The absence of clear carbon emissions rules in the United States will prevent power companies from building new coal or nuclear power plants for the next several years, the head of Duke Energy Corp said Tuesday.
– Edited By Tom Lamar –
Most power companies will instead build natural-gas fired power plants, betting that new U.S. gas fields will keep supplies of that fuel abundant, Jim Rogers, Duke's chairman and chief executive, told Reuters.Energy legislation being debated in the U.S. Congress omitted regulations that would have established a market for companies to trade the right to emit carbon dioxide."I think it puts on hold the building of any new coal plants. It probably puts on hold the building of nuclear plants because you don't have a price on carbon," Rogers said.
Duke Energy is one of several major U.S. power utility owners that support a cap and trade system for carbon. It owns 20 coal fired-power plants and is also the nation's third largest operator of nuclear power.
About 85 percent of the new power plants built in the United States over the past decade have run on natural gas, he said.Coal-fired power plants produce about half the nation's power, although natural gas power plants emit about half as much carbon as the coal plants.
By leaving the future of carbon regulation uncertain, few utilities are likely to risk investing hundreds of millions of dollars in new coal fired power plants.That will hurt coal companies in the long run, Rogers said.
"I think from the coal industry perspective, they start to go into what I call the valley of death," he said. "It's hard to envision anyone getting the permitting and really going through the process of building a coal plant in the next decade."
In addition, as much as one-third of the 330,000 megawatts of aging coal-fired electricity capacity will likely be shut down in the next decade, he said.Earlier Tuesday, Duke reported a second quarter net loss as it wrote down the value of some of its Midwest power plants, although its profits per share excluding the charge beat Wall Street estimates.
Electricity demand from industrial customers has started to rise, Rogers said, although it was coming from very low levels, while household and commercial power demand in the second quarter was flat.
"It'll probably be '14 to '15 before we get back to a 2007 (electricity consumption) level," Rogers said.Rogers noted economic growth and power consumption are typically correlated and, although fears of deflation in the United States could push investors into utility stocks, the company would be better off in a robust economy.
"Deflationary (pressure) would be great for utility stocks, but bad for our country. I'd like to see our economy get going and get our mojo back and a deflationary period doesn't allow our economy to do that."