IS NEW COAL-FIRED GENERATION POISED TO RELIEVE GAS MARKET TIGHTNESS?

The North American energy industry faces a quandary. Greater fuel diversity is needed in the next wave of power generation to reduce reliance on natural gas. But although coal appears to be best positioned to provide that diversity, regulators, policymakers, and industry participants may be reluctant to acknowledge coal's potential. Coal generation developers also face obstacles that make bringing individual projects to market challenging. The North American energy industry is arriving at a critical juncture where today's choices will determine the timing and fuel mix of the next wave of generation. In this Private Report, CERA finds that

- New coal-fired generation is likely to be the default choice to add fuel diversity to the next wave of new power plants.
- Significant risks regarding natural gas prices, project cost, and uncertainty surrounding costs associated with carbon emissions suggest that regulated, municipal, or cooperative utilities or companies with firm power sale contracts are the best positioned coal generation developers.
- New coal generation projects are likely to compete with new liquefied natural gas (LNG) projects on several levels. Successful developers of new coal generation and LNG will need a firm understanding of the interplay between these competing investments.

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CERA Reports Online, a wholly owned subsidiary of IHS Energy, is a leading advisor to international energy companies, governments, financial institutions, and technology providers. CERA delivers critical knowledge and independent analysis on energy markets, geopolitics, industry trends, and strategy. CERA's expertise covers all major energy sectors--oil and refined products, natural gas, and electric power--on a global and regional basis.