News

Power usage down all over

May 22 - McClatchy-Tribune Regional News - Tom Fowler Houston Chronicle
An overbuilding of power plants combined with a large drop in
electricity demand might make it a particularly bad time for state and
federal mandates on renewable power, according to a Wood Mackenzie
> analysis.
>
> Power usage is down steeply across the country in the first three
> months of 2009 compared with 2008, due in part to the economic
> downturn and possibly a change in consumer behavior, said George
> Given, the head of power market research with the energy consulting
> firm. The demand lag is expected to continue into next year before
> starting a very slow recovery.
>
> But several new power plant projects -- including some coal-fired
> plants -- are expected to come online in the next few years, creating
> even deeper surpluses of power supplies across the country.
>
> Congress and several state legislatures are considering
> increasing the amount of power that comes from renewable sources as
> part of broader efforts to lower greenhouse gas emissions. The U.S.
> House debated a bill this week that could require 25 percent of the
> nation's power to come from renewable sources by 2025, while the Texas
> Legislature is considering adding 1,500 to 3,000 megawatts of solar
> power to the state grid in the coming years.
>
> But the drop in demand has damaged power company balance sheets,
> Given said, meaning they're in a particularly poor position to invest
> in the renewable power projects, which tend to rely on government
> subsidies. And even if those projects were built, they'd be competing
> in an over- supplied market full of lower-cost options.
>
> "It's not the best investment for these companies at this time,"
> Given said.
>
> Many power companies have seen large drops in electricity use.
> Houston's CenterPoint Energy reported a nearly 10 percent drop in
> residential consumption in the first three months of the year from the
> same quarter last year.
>
> Given said some of the decrease is linked to the downturn in the
> economy, but the drops are much deeper than the drop in gross domestic
> product alone can explain. It might reflect a fundamental shift in
> power usage by consumers in reaction to higher prices in 2007 and
> 2008.
>
> Reserve margins -- the difference between how much power capacity
> is available and the peak demand -- have continued to climb as demand
> has slowed. In Texas, the main grid operator tries to keep the reserve
> margin about 12.5 percent, but it's currently more than 25 percent and
> expected to reach more than 30 percent next year.
>
> The steep downturn in the power industry is also dragging down
> the natural gas market, said Jen Snyder, an analyst for Wood
> Mackenzie.
>
> The problem is compounded by a recent surge in natural gas
> production in the U.S. -- government data released Thursday says
> stockpiles rose by 103 billion cubic feet, well above analyst
> expectations, and 22.4 percent above the five-year average. Also, a
> wave of new liquefied natural gas capacity coming online overseas is
> oversupplying Europe and Asia.
>
> Many natural gas production companies have pulled drilling rigs
> out of production in an effort to stop the price slide, but Snyder
> said only a rebound in demand will bring natural gas prices back up.
> She expects a modest improvement in the economy in 2010, but gas
> demand won't recover until 2012.
>
> Natural gas slid 36.7 cents to $3.603 per million British thermal
> units Thursday while crude oil fell 99 cents to $61.05 a barrel in New
> York trading.
>
> tom.fowler@chron.com


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