Any gains, he said, would be through existing coal plants taking market share away from natural gas and, possibly, nuclear.
A covered coal mining conveyor in Manahoy City, Penn.
U.S. power generator Dynegy Inc. sees coal regaining some market share as President-elect Donald Trump promises to put more miners back to work.
“Certainly more coal is good for us” and helps make coal-fired plants more profitable when natural gas and electricity prices rise, Dynegy Chief Executive Officer Robert Flexon said in a Bloomberg Television interview with Alix Steel Wednesday. He doesn’t see the economics shifting enough to spur the construction of new coal-generating capacity. Rather, any gains would be through existing coal plants taking market share away from natural gas and, possibly, nuclear, he said.
Flexon’s comments come as gas topped coal as the biggest fuel for U.S. electric plants in 2016 -- the first time that’s happened for an entire year, according to government data going back to 1997. A record number of coal plants were shuttered last year and demand for coal-generated electricity was undercut by lower gas prices. The prospect for rising gas prices prompting more demand for coal has dimmed after some states installed subsidies for emissions-free nuclear reactors to meet environmental goals.
Some generators have also seen profits squeezed by excess power supplies and slowing demand growth for electricity. The 24-hour average for spot wholesale electricity prices at PJM Interconnection LLC’s Western hub, the benchmark for the grid stretching from Washington to Chicago, fell to $28.79 per megawatt-hour in 2016, heading for the lowest annual average on record.
“President Elect Trump’s message has been about having fair competition,” said Flexon. If the U.S. eliminates subsidies for different fuels and becomes more "technology neutral,", then "that’ll be very, very good for coal. It’ll increase the capacity factor for coal and those coal miners will need to go back to work to extract coal from the ground and get it to power plants.”
Dynegy shares fell 1.9% at 2:33 p.m. Wednesday. The stock has lost 37% of its value this year.