Tougher federal emission standards will force more coal plants to retire between now and 2020, increasing natural gas use for power by between 2.7 Bcf/d and 5 Bcf/d, Standard & Poor’s Ratings Direct said in a report Tuesday.
S&P assumed that gas will replace the anywhere from 40 GW to 75 GW that S&P predicts utilities and independent power producers will sideline because of the Environmental Protection Agency’s Cross State Air Pollution Rule and Mercury Air Toxins Standard, which are set to take effect next year. “Although renewable [energy] growth will form an important part of future electricity supply, low natural gas prices are swinging the pendulum in favor of a significant build-out of natural gas plants,” S&P said in a report on the future of coal and the power industry. The increased demand for gas as coal-fired power plants are taken out of service will boost gas prices to the $5/Mcf range by 2016-2017, S&P predicted.