baseload fuel, he said. "The new source performance standards just confirm what we already thought and will help the shale gas producers tell their story, confirming the contribution that gas will make to the market," he said.
