Even before the Clean Power Plan went public, the coal industry was dying out.
While it still provides about 39% of U.S. energy, the popularity of the power source has dropped dramatically. Bloomberg New Energy Finance estimates that this year, 7% of coal capacity in the U.S. will be taken offline. That’s 23 gigawatts of power that will have to be replaced.
It’s not just popularity that has taken this power source down a peg either. Coal energy companies have lost about 25% of their revenues in the past three years alone. Where some have been able to stay afloat by converting their coal plants, others like Alpha National Resources have lost too much—$875 million just last year in this company’s case—and have had to file for bankruptcy.
Southern Company, one of the U.S.’s biggest utility owners, refuses to let itself go that route.
Instead, the company is planning to convert many of its coal power plants to natural gas.
In order to do this, Southern recently acquired AGL Resources, a natural gas distribution company. The purchase adds not only a line of customers
to Southern’s assets, but also the smaller company’s natural gas pipeline infrastructures.
Bloomberg estimates that this will boost Southern’s natural gas usage by 22%, from 1.8 billion cubic feet per day to 2.2 bcfpd.
The unpopularity of coal power aside, natural gas is much more abundant and affordable right now. The U.S. shale boom increased domestic supply very quickly, and some estimates say there is still an excess of 360 trillion cubic feet of gas that can be recovered.
Southern has announced plans to shut down more than a dozen coal power plants in previous years, and now will have the assets to convert some instead of losing them entirely.
The company currently produces its energy from about 42% coal and 39% natural gas. But as the transitions continue, natural gas will be sure to catch up and become Southern’s main source of power.
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Until next time,
Keith Kohl
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