Retiring Duke Energy (NYSE:DUK) Chairman James Rogers sees no big market for major power generating stations in the United States in the near term, but says that should change over time.
“We are not in a period where we are going to be building major central power stations,” Rogers told PennWell’s 25th annual Power Generation Week gathering Nov. 12. The conference is being held in Orlando, Fla., and has an expected overall attendance of 21,000.
The power generation landscape will continue to change, however, between now and 2050, Rogers said. By that time virtually all existing coal and nuclear power plants in the United States will have to be retired, Rogers said.
Rogers, who retired his CEO post at Duke earlier this year and will retire as chairman at the end of December, said only regulated utilities are prepared to replace this level of generating capacity. Duke is well positioned in this regard because most of its operations are regulated utility states, Rogers said.
The Power-Gen conference honored Rogers as the most influential person in the industry over recent history, based upon a reader poll conducted by PennWell’s Power Engineering Magazine. GenerationHub is also part of PennWell.
While the pace of change is accelerating, Rogers said he believes better times are ahead for the power business. The industry must, however, tackle its problems head on, he added.
The 1970s-era Public Utility Regulatory Policy Act (PURPA) was the first crack in the monopoly that regulated integrated utilities long held on power generation. The business and regulatory structure has continued to change, Rogers said.
Due to consolidation, there are probably half as many traditional regulated electric utilities as there used to be, Rogers said. There were about five utilities in what is now Duke Energy, Rogers said. The last Duke consolidation came with Duke’s much-debated merger with Progress Energy in 2012.
Today’s power suppliers are providing customers with affordable, reliable electricity at a cost that’s been basically flat “in real terms” compared to 20 years ago, Rogers said.
The industry’s biggest challenge will probably be modernizing its rate structure, Rogers said.
Rogers was the final speaker during a keynote session that included: Peter B. Delaney, CEO of OGE Energy (NYSE:OGE); David R. Dunning, Fluor (NYSE:FLR) Group Executive, Business Development & Strategy; and Amy Ericson the President of Alstom in the United States.
Flat growth; growing demands concern executives
The executives painted a picture of little electric demand growth combined with increasingly stringent environmental demands and market expectations fueled by continued availability of cheap natural gas.
Power demand is flat and “our goal is to keep prices flat in real terms,” Delaney said. This is a period of changing regulatory uncertainty, the OGE CEO said.
Delaney declined to speculate on whether EPA’s new greenhouse gas rule proposal would withstand legal challenge. Delaney said that, in addition to not being a lawyer, his company just lost a legal case over EPA rules. “I’m not the best one to ask,” Delaney said.
Numerous speakers cautioned against market overreliance on natural gas.
Lots of coal-fired generation has been marked for retirement and “something has to take its place,” said Fluor’s Dunning. The world’s population is expected to grow about 25% by 2040 and the planet will need more energy, Dunning added.
The U.S. could emulate the international community in some aspects of energy policy, said Alstom’s Ericson. The United Kingdom has aggressively invested in carbon capture, allowing the White Rose project to go forward, she added.
France is commercializing offshore wind and Asia is working to retire older, dirtier coal plants and replace them with newer ultra-critical coal plants, Ericson said.