The U.S. power system will retire more than 70 GW of fossil-fired capacity over the next four years, according to the second quarter Energy Outlook by ICF International (NASDAQ:ICFI). In addition, power generators will need to install 400 GW of new pollution control installations over the same time period.
Despite these predictions, ICF projects that coal generation in the U.S. will remain steady through 2020. The study also finds that the U.S. Environmental Protection Agency’s recently proposed New Source Performance Standards for greenhouse gases from new generation sources does not impact the going forward capacity build-out.
In the gas market, this past winter’s record warm weather reduced core gas demand in the residential and commercial sectors and caused gas prices to fall to $2 per million British thermal units (MMBtu). These prices are not sustainable, according to the report. As projected, producers have begun to cut back gas development and redirect drilling activity to oil and natural gas liquids. As a result, gas prices have started to firm. Core demand likely will return this coming winter, as supply tightens and demand returns, with gas prices hovering in the $5 to $6 per MMBtu range in the long run, according to ICF.
For more information on ICF’s second quarter report, click here.
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