Thursday, January 29, 2015

Snapshot of the Future: More Natgas Power Plants

Because of swooning natural gas (and oil) prices, the energy market is looking pretty sour right now, but that's not going to be the case forever, especially for natural gas.  SNL Financial recently featured the new Stonewall natural gas-fired power plant, a merchant plant being developed by Panda Power Funds, LP in Loudoun County, VA, an exurb of D.C. and one of the fastest growing counties in the U.S.  The plant will effectively replace the coal-fired Potomac River Generating Station that closed in 2012 and take advantage of natural gas from the Marcellus Shale to serve a growing population.

Stonewall is one of many instances across the country where new natural gas plants are replacing aging coal facilities.  In a few years, gas likely will displace coal as the predominant source of electric power in the country.  These changes will be gradual but steady and will be intertwined with the opening of a handful of LNG export facilities and new manufacturing complexes that will further strengthen the demand side of the natural gas equation.  The new demand drivers will not eliminate price volatility, but they likely will increase and diversify gas demand, which will help raise the "floor" price of natural gas.

No comments: