Mergers, the Environmental Protection Agency (EPA) Clean Power Plan, cheap natural gas and the polar vortex were among the most noteworthy generation stories of 2014.
** EPA Clean Power Plan: In June EPA issued its proposal to cut greenhouse gas emissions from existing power generation sources. The program calls for individual states to draft and implement their own plans to cut CO2 30% by 2030. EPA received millions of comments by Dec. 1. Many observers expect the plan to be litigated extensively.
** Mergers: Whether for economies of scale or the need to comply with more stringent regulations, electric companies are increasingly looking to get bigger. Probably the biggest announced combination of the year involved the energy business of Alstom and General Electric (NYSE:GE).
** Polar vortex: Among other things, 2014 is the year when the term ‘polar vortex’ entered the energy lexicon. One of the early mentions of the polar vortex in GenerationHub came in a Jan. 6, 2014, article that mentioned the National Weather Service was predicting extreme wind chill values from the Northern Plains to Central Appalachians.
Subzero temperatures in many areas triggered Mid-Atlantic spot power prices in excess of $268/MWh. New England and New York City also recorded spot power prices above $220/MWh on Jan. 7, according to the Energy Information Administration (EIA). Seldom-used oil-fired power plants were pressed into service. Many analysts would cite the polar vortex as evidence for the continued need for conventional baseload coal and nuclear power plants.
Coal retirements: Between 2012 and 2020, about 60 GW of coal-fired capacity is projected to retire in the Annual Energy Outlook 2014 reference case, which assumes implementation of the EPA Mercury and Air Toxic Standards (MATS), as well as other existing laws and regulations, EIA has said.
The rise of natural gas: Natural gas continues to be extremely cheap, and it continues to dominate construction of new baseload power plants in the United States. This is true for both regulated electric utilities and independent power producers. IPPs are embracing gas in regions from California to Texas to PJM.
Renewable energy goes mainstream: Despite a temporary lapse in certain tax credits for renewable energy, wind and solar have still accounted for more than 40% of the new electric generating capacity commissioned during the first 11 months of 2014. In addition, major companies like Dominion (NYSE:D) are among those pursuing offshore wind energy projects with the Interior Department.
Questions about nuclear future: Entergy (NYSE:ETR) is scheduled to cease generation at its Vermont Yankee nuclear plant Dec. 29. It joins other recent nuclear retirements such as the Edison International (NYSE:EIX) San Onofre Nuclear Generating Station (SONGS) in California, the Dominion Kewaunee nuclear plant in Wisconsin and the Duke Energy (NYSE:DUK) Crystal River 3 plant in Florida.
The spate of the retirements, the impact of cheap natural gas and the age of the domestic nuclear fleet have stimulated worries about nuclear energy’s future in the United States. That’s despite new nuclear generation that’s expected to come online in Tennessee, Georgia and South Carolina in upcoming years.